China Daily reported that China's nonferrous metals industry is unlikely to grow in the H2 of the year, as the economy continues to struggle, after officials reported a significant drop in output growth during the first five months.

Mr Shang Fushan vice chairman of the China Nonferrous Metals Industry Association said that the industry has experienced a huge decline as figures showed total output of the 10 major nonferrous metals in the first 5 months was 14.26 million tonnes, 5.1% increase YoY but still well down on the growth of 8.8% in the corresponding period of the previous year. The development of the nonferrous metals industry largely depends on the country's macro economy in the following months and that's not very good currently, so it is hard to predict what's ahead."

Mr Shang said however the central government is expected to carry out policies to boost the economy, suggesting he didn't expect the situation to worsen. The output of lead and zinc in the country is reducing and the growth of output of copper, alumina is falling.

According to recent estimates by Wistrategy Consulting, a domestic business consultancy focusing on listed companies, the total annual revenue of 24 listed nonferrous metals companies on the Shanghai and Shenzhen stock exchanges will grow by 14.24% this year compared to 35% last year. Profits by the companies are expected to grow by 8.27% a huge drop of 39 percentage points YoY.

Wistrategy said that a market oversupply of nonferrous metals still exists and the situation is getting worse with fierce competition. Dependence on imports is also increasing, which adds to the challenges of the industry. It highlighted competition among electrolytic aluminum producers as being especially brutal.

Mr Shang said that "Few producers who buy alumina and electricity to make electrolytic aluminum made profits during the first 5 months. Only the ones that own both alumina mines and coal fired power plants can make a little profit. However, output of electrolytic aluminum is still increasing at a rapid speed in China.”

According to the figures from the National Development and Reform Commission, China's output of electrolytic aluminum had a 10.5% growth in the first 5 months, 6.5 percentage points higher than last year. In February, the Ministry of Land and Resources encouraged more private investment into the mining industry to boost the industry and lessen the country's reliance on imported mineral resources.

Source - China Daily.com

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