12th Rare Earth Summit
May 27-28, 2021
Hangzhou, Zhejiang, China
11th Aluminum Raw Materials Summit
May 20-21, 2021
Hangzhou, Zhejiang, China
9th Magnesium Summit
April 15-16, 2021
Hangzhou, Zhejiang, China
13th World InBiGeGa Forum
March 25-26, 2021
Hangzhou, Zhejiang, China
7th World Antimony Forum
June 13-14, 2019
Changsha, Hunan, China
7th Refractory & Abrasive Materials Summit 2019
May 23-24, 2019
Qingdao, Shandong, China
10th Aluminum Raw Materials Summit
May 16-17, 2019
Zhengzhou, Henan, China
11th Rare Earth Summit
May 9-10, 2019
Qingdao, Shandong, China
8th Magnesium Summit
April 11-12, 2019
Zhuhai, Guangdong, China
12th World InBiGeGa Forum
March 14-15, 2019
Zhuhai, Guangdong, China
6th World Manganese & Selenium Forum
May 21-22, 2018
Hainan Sanya, China
Interview with Liao Zhanhong, manager of China National Nonferrous Metals Industry North-China Corporation
China National Nonferrous Metals Industry North-China Corporation belongs to central company and the controlling shareholder is China Nonferrous Metal Mining, an enterprise solely funded by the State who is engaged in non-ferrous metal trading. The company mainly operates copper, aluminum, lead, zinc, tin and nickel with the sale volume over 50,000tpy, and sale value reaches at two billion yuan. Meanwhile, the company enjoys high popularity in Tianjin and surrounding areas.
Liao Zhanhong: Copper price under pressure to fluctuate largely
----Interview with Liao Zhanhong, manager of China National Nonferrous Metals Industry North-China Corporation
Asian Metal: Hello, Mr Liao. Firstly, I would like to express my thanks for your acceptation of the interview from Asian Metal. The east coast in Japan suffered from 9-magnitude earthquake and the ensuing tsunami on 11th March. How do you think the situation influences on the copper market?
Mr Liao: Japan experienced this disaster and the ensuing tsunami as well as the nuclear reactor explosion with serious damage. In the recent several decades, the economy in Japan ranked the second in the global market. This disaster will definitely bring bad influence on the Japanese economy, even in the whole world. The copper price will bear pressure before the start of reconstruction.
Asian Metal: Copper price continued to rebound after a short-lived decrease. In your opinion, what is the main reason? Can the copper price keep stable at the current level? How long this upward trend can last?
Mr Liao: It is technical rebound after the decrease. Besides, US dollar kept weakening due to the earthquake in Japan and ongoing crisis in North Africa, which supported the rebound of copper price to some extent. It needs some time to observe if the price can stand firmly. In terms of the current situation, I tend to anticipate that the copper price would fluctuate largely.
Asian Metal: Will the high oil prices caused by chaos in North Africa and the debt problems in Europe Union continue to affect the copper price?
Mr Liao: The high oil prices and debt problems in Europe will surly continue to affect the copper price. Situation in North Africa and Middle East is unclear from mid-February and the international oil prices kept rising, exceeding USD100 per barrel for crude oil. At present, it is unsure about the situation in these regions with increasing uncertainty of international crude oil trend. The price is expected to rise in the short term and the supply turns tight. The price correction occurred as expected, which is likely to push up the inflation expectation.
Moody lowered the sovereignty credit rating for three grades in Greece early this month and pointed that the fiscal reform plan was confronted with obvious operational risks. It is unlikely to meet the solvency standards after 2003 and there is possibility of causing debt recombination. After that, the grade in Spain decreased from Aa1 to Aa2 with negative expectation. Besides, the ten-year government bonds rate reached a peak since the Euro came out in Portugal and indicated the seriousness of sovereignty debt problems in the second-line countries in Euro zone. It is indeed difficult to resolve the problem facing the rising cost. At present, the financial condition in Europe is the main factor to affect the investors, the same condition as that of in April last year. Generally speaking, the debt problem in Europe will continue to suppress copper market.
Asian Metal: At present, some insiders are focusing that China will continue to tighten monetary policy to restrain inflation. What is your opinion on this policy?
Mr Liao: According to the data from NBS, CPI (consumer price index) increased by 4.9% year on year in February with the same pace as that in January, but it was higher than that of the expectation from economists. CPI stands highly at present and commodity prices are still under pressure. At present, China continues to tighten the monetary policy to curb inflation, which will bring bad influence on commodity market. Under the loose monetary policy, the liquidity is great, resulting in rapid increase of commodity price. Meanwhile, the speculation in this market has an impact on the social and economic development. The tightening moves are to prevent the overheated economy, benefiting the regulation of the economic structure and urging the economy to develop more scientific and reasonable. Besides, China tightens the monetary policy, causing tight liquidity, which restrains the rapid increase of copper price. However, this policy has both sides. China constantly raises the interest and the reserve requirement with increasing pressure of capital turnover on upstream and downstream plants and restrains the copper demand to some extent.
Asian Metal: The copper inventory keeps rising in London and China at present. In addition, most large-sized smelters are expanding the capacity. Will these actions suppress the copper price?
Mr Liao: The copper inventory continued to increase in London and China. Copper inventory on the LME is very closes to 440,000t while that of in Shanghai is up to over 170,000t, which will definitely suppress the copper price. In addition, the large-sized smelters are expanding the capacity, bringing no influence on copper price.
Asian Metal: Shang Fushan, the vice-chairman of China Nonferrous Metal Industry Association revealed the draft of the “12th Five-year Plan” in non-ferrous industry. According to the draft, the output of ten non-ferrous metals (copper, aluminum, lead, zinc, nickel, tin, antimony, magnesium, titanium sponge and mercury) must be controlled within 41 million tons, and the copper output is 8.3 million tons. What do you think about that?
Mr Liao: It is reported that the copper demand in China will rise to 8.5 million tons ended by 2015 and the output will be controlled within 8.3 million tons, basically the same as the current supply and demand condition. Therefore, it will not affect the copper market.
Asian Metal: How is the operation in your company?
Mr Liao: The sale volume of copper cathodes is around 2,000tpm. Although it is the bullish season for copper consumption, there is no improvement of demand, and our sale volume is on the decline.
Asian Metal: Thank you again for your share of your opinion on the copper market. Wish your company a better development in the future.
Mr Liao: Japan experienced this disaster and the ensuing tsunami as well as the nuclear reactor explosion with serious damage. In the recent several decades, the economy in Japan ranked the second in the global market. This disaster will definitely bring bad influence on the Japanese economy, even in the whole world. The copper price will bear pressure before the start of reconstruction.
Asian Metal: Copper price continued to rebound after a short-lived decrease. In your opinion, what is the main reason? Can the copper price keep stable at the current level? How long this upward trend can last?
Mr Liao: It is technical rebound after the decrease. Besides, US dollar kept weakening due to the earthquake in Japan and ongoing crisis in North Africa, which supported the rebound of copper price to some extent. It needs some time to observe if the price can stand firmly. In terms of the current situation, I tend to anticipate that the copper price would fluctuate largely.
Asian Metal: Will the high oil prices caused by chaos in North Africa and the debt problems in Europe Union continue to affect the copper price?
Mr Liao: The high oil prices and debt problems in Europe will surly continue to affect the copper price. Situation in North Africa and Middle East is unclear from mid-February and the international oil prices kept rising, exceeding USD100 per barrel for crude oil. At present, it is unsure about the situation in these regions with increasing uncertainty of international crude oil trend. The price is expected to rise in the short term and the supply turns tight. The price correction occurred as expected, which is likely to push up the inflation expectation.
Moody lowered the sovereignty credit rating for three grades in Greece early this month and pointed that the fiscal reform plan was confronted with obvious operational risks. It is unlikely to meet the solvency standards after 2003 and there is possibility of causing debt recombination. After that, the grade in Spain decreased from Aa1 to Aa2 with negative expectation. Besides, the ten-year government bonds rate reached a peak since the Euro came out in Portugal and indicated the seriousness of sovereignty debt problems in the second-line countries in Euro zone. It is indeed difficult to resolve the problem facing the rising cost. At present, the financial condition in Europe is the main factor to affect the investors, the same condition as that of in April last year. Generally speaking, the debt problem in Europe will continue to suppress copper market.
Asian Metal: At present, some insiders are focusing that China will continue to tighten monetary policy to restrain inflation. What is your opinion on this policy?
Mr Liao: According to the data from NBS, CPI (consumer price index) increased by 4.9% year on year in February with the same pace as that in January, but it was higher than that of the expectation from economists. CPI stands highly at present and commodity prices are still under pressure. At present, China continues to tighten the monetary policy to curb inflation, which will bring bad influence on commodity market. Under the loose monetary policy, the liquidity is great, resulting in rapid increase of commodity price. Meanwhile, the speculation in this market has an impact on the social and economic development. The tightening moves are to prevent the overheated economy, benefiting the regulation of the economic structure and urging the economy to develop more scientific and reasonable. Besides, China tightens the monetary policy, causing tight liquidity, which restrains the rapid increase of copper price. However, this policy has both sides. China constantly raises the interest and the reserve requirement with increasing pressure of capital turnover on upstream and downstream plants and restrains the copper demand to some extent.
Asian Metal: The copper inventory keeps rising in London and China at present. In addition, most large-sized smelters are expanding the capacity. Will these actions suppress the copper price?
Mr Liao: The copper inventory continued to increase in London and China. Copper inventory on the LME is very closes to 440,000t while that of in Shanghai is up to over 170,000t, which will definitely suppress the copper price. In addition, the large-sized smelters are expanding the capacity, bringing no influence on copper price.
Asian Metal: Shang Fushan, the vice-chairman of China Nonferrous Metal Industry Association revealed the draft of the “12th Five-year Plan” in non-ferrous industry. According to the draft, the output of ten non-ferrous metals (copper, aluminum, lead, zinc, nickel, tin, antimony, magnesium, titanium sponge and mercury) must be controlled within 41 million tons, and the copper output is 8.3 million tons. What do you think about that?
Mr Liao: It is reported that the copper demand in China will rise to 8.5 million tons ended by 2015 and the output will be controlled within 8.3 million tons, basically the same as the current supply and demand condition. Therefore, it will not affect the copper market.
Asian Metal: How is the operation in your company?
Mr Liao: The sale volume of copper cathodes is around 2,000tpm. Although it is the bullish season for copper consumption, there is no improvement of demand, and our sale volume is on the decline.
Asian Metal: Thank you again for your share of your opinion on the copper market. Wish your company a better development in the future.