Torlizzi Base Metals Report: Winter cuts anticipated in China

Torlizzi Base Metals Report: Winter cuts anticipated in China
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An economy showing signs of cooling off and a series of announcements by its government is pointing to a slowdown in metals output in China during the winter of 2018 and 2019.

In the steel sector, the government and steelmakers in the Tangshan region, which accounts for about 15 percent of China’s steel capacity, have agreed to a one-third cut in output during the winter tied to anti-pollution measures. If steelmakers follow through on the cuts, they will make some 19 million metric tons this winter, which runs from Oct. 11, 2018, to March 31, 2019.

Beyond Tangshan, the winter cuts in China are expected to extend to a wider geographic area and to have a greater overall effect on Chinese steel production.

Demand for steel in China, combined with the anticipated cutbacks, may prove helpful in sustaining lifting steel prices in China and globally. Data tracked by the consultancy SteelHome shows iron ore inventories dropping China and global prices rising for the steelmaking commodity.

There remains bearish sentiment in China’s steel sector, however, with hot-rolled coil (HRC) prices there having fallen in the first 20 days in October.

In Germany, drought-related low water levels are affecting output in that nation’s mills. Germany-based steelmaker Thyssenkrupp says raw materials for steelmaking are having difficulty moving from the port of Rotterdam to mills in Germany. Reduced steel output could lead to higher pricing just as German steelmakers and auto produces are negotiating their 2019 steel pricing contracts.

On the nonferrous side, Chinese output of alumina has been impacted by raw materials shortages at the Shandong Xinfa company. One of that firm’s refineries in Shanxi province is operating at 50 percent capacity, creating spot shortages of alumina and potentially lifting China’s aluminum prices.

The pricing of copper and other metals is being influenced by economic data from China, as the world’s commodity investors try to determine whether that nation’s hunger for finished metal could be waning.

That nation’s government has been encouraging banks to purchase the shares of listed companies nearing margin call prices on their stocks as a way to support Chinese securities prices, which have drifted downward throughout 2018. Investors will be watching to see what develops in terms of the trading relationship between China and the rest of the world (particularly the United States) at the G20 Summit meetings scheduled for Nov. 30-Dec. 1 in Buenos Aires.

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Source: Recycling Today
Torlizzi Base Metals Report: Winter cuts anticipated in China
<![CDATA[An economy showing signs of cooling off and a series of announcements by its government is pointing to a slowdown in metals output in China during the winter of 2018 and 2019. In the steel sector, the government and steelmakers in the Tangshan region, which accounts for about 15 percent of China’s steel capacity, have agreed to a one-third cut in output during the winter tied to anti-pollution measures. If steelmakers follow through on the cuts, they will make some 19 million metric tons this winter, which runs from Oct. 11, 2018, to March 31, 2019. Beyond Tangshan, the winter cuts in China are expected to extend to a wider geographic area and to have a greater overall effect on Chinese steel production. Demand for steel in China, combined with the anticipated cutbacks, may prove helpful in sustaining lifting steel prices in China and globally. Data tracked by the consultancy SteelHome shows iron ore inventories dropping China and global prices rising for the steelmaking commodity. There remains bearish sentiment in China’s steel sector, however, with hot-rolled coil (HRC) prices there having fallen in the first 20 days in October. In Germany, drought-related low water levels are affecting output in that nation’s mills. Germany-based steelmaker Thyssenkrupp…