Non-ferrous metals prevent prices from falling

As the non-ferrous metal industry continues to experience a surge in production due to steady growth measures, the upstream supply of raw materials is recovering rapidly. However, downstream demand remains sluggish, with industrial manufacturing entering its off-season and end-user sectors growing at a slow pace. This imbalance between supply and demand suggests that it will take some time before inventory levels decrease and overcapacity is reduced. With rising input costs and processing fees, production of non-ferrous metals has accelerated. In November, China produced 531,000 tons of refined copper, marking an 11.6% year-on-year increase—an all-time high. Meanwhile, electrolytic aluminum output rose by 20.7% to 1.664 million tons compared to the same period last year. Although this was slightly lower than October’s peak, the volume remained strong. Zinc output also rebounded sharply, increasing by 7.3% month-on-month and 1.6% year-on-year, returning to positive growth. Lead production fell by 2.8% quarter-on-quarter but still saw a 10.4% year-on-year rise. High inventory levels are a major concern for the entire non-ferrous metal sector. By December 7th, LME copper inventories hit a record high of 255,200 tons, while copper stocks in bonded areas climbed to around 750,000 tons due to weak demand and increased domestic exports. LME aluminum inventories stayed at historical highs, reaching 5.2 million tons. Aluminum stock levels hit a two-year high of 460,000 tons, with social inventories hovering near 1 million tons. Zinc inventories on the LME also reached a new record of 1.236 million tons, while social stocks remained at historically high levels. Lead stocks continued to rise, reaching over 360,000 tons in the previous period. On the demand side, improvement has been limited. The non-ferrous metal rolling industry's seasonally adjusted PMI dropped to 49.49 in November, down 1.37 percentage points from the previous month. Despite an overall rise in the manufacturing PMI, demand for non-ferrous metals remained weak. The power sector, a major consumer of copper, faced challenges due to cold weather, which slowed construction activities. While air conditioning production picked up slightly in winter, refrigerator output was in its off-season, and demand for copper tubes in home appliances did not improve significantly. Copper companies saw their operating rate drop to 60.96% in November. The real estate sector showed some signs of recovery in November, but much of this was driven by developers accelerating sales and capital withdrawal ahead of the end of the year. Actual demand for aluminum alloy and galvanized sheet only improved after the Spring Festival next year. Additionally, environmental protection campaigns across the country have led to stricter regulations, affecting lead-related companies, especially small and medium-sized enterprises. Galvanized companies were also impacted by these measures.

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