(MENAFN- ProactiveInvestors)
Chinese demand for Australian commodity resources is expected to remain strong over the longer term as urbanisation continues and it transitions into a consumer led economy.
This is according to Reserve Bank of Australia's (RBA) head of economic research Alexandra Heath.
Heath said that while slower growth in China and a rapid increase in the supply of coal and iron ore had pressured resource prices in recent months the urbanisation of the population still had a long way to run and would lift demand for steel food and energy.
Despite many opinions and media headlines to the contrary Heath said RBA research suggested China's demand for steel was yet to peak.
This was in part because residential construction was shifting to taller more feature-packed buildings.
As an example she noted a 50-floor building required roughly double the amount of steel per square metre as a 15-floor building.
Consumer demand was also expected to become more steel-intensive. In particular motor vehicle ownership in China was a fraction of the levels in the United States and as that grew so would the demand for steel.
Heath opined that the Chinese economy is continuing to evolve in ways that will support demand for resources and the sheer size of the economy suggests that these demand forces will over the medium to long term remain strong.
Bullishly for Australian mineral explorers and mining producers China and Australia signed a Free Trade Agreement this week that lowers or removes tariffs on a host of Australian commodities.
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