China pushes for metals market consolidation
Rationalization of base metals supply proposed by Chinese government
By Tom Stundza -- Purchasing, 5/11/2009 9:07:00 AM
China’s State Council, China's cabinet, will push for consolidation of base metals production through 2011. The council’s plan to revitalize the country’s nonferrous metals sector will seek to have the top 10 firms controlling 90% of copper production by 2011, 70% of aluminum, 60% of lead and 60% of zinc.
A Reuters News report says the State Council also said it would examine the case for further tax changes and more state stockpiling of base metals. It also confirmed targets to close outdated production capacity. “These are generally positive initiatives. The plans for copper and zinc are very positive,” senior commodities analyst Mark Pervan at the Australia and New Zealand Banking Group tells Reuters.
News services also say that Chinese newspapers available in Beijing and Shanghai quote Zhang Fengkui, a researcher at the raw materials division of the Ministry of Industry and Information Technology, as saying China plans to invest $2.93 billion in upgrading facilities at the country's base metals producers.
One sign of the internal problem nonferrous metals problem is reported by MarketWatch.com, which says that zinc smelters restarted production in recent months despite no demand surge from automakers for galvanized steel. Upshot: The zinc supply is in surplus again, says Hu Deyong, a senior official with China Nonferrous Metal Industry Association at a metal forum in Beijing.
Li Xialin, vice chairman at Zhongjin Lingnan Nonfemet Co., a key zinc smelter in China, tells the forum that “the market fundamentals haven't changed. Overcapacity and weak demand are still the key issues.”
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