OREANDA-NEWS. April 25, 2014. Chinese commodity demand has reached a short-term macroeconomic cyclical bottom and growth should pick up as the year progresses, says Citi Research.

“Recent weeks have seen signals of increasing government concern over growth rates and a desire to provide support, including infrastructure investment, tax cuts and social housing programs,” Citi says.

“We expect these and further measures to provide a moderate boost to H2 commodity demand, but do not expect a large stimulus along the lines of 2012, much less than seen in 2008-2009.” While credit conditions remain tight, they have not become any tighter in recent months, Citi points out.

“While virtually every commodity should benefit, the most leveraged commodities to an expected improvement in Chinese demand are: steel, iron ore, met coal, zinc, copper, soybeans, LNG, naphtha, and fuel oil,” Citi says. “However, incorporating supply considerations, we believe steel, zinc, copper, and LNG provide the best exposure to an improvement in Chinese demand.”