Singapore 01/07/2016 - China’s non-ferrous metals market may have bottomed out but outstanding problems like weak demand and unsustainable price increases is making it difficult for the domestic market to rebound, China’s Nonferrous Metals Industry Association (CNIA) said in a late-June report.
The Chinese non-ferrous metals market has bottomed out and is stabilising as profits in the sector reversed their decline while demand improved recently, said the association.
But the industry faces major issues like weaker demand, unsustainable price increase, rigid increase in production costs and corporate financing difficulties, it noted.
“The basic conditions for recovery are not substantial and there remains a risk of short-term correction in the market,” it said.
The growth rate of profits in China’s non-ferrous metals industry had improved since April. Total profits in the sector grew 13.4 percent year-on-year to 53.05 billion yuan ($7.99 billion) in January-May, picking up from a 6.6-percent growth in the first four months of the year.
The January-April growth rate had marked the first time the industry's profit had grown positively after registering year-to-date declines since September 2015 and in the first quarter of this year.
But concerns remain over China’s stuttering pace of economic recovery which may not bode well for the local non-ferrous metals sector for the rest of this year.
On Friday, the Caixin Chinese manufacturing PMI for June came in at 48.6, which was below forecast of 49.1 and May’s number of 49.2.
It was the index’s third monthly decline in a row and marked the steepest deterioration in manufacturing conditions since February.