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CMRA: Forecasts Change to Cloudy

Nonferrous, Legislation & Regulations, Conferences & Events, Auto Shredding, Metallics

Speakers at Chinese metals conference see uncertainty for 2009.

November 25, 2008

The China Nonferrous Metals Industry Association’s Recycling Metal Branch (CMRA) invited speakers from several Chinese metals industry sectors to its Nov.7-9 event.


Most of those invited had prepared presentations well ahead of the November event to meet a conference deadline. Since many of these presentations assumed continued growth in Chinese metals production for the remainder of 2008 and into 2009, many speakers offered revised comments once they reached the podium.


Zhang Tianjiao of Wukuang Star Futures Co. Ltd. was among the presenters who noted that his original presentation “was written before September 15” and that he “did not predict such a dramatic or drastic drop” in metals demand or pricing.


Zhang noted that prices for many commodities during the past two years had been “unimaginable” thanks largely to heavy demand for materials from China.


Even though Zhang’s slides and comments were prepared several weeks before his November presentation, he was already warning of that the “lending crisis was spreading all over the world.” He also noted that a stronger U.S. dollar could be a factor that could “increase the risks of metals price declines.”


Zhang’s September slides indicated that copper scrap and concentrate was likely to remain in short supply. His November comments wavered from that viewpoint somewhat, but he still predicted that “prices of metal have already declined to the bottom or near bottom” and that the steepest drops had already occurred.


Presenter Yang Jun of the China Futures Co. Ltd. advised attendees to engage in hedging to guard against the worst impacts of price volatility. Yang remarked, “Do not expect the economy to recover quickly,” adding that most “first quarter forecasts are over-optimistic.”


Hedging on transactions, said Yang, is “a very simple idea,” but that “very small and medium-sized enterprises do not understand this strategy.” The primary benefit, he said, is eliminating risk exposure. “Don’t think you are smarter than the market,” he warned attendees.


A presentation from Wang Biwen of the China Non-ferrous Metals Fabrication Industrial Association (CNFA) featured slides created in September that referred to the “exceptionally rapid” development of China’s wire and cable production industry. Wang tempered that language somewhat by commenting that currently there was “too much inventory” left over from “a full market.”


Although the presenters adjusted their comments to reflect the more subdued market, Zhang from Wukuang Star Futures advised attendees not to presume that the downturn was any more permanent than the bull market had been. “Do not listen to the predictions of others,” he stated. “You need to keep a clear mind.”


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