China’s bid to rein in exports roils aluminum stocks and prices
China’s cancellation of tax relief on exports has left the aluminum industry scrambling to assess the impact on supply flows.
Market indicators are spelling out a bad year for copper producers as the world’s biggest consumer, China, appears unlikely to eat up excess supply.
Copper prices dropped in late January on weak Chinese manufacturing data. Then US data dragged prices down further, adding to a 10-day losing streak for the metal.
Economists are predicting that in 2014 China will experience its slowest nominal growth since 1990.
Every number that comes out of China lately is worse than the time before, Bloomberg Industries’ Kenneth Hoffman said last week.
Meanwhile, many firms have cut copper forecasts. Bloomberg analysts see the price of the benchmark three-month forward contract on the LME averaging $7,078 a tonne this year, 3.7 per cent lower than last year, according to the South China Morning Post.
A Reuters poll predicts that copper prices will decline by 4.2% throughout 2014.
But there are some indications that these predictions might be too dire.
“Things may not be as bad as the market is thinking,” Standard Chartered Bank’s global head of metals trading, told the South China Morning Post.
“I see China buying more copper this year than last year, and prices will also be supported by the economic recovery in the US and Europe.”
Also, China’s biggest copper consumer, State Grid Corp, planned on increasing new power grid construction by 13% this year, the Post wrote.
