Singapore 25/01/2016 - Nonferrous metal prices have an almost a zero chance of making an ‘obvious rebound’ in the first half of this year, with prices expected to stay low during the period, said China’s Nonferrous Metals Industry Association (CNIA) in a report last week.
The dismal forecast is attributed to a weak outlook for demand, and a lack of improvement to the oversupply situation in the industry against a backdrop of slower global economic growth.
It is difficult for nonferrous metals demand to improve amid low growth rates for global investments in real estate and power, while demand from new applications are hard to develop, CNIA said.
There is also no substantive improvement in the overcapacity situation in the metals industry in China, it added.
Fixed investments in the Chinese nonferrous metals industry remains in a trend of zero or negative growth, with companies in the sector continuing to face low product prices, high costs and tight liquidity, said CNIA.
China’s fixed asset investment in the nonferrous metal smelting and fabricating industry had fallen by four percent in 2015 to 557.9 billion yuan ($78 billion) in 2015.
The country's production of ten major nonferrous metals had risen 5.8 percent to 50.9 million tonnes in 2015. But production in December 2015 had fallen 4.6 percent year-on-year, making it the first year-on-year monthly decline for Chinese nonferrous metal production since December 2010.
Commodity prices are also expected to remain under pressure due to the strengthening US dollar, while demand for nonferrous metals from China’s real estate, power grid and cable, and electrical appliance industries are expected to stay soft, CNIA added.
Copper prices on the Shanghai Futures Exchange have fallen by around 25 percent since May last year, with the most active March contract last at 35,020 yuan per tonne on Monday.
The London Metal Exchange three-month copper price has also slumped by around 30 percent since May last year. It was recently at $4,430 per tonne on Monday.