There was slight disappointment that the government did not announce a faster path of decarbonisation at the National People’s Congress in March. The changing role of China is one to watch. If these changes take effect as planned, it will mean China will play a very different role in global commodity markets in the next decade than it has over the previous decade. The new FYP puts emphasis on internal circulation and domestic consumption as the main pillar of economic growth and discusses a pivot away from infrastructure investment and trade. China Five Year PlanĢ021 marks the launch of China’s 14th five-year plan (FYP). Meanwhile, where downstream manufacturers who are increasingly demanding ‘green metal’ to meet sustainability targets – we will be assessing if low carbon products attract a premium. We will continue to highlight assets that are at risk of becoming stranded due to escalating costs. CRU’s analysis of costs will explain how this will tilt and re-shuffle global cost curves and reshape supply pipelines. Global carbon prices and regulations will escalate costs of high emitters and alter value-in-use assessments. How will other countries respond to increasing climate ambitions in these major economies? How will this impact trade flows and metal prices when implemented? How effective will climate policies be in supporting the uptake of EVs and the rise of recycling rates of end-of-life goods? CRU will continue to investigate the following questions. China is expected to announce further decarbonisation policies ahead of COP26. The EU has announced plans around its carbon border adjustment mechanisms (CBAM). The US has re-joined the Paris Agreement. In 2021, governments have started to shift from rhetoric to policy implementation. CRU is continuing to examine the implications of applying these approaches across value chains to optimise emissions abatement. New technologies, including carbon capture, hydrogen/ammonia as a fuel, process and supply chain optimisation, and recycling, will be important levers. The growth in renewables as the energy source for power, together with the electrification of mining equipment, is a key enabler for decarbonisation. This reflects the lively debate around whether we are at the foothills of a new commodity Supercycle. In this mid-year update CRU have decided to add a fourth theme ‘Supercycle or business cycle’. China remains an important player in the commodity industry – but its role is changing due to the Five-Year Plan. Carbon Emissions and Sustainability remain important themes for our customers in the run-up to COP26. Mid-year, we are reviewing and updating our themes. In January we presented CRU’s three new Macro Themes for the year - Carbon Emissions, China’s 14th Five Year Plan, and Reshaping Global Trade. CRU is forecasting the fastest annual growth in the world economy for 40 years, underpinned by successful vaccination programmes and supportive fiscal and monetary policy. 2021 is shaping up to be a year of economic recovery.
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