Ministry of Industry and Information Technology: No Short Term Solution For Our Country’s Excess Nonferrous Metal Smelting Capacity

According to the Ministry of Industry and Information Technology, the Ministry has released the 2013 Operation Report on China’s Industrial Communication Industry. The report points out that there is no short term solution for our country’s excess nonferrous metal smelting capacity, inadequate ability to support mines and the industrial chain structure that is “big in the middle and small at both ends” and featured by the shortage of high value-added products.

The nonferrous metal industry sees overall stable production. From January to November, the added value of the nonferrous metal industry increased by 13.3% compared with the same period of last year, while the growth speed dropped by 0.7% over the same period of last year. Among the main products, the output of 10 nonferrous metals was 36.91 million tons, up by 10.5%, of which the output of electrolytic copper and electrolytic aluminum increased by 14.3% and 9.6% respectively. The output of copper material and aluminum material experienced a higher growth, with the cumulative growth rate both exceeding 20%.

The price showed a volatile downward trend. On November 29, the 3-month futures closing price of copper, aluminum and zinc at the Shanghai market was respectively RMB50,530/ton, 13,975/ton and 14,740/ton, notably lower than that of earlier this year.

The profit decline has slowed down, but enterprises’ production and operational difficulties remain serious. In the first 10 months, the nonferrous metal industry realized a profit of RMB143.8 billion, down by 6.8% year on year, while the decrease shrank by 12.6% over last year and was 5.6% less compared with the first half of the year. The profit rate of income from main business was 3.39%, decreasing by 0.57%; and the percentage of loss making enterprises was 19.81%, increasing by 1.09% year over year. Next year’s operational situation is likely to be more or less the same with this year. Although the overall market demand in the nonferrous metal industry is hard to pick up, with the indepth execution of the strategic emerging industry development plan and the continuous advancement of structural adjustment, nonferrous metal deep processing is expected to maintain a relatively fast growth, which will support the stable operation of the nonferrous metal industry. However, there is no short term solution for our country’s excess nonferrous metal smelting capacity, inadequate ability to support mines and the industrial chain structure that is “big in the middle and small at both ends” and featured by the shortage of high value-added products. The quickened recovery of the US economy will weaken the financial attribute of metals like gold and copper, and the price of nonferrous metals will possibly continue the volatility at the lower level. Meanwhile, cost of electricity, environmental protection and labor in the country will see relatively bigger increases, enterprises’ operational difficulties may remain for a while, and the profit realized is likely to be at the same level of this year.