LME WEEK: China’s energy transformation, manufacturing upgrade and Belt & Road becoming new driving forces for China’s metal consumption

Published: Oct 11, 2023 14:44

Save

At the SMM LME LONDON EVENT held during LME WEEK, Wu Ming, head of metals and commodities at PRC Macro, expressed her views on the impact of Chinese real estate on global metal demand.

China’s real estate slowdown: knowns and unknowns

A slowdown in China's property market has weakened global metals demand as the industry accounts for about 20% of global steel demand, about 18% of aluminium demand and about 6% of copper demand. This is expected to lead to overcapacity and oversupply.

The Mystery of Steel

In theory, steel and iron ore demand should collapse as housing starts and construction weaken, but actual demand for steel this year has exceeded market expectations.

New driving forces: energy transformation, manufacturing upgrade

Chinese manufacturers hold a leading position in the global value chain and are capable of providing more high value-added products. China's energy transition not only boosts infrastructure and domestic consumption, but also enhances the competitiveness of Chinese manufacturers.

ODI boosts steel demand thanks to Belt and Road initiative

Strong exports consumed about 8% of steel production , largely counteracting the impact of the real estate slowdown.

The surge in exports to the Middle East was driven by a strong rebound in policy-supported RMB overseas direct investment (ODI).

Structural changes in China’s steel market

Manufacturing upgrades, energy transformation and overseas demand have led to changes in the structure of China's steel market, with flat steel gaining more share.

Chinese steel mills are working to reduce risks posed by the property market, and industry policy guidance will reinforce this trend.

Chinese steel mills

The average service life of BF-BOF assets in China is only about 14 years, compared with more than 40 years elsewhere, making it difficult for Chinese steel mills to scrap them in a short period of time. At the same time, the current capacity of electric arc furnaces is too small to produce flat steel.

Copper and aluminium: Still have support in the near term

Completion of real estate will maintain growth until at least the second quarter of 2024.

Manufacturing stockpiling may begin in the fourth quarter of 2023, driven by energy investment, manufacturing upgrades and real estate completions.

Conclusion

•Global metal producers and metal demand are reducing the risk of China's real estate crisis. China's energy transformation, manufacturing upgrades, and strong exports driven by ODI in the Belt and Road initiative countries are becoming new driving forces for metal consumption.

•These new drivers have led to structural changes in China's steel market, with the share of flat steel rising steadily.

•This structural change on the demand side, coupled with China's supply structure, makes iron ore demand more resilient.

•China's property completion and restocking cycle will continue to support aluminium and copper demand in the short term.

Market forecast

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

5 mins ago

Ningyuan New Materials invites you to the 2026 SMM (3rd) South China Nonferrous Metals Annual Conference

Ningyuan New Materials' main products: fiber casting filter screen, liquid aluminum diversion bag, liquid aluminum distribution bag, rigid thermoformed distribution bag, liquid aluminum filter bag, liquid aluminum filter cloth, ceramic filter disc, and other heat-resistant filter products.

5 mins ago

21 mins ago

Zambia Copper Output Rises Just 0.45% in H1 2026 Despite Stronger KCM and Kansanshi Production

Zambia produced 447,181.93 tonnes of copper in the first half of 2026, up only 0.45% from 445,176.59 tonnes in the same period of 2025, as stronger production at several major mines was largely offset by declines elsewhere in the sector. According to Zambia’s Ministry of Mines and Minerals Development, the improvement was supported by higher output at Konkola Copper Mines (KCM), Kansanshi, Lumwana, Lubambe and other major operations. Kansanshi’s copper production increased 2.44% year on year, helped by the S3 Expansion Project, which sustained processing throughput above design capacity and recorded its highest processed tonnage in May. Higher operating time, improved plant utilisation and stronger milling rates also supported the mine’s performance. KCM recorded a substantially stronger increase, with copper production rising 21.43% year on year. The ministry attributed the improvement to recapitalisation, increased mine development, better equipment availability and more consistent plant feed. However, the gains were not broad-based. Production declined at NFCA Mining, Chibuluma Mines and Mopani Copper Mines. Mopani’s output was affected by a planned maintenance shutdown at the Mindola Shaft in May, which temporarily disrupted ore hoisting. The ministry also identified fuel supply constraints and insufficient domestic sulphuric acid availability as factors limiting plant-feed availability at some operations. For Zambia’s copper sector, the first-half data shows that stronger performance at key large-scale mines has yet to translate into rapid national production growth. The 0.45% increase in aggregate output highlights the extent to which operational disruptions and input constraints can offset production gains from expansion projects and mine recapitalisation.

21 mins ago

31 mins ago

MMG’s Kinsevere Produces 33,800 Tonnes of Copper Cathodes in First Half of 2026

MMG’s Kinsevere operation in the Democratic Republic of Congo produced 33,800 tonnes of copper cathodes in the first half of 2026, up 33% year on year, as the continued ramp-up of the Kinsevere Expansion Project and its sulphide processing facilities supported higher output. Copper cathode production reached 16,820 tonnes in Q1, up 44% year on year, followed by 16,980 tonnes in Q2, up 24% from the same period of 2025. The improvement reflects the progressive ramp-up of Kinsevere’s sulphide processing circuit, including the concentrator and Roaster, Gas Cleaning and Acid Plant, together with increased contribution from the Nambulwa satellite pit. Kinsevere remains on track to produce 65,000–75,000 tonnes of copper in 2026. At the midpoint of the guidance range, the mine would produce around 70,000 tonnes this year, meaning first-half output of 33,800 tonnes represents close to half of the implied annual target as the expanded operation continues to ramp up. Power reliability, however, remains an operational constraint. MMG is developing a Battery Energy Storage System (BESS) to provide backup during temporary outages and improve power stability at Kinsevere. The investment highlights the importance of electricity reliability to sustaining higher utilisation rates as the expanded sulphide facilities move toward more stable production. From a copper-market perspective, Kinsevere’s H1 performance shows that additional DRC supply is beginning to emerge not only from new mines but also from brownfield expansions and the conversion of existing operations toward sulphide resources. If Kinsevere reaches the upper end of its 2026 guidance, annual copper production would approach 75,000 tonnes, reinforcing the DRC’s growing contribution to global refined copper supply.

31 mins ago