Multiple Measures Have Been Adopted to Stabilize the Price of Metals to Ensure Stable and Orderly Economic Development

1.Chinese metal mining industry has adopted the policy of “capacity control and production control”,which has helped to significantly increase operating benefit

According to the data from National Bureau of Statistics:in the first 10 months this year,China had cumulatively produced 734.07 million tons of pig iron,977.05 million tons of crude steel,and 1122.35 million tons of steel,respectively presenting a YOY decrease of -3.2% and -0.7%,and a YOY increase of 2.8%.China has produced 53.76 million tons of 10 types of nonferrous metals,presenting a YOY increase of 7%,including 8620000 tons of copper,32.37 million tons of primary aluminum,5960000 tons of lead and 5430000 tons of zinc,respectively presenting a YOY increase of 8.4%,6.5%,13.3% and 3.2%.Meanwhile,according to the data from National Bureau of Statistics,Metallurgical Mines’Association of China and General Administration of Customs of China,from January to October,China had cumulatively produced 3297.16 million tons of raw coal and 394.10 million tons of coke,respectively presenting a YOY increase of 4.0%and 0.1%.China had cumulatively produced 823.111 million tons of raw iron ore(amounting to 200 million – 210 million tons of fine iron powder),a YOY increase of 11.5%.China had imported 933.484 million tons of iron ore(iron ore and its concentrate),a YOY decrease of 4.3%.

In terms of profit,from January to October,2021,the cumulative operating income of metal mining industry nationwide reached RMB 14477.24 billion and recorded profit reached RMB 790.09 billion,with industrial profit presenting a YOY increase of 131.47%.The recorded profit of metal mining industry accounted for 11% of total profit of abovescale industrial enterprises nationwide,i.e.RMB 7164.99 billion.More than that,the growth is far more significant than the average growth of abovescale industrial enterprises nationwide,i.e.42.2%.

Meanwhile,metal mining industry became the first one to realize strict carbon emission requirements in China,and iron and steel industry and aluminum industry has implemented strict policy of “capacity control and production control”.In 2020,our per-ton-steel carbon emission was only 1.46 tons,amounting to about 543kg of standard coal,lower than the standard required by World Steel Association that per-ton-steel carbon emission should not exceed 1.58 tons and coking coal consumption of crude steel should not exceed 588 kg of coking coal.

To sum up,in 2021,our metal mining industry has gained stable development under the strict requirement of “dual carbon”.The industry not only continues to play the role of “the pillar of foundation of national economy” but also is providing robust support for our economy to make transformation and development in the brand new development pattern.

2.During development in 2021,problems are also exposed in our metal mining industry that demand prompt solutions

(1)Floating capitals concentrate in the resource end worldwide,resulting in a surge in raw material price in metal mining industry this year.However,soaring price is continually driving market operation risks up

Global economy slipped into recession in 2020 due to Covid-19.In order to ease the impact of the pandemic,the whole world has adopted quantitative easing policies to stimulate economic growth.According to relevant information,as of the end of September,the cumulative capitals released by quantitative easing policies during antipandemic period worldwide reached as high as USD 16 trillion,greatly increasing capital mobility all around the globe.Bulk commodity raw material market occupies the upstream of economic chain,which means it is safer than the other sections,and it has always been the preferential choice of capitals.Capitals flowing to the safer bulk metal commodity market became an important reason for the surge in commodity price.

As of November,30,2021,there had been an average increase of 49% in the price of representative commodities of ferrous and nonferrous metals including copper,zinc,nickel,cobalt,lithium carbonate,tungsten,antimony,rebar and iron ore.Among them,top 5 in growth were lithium carbonate(136%),antimony(65%),iron ore(51%),copper(50%)and aluminum(42%).Four types of metals had higher growth than the average growth,i.e.lithium carbonate,antimony,iron ore and copper.These four types are just the representatives of our strategic metals in ferrous,nonferrous,advantageous and new energy metals.Therefore,to some extent,“China factor” is playing a role in the whole price pattern.

From the perspective of the growth in the price of metals,ever-increasing price is rapidly building up market risks.Once the downstream consumption transmission is blocked or the publicity stunt capitals are withdrawn,the price of metals will drop dramatically,which will greatly hinder the continuous and stable development of our economy.

(2)“Chinese demand” has grown into the pillar of global metal mining expectations.However,“Chinese demand” has also become an excuse for international mining giants to adopt skimming price for dividends from Chinese economic development

In the first three quarters of 2021,China reached GDP of RMB 82313.1 billion,presenting a YOY growth of 9.8%.As a country that became the first one to defeat Covid-19 pandemic,China infused a “cardiotonic” to global anti-pandemic campaign with its unique and irreproducible anti-pandemic strategies and nationwide vaccination.After the outbreak of Covid-19 pandemic in 2020 all around the globe,China has been acting as the backbone and important engine in the recovery of global economy.The rapid growth of Chinese economy has driven the demands for bulk metallic mineral products especially copper and iron,and shaped a pattern with below features:Firstly,metals that have financial attribute(futures exchange).These metals always win the favor of capitals relying on their performance in both spot market and futures market.Secondly,metals that are necessary for China to make economic development but are in short supply relatively,such as copper and iron ore.These metals are so badly needed by China that capitals speculate on them multiply.Thirdly,a mild rise in the price of Chinese traditional advantageous metals due to the fact that demands from other countries have not fully recovered yet.Fourthly,driven by “Chinese demand”,the price of metals having new energy attribute have surged continuously.“Chinese demand” has become a huge excuse for international mining giants and financial capitals to adopt skimming pricing for dividends from Chinese economic development.

(3)Recurrence of pandemic now and then worldwide might lead global economy to a brand new development model,while internal and external uncertainties for economic development will increase as a result.

Global economy started to develop in a brand new model while the world was still in the throes after Covid-19 pandemic in 2020.Currency increasing and domestic demand expanding are two important measures for all countries to drag economic development.Continuous inflow of floating capital has been elevating the price of metal raw material and energy,and the whole world is exposed to the pressure of high inflation.Due to recurrence of pandemic now and then worldwide after 2021,economy around the world is getting recovered sluggishly.Global economy is exposed to the shock similar to a “joint” shock created by 1929 global economic depression and 2008 subprime crisis.China,as the first country to defeat the pandemic,duly put forth the new economic development concept of “prioritizing internal flows” under the circumstance of continuous emergences of uncertainties in global economic development,and took the lead in global economic development.In this sense,it seems that global economy is experiencing a “reboot” kind of development model instead of a model of economic recovery as expected,which will inevitably result in bigger uncertainties in global economy.

(4)Due to “dual carbon” policies,metal mining industry is faced with pressures coming from multiple aspects,i.e.supply guaranteeing,price stabilizing,development and emission reduction.The whole industry pattern might experience great adjustment and the industry will encounter more uncertainties in the development.

Due to “dual carbon” policies,metal mining industry is faced with pressure coming from multiple aspects,i.e.supply guaranteeing,price stabilizing,development and emission reduction within a definite time.The pressure of high consumption and high emission will lead to major adjustments in the pattern of Chinese metal mining industry

Due to the dual pressure of environmental protection and raw material,the new industrial layout will gradually come into shape in steel industry in the future,i.e.newly established blast furnace and converter long-process steelmaking in coastal areas and short-process electric steelmaking in inland provincial capital cities or main steel using areas will grow into major productive forces;nonferrous industry probably will make concentrated deployments centering on power supply and energy supply in key production areas.Therefore,the industrial pattern featuring joint development involving new energy,clean energy industry and nonferrous industry chain will come into shape.The industrial pattern probably will drive the changes and transformations of the production pattern of steel,which is now in the competition of cost,and processing industry in the downstream of nonferrous industry,and logistics and business flow of the entire commodity supply chain.Meanwhile,uncertainties in the industry start to increase.

(5)Shortage of continuous and stable supply of raw materials is becoming the biggest problem for Chinese metal mining industry

Shortage of continuous and stable supply of raw materials is still the biggest fetter for Chinese metal mining industry to make developments,and is continuously threatening our economic development.For the reasons of history and natural endowments,global quality mineral resources are pretty much monopolized by a very small number of international mining giants.It has not been very long since China first started “going global” policy,and China is lacking in experience of investing and operating with international mining giants,which resulted in low success rate in our overseas investment.What is worse,Covid-19 pandemic has not been well controlled worldwide.China’s important metal mineral resource countries,such as South Africa,Brazil,Chile,Peru,Indonesia and India,have to “lock down their countries” due to severe pandemic.“Unavailability of supply and shortage of supply” has seriously hindered the continuous and stable raw material supply to our metal mining industry.In the meantime,global geopolitical risk,which is getting increasingly fierce,has always been threatening the continuous and stable raw material supply to our metal mining industry.

(6)In the context of the new economic development model of “prioritizing internal flows”,the development and utilizing of secondary metal field is quite insufficient

In the face of Covid-19 pandemic worldwide and so many uncertainties in economic development,China duly put forth the new economic development concept of “prioritizing internal flows” that emphasizes the importance of domestic demand expanding and the strict requirements of “Emission Peak” by 2030.The new economic development model has raised higher requirements for the recycling of our domestic resources,especially metal mining resources.China has a short history of industrialization,and our metal accumulation totally relies on primary mineral resources.Compared to developed countries like USA,Japan and European countries,China is now in an immature state in terms of overall planning,technologies,and industrial maturity of metal recycling,and our per-capita amount of secondary metal falls far behind that of developed countries.Besides,China is now in the stage of industrialized development,where iterative application of social metal accumulation requires huge support from primary metal mineral resources,and secondary metal utilizing ability is far from being strong enough for us to realize self-supporting cyclic development in metal mining resources.On the whole,our country has to address many problems in resources,technologies,capital investment,awareness and concept,and environmental policies in the process of developing and utilizing secondary metals.

3.Advice for the development of Chinese metal mining industry

(1)To continue the implementation of stable currency policies and use effective policies to guide capitals to economic-base industrial areas,so as to ensure the benign cycle and development of these industries.

(2)To stick to the basic policies of opening-up to the outside world and “OBOR”,to work together to overcome difficulties and supply each other's needs,so as to ensure the effective development of our overseas metal mining resources,and the successful exploiting and returning back of our overseas equity mining resources.In the context of severe pandemic and complicated international political situation,to ensure a safe and stable supply of the metal mineral resources that are necessary for national economic development.

(3)To devote greater efforts to exploiting relatively quality mineral resources nationwide,and to give play to the function of domestic resources as a “ballast stone”,so as to improve our selfsupporting ability.

(4)To comprehensively support the new economic development model of “prioritizing internal flows”and the development of our secondary metal field under the requirement of “dual carbon”.

(5)To continue the strict implementation of the policies of capacity equivalent replacement or capacity reducing replacement,and to strictly implement policies of “capacity control and production control”,so as to ensure a continuous,stable and healthy development of national economy.

(6)The rise in the price of metal mineral products in 2021 mainly resulted from the “dual engine”of China factor and financial capital.Bulk metal commodities are the basis for the development of national economy.Serious inflation is going to happen once downstream consumption is stunted and the price fails to transmit downstream,and this is a big threat to the development of national economy.Therefore,it is important to continue to greatly standardize financial market order and take severe measures against speculation of financial capitals;to strictly investigate malicious manipulation in spot market and take severe measures against hoarding and cornering,so as to standardize effective transactions in physical market.In this way,with the continuous implementation of bi-phase adjustments to physical economy and financial market and effective and powerful alleviating policies,the inflation pressure and threat on the entire national economy resulting from the rise in the price of bulk metal mineral products will be effectively alleviated.This is a crucial step for China to alleviate risks,stabilize economy and gain sustainable development in the future for the long term.