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New Year and new themes for China industrial metals trade - Andy Home-2018 China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
3/6/2018 Copper exhibition -non-ferrous metals expo |
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Reuters reported that China still dominates the pricing landscape for the base metals pack traded on the London Metal Exchange, albeit in increasingly complex ways. East meets West physically in the form of China''s trade flows, although these too have evolved over time into a multidimensional matrix.
China''s January trade figures, released over the weekend, come with the usual interpretative challenges of two new year holiday periods but clearly signal a new configuration.
These are the emerging themes to watch for in the coming months.
ALUMINIUM SEMIS EXPORTS ON THE RISE
China''s exports of aluminium semi manufactured products are rebuilding momentum. At 390,000 tonnes in December and 400,000 tonnes in January, they are once again running at the very top end of the range that has defined monthly flows for the last three years.
The timing is politically charged since US President Trump is considering a range of potential trade sanctions against imports of aluminium, particularly aluminium "semis" from China.
But right now the mechanics of arbitrage are trumping politics and pushing surplus metal out of the country.
Despite the closure of "illegal" production capacity and winter heating season restrictions, metal is piling up in the Shanghai Future Exchange''s warehouse network. Stocks have risen from 100,722 tonnes at the start of January 2017 to a current record 811,839 tonnes.
Such tangible evidence of domestic oversupply has translated into ShFE prices lagging London''s bull run, leading to a widening arbitrage gap through which metal is now flowing.
Trump, however, may yet trump the arbitrage.
China is the largest overseas supplier of "semis" to the US market and will be at the heart of any tariff disruption to global aluminium trade.
COPPER SCRAP IMPORTS PLUNGE
China''s imports of copper scrap haven''t historically grabbed the headlines but they might this year.
A series of overlapping restrictions on who can bring what sort of material into China resulted in some very low allocations in the opening rounds of copper scrap import quotas for this year.
That early warning sign of potential disruption to the scrap section of the copper supply chain appears to be born out by a slump in January imports.
They fell to 199,900 tonnes from an average 262,000 tonnes in the fourth quarter of last year.
Imports last fell below the 200,000-tonne level in February 2015 and again in February 2016, both New Year holiday months.
Scrap interacts with two parts of the supply chain since it is used as feed by producers of refined metal and by product-makers.
-2018 China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
-Non-Ferrous Metal exhibition, 2018
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