Market Report, Nonferrous Scrap, China

Nonferrous Scrap>>China>> David Chiao, Uni-All Group Ltd.

Nonferrous markets have been very difficult during the past few months for China. China has been staying behind in prices, not just in copper but also stainless steel, aluminium, zinc – all the nonferrous metals. I believe the funds are moving too fast.

The consumers here in China just couldn’t affect the price like this. This is what we have seen, and secondly because of the currency exchange. The Chinese yuan is pretty much fixed with the U.S. dollar. This is why, compared to the euro, the Chinese yuan has been staying very weak.

Psychologically, everyone in China, America and Europe is expecting the Chinese yuan to appreciate. Therefore, a lot of consumers are reluctant to exchange at the current rate. They are kind of waiting for a chance to make the yuan stronger, which will bring down the buying price and exchange rate. This is another reason there has not been a whole lot of action.

During the summer months, exporting to China had been pretty active, thus China still has pretty good inventory levels, especially in copper and aluminium. This is why consumers are not really reacting to the market, because they still see a lot of inventory available.

The overall inventory has been reduced quite sharply in the last month. I believe within another month to two months time the shortage will show up in the buying price. China’s price has been pretty much behind.

Domestic consumption is moving at a pretty good pace. From our point of view in China, there is still pretty good consumption and a pretty good market. What is really hurting is the export market. Export for China still contributes more than 40 to 50 percent of the total GDP, so when the export market is slowing down, certain types of consumers are not really placing many big orders now.

David Chiao, Uni-All Group Ltd. can be contacted at uniall@yahoo.com.