SHANGHAI, Jan. 9 (SMM) – China’s nonferrous metals industry remained sluggish in 2012 reflected in slipping orders, massive losses, and severe oversupply.
Given the market fears triggered by China’s economic slowdown, the National Development & Reform Commission speeded up to approve infrastructure investment projects since last September, with an aim to boost economic growth. However, the RMB 4 trillion bailout plan introduced in late 2008 resulted in severe overcapacity, greater inflationary pressure and imbalance in economic structure while spurring economic growth, revealing the future trouble brought by stimulus program of this kind.
Nonferrous metals industry was inevitably affected by the slowing economic growth. China’s nonferrous metals industry suffered the toughest situation in 2012 with cost rising, prices falling and enterprises losing.
In this context, market is anticipating rescue policy from the central government. The State Reserve Bureau started purchase metals for reserve last November, somewhat lifting market sentiment. Nevertheless, this measure failed to bring fundamental change to the industry against the backdrop of economic slowdown and waning domestic demand.
Doubts have been raised about how the urbanization progress will benefit nonferrous metals industry and what else could the government do to rescue the market.
SMM believes the purchase and reserve of metals will not be able to solve the problem of supply and demand at root, and market fundamentals should still be regulated by market discipline. The 18th National Congress attached greater importance to quality and efficiency for economic work in 2013, and nonferrous metals industry should also focus more on improving quality rather than quantity.