Metals Output to Witness Drastic Slowdown

SEATTLE (Scrap Monster): The most recent base metal review report published by Milan-based T-Commodity predicts slowdown in metal output in China during winter season this year and next year.

Further to anti-pollution measures by the Chinese administration, the steelmakers in the Tangshan region have pledged to cut one-third output during the winter period. It must be noted that the region accounts for almost 15% of the total Chinese steel production. The announced production cut will lead to reduction in output by around 19 million metric tons during the winter period until March 31^st, 2019. Other provinces too are expected to declare production cuts, the report says. Overall, Chinese steel sector sentiments are likely to remain bearish in the near future.

The moderate demand for steel in China, coupled with production cuts is likely to lift domestic as well as global steel prices. Moreover, decline in iron ore inventories may trigger further rise in prices of the steelmaking raw material. The report also cites raw material shortages at Shandong Xinfa Company, thereby leading to reduced alumina output. The company’s refinery in Shanxi province is reportedly operating at half capacity. The spot shortage of alumina is likely to lift aluminum prices. Historically, the base metal prices in China tend to depend a lot on Chinese economic data.