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Commodity to benefit from China's end of one-child policy

BEIJING
2015-10-30 16:20

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China will allow all couples to have two children, abandoning its decades-long one-child policy, the Communist Party of China (CPC) announced after a key meeting on Thursday.

The policy change will be good news to the currently weak commodity market, said Liu Xintian, a senior analyst of 100pp.com, a commodity information provider.

In the short term, steel, building materials and nonferrous metal industries will benefit from the end of the one-child policy.

Those couples intended to have the second children will choose to improve their housing conditions, which will stimulate the property market, said Liu.

The property market will likely see the "dawn" in November at the earliest, which will drive up demand for the downstream products, including steel, building materials and nonferrous metals.

Despite no fundamental reversal, the stabilization and phased rebound in the commodity prices will likely happen, Liu noted.

In the medium term, the textile and agricultural products will benefit from the policy change. With the implementation of the new policy, baby boom will likely come in the second half of 2016 at the earliest. The population increase will create new demands for basic necessities. It is estimated that demand for the textile products represented by the cotton will increase in a range between 5 percent and 10 percent and that for egg will increase in a range between 10 percent and 15 percent, Liu forecast.

In the long run, the energy and chemical sectors will benefit from the new policy. With the population increase, demand for the energy and commodity will grow. However, the crude oil and chemical products will not escape from the predicament in the near term, Liu added.

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