ANZ predicts that China's growth decline will have a negative impact on global commodity demand, but India could make up a portion of this shortfall.
The bank predicted that India's economic growth will likely outpace China's, with the South Asian nation becoming the world's third-largest economy by the end of this decade.
According to a recent report by the bank, India's demand for commodities will likely increase, and it could offset more than half of China's demand shortfall, particularly in the energy sector.
ANZ analysts predicted that India's demand for commodities would increase swiftly due to favourable demographics, urbanisation, the expansion of manufacturing and exports, and the construction of infrastructure.
India has surpassed China as the most populous nation, and according to ANZ's data, its rate of urbanisation is expected to rise to 40% by 2030 from the current level of 35%, fueling demand for industrial metals and energy commodities, which are typically associated with a rise in infrastructure and manufacturing demand.
The bank forecasts that India's annual demand for main commodities such as oil, coal, gas, copper, aluminium, and steel will increase by more than 5 percent between now and 2030.
Comparatively, China's demand for these same commodities will decelerate to between 1% and 3% by the end of this decade, in tandem with a projected decline in GDP growth to 3.5%. China's GDP grew 6.3% annually in the second quarter, below market expectations of 7.3% growth.
ANZ predicted that the increase in India's demand will be most pronounced for oil and coal, consistent with the country's reliance on heavy oil imports of more than 80%.
Analysts wrote, "India will increase its efforts to decarbonize by 2030, but these efforts may be hampered by the country's rapidly growing energy needs, a significant portion of which may still need to be met by fossil fuels."
The Petroleum Planning and Analysis Cell of India projects that by 2024, India's consumption of petroleum products will increase by approximately 5%, to 233,805 thousand metric tonnes.
India is projected to make up 60% of China's lost coal demand in 2030, and 66% of China's lost oil demand, according to ANZ's counterfactual scenario, even if China's development does not slow.
The Indian government's increased emphasis on infrastructure development, energy transition, and capital expenditures may also result in a rise in demand for steel and iron.
According to the report, the demand for metals and bulks could increase significantly.
According to ANZ, it may be more difficult to satisfy the massive steel and aluminium demand gap left by China.
"For aluminium and steel, India's pick-up of demand left unsatisfied in China may not be all that significant," ANZ noted, citing China's massive consumption of these commodities.
China utilises more than fifty percent of the world's production of industrial metals and steel.
While China will continue to dominate the commodity markets, India can remain a "significant influencer," according to ANZ.
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