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
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June 13-14, 2019
Changsha, Hunan, China
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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
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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 Mr. Wang Xiangyang, Vice General Manager Assistant of Shenyang Chengtong Metal Co., Ltd.
Shenyang Chengtong Metal Co., Ltd. is affiliated with China Chengtong Metal (Group) Corporation, which subjects to the State-owned Assets Supervision and Administration Commission (the “SASAC”) of the State Council. The main business covers copper, aluminum, lead, zinc, nickel, minor metal, and ferroalloy. Currently, the sales volume of nonferrous metals reaches 120,000tpy, and the value totals RMB3.5billion every year. In this case, the company has been the largest trader of nonferrous metals in Northwest China.
Wang Xiangyang: Copper prices under pressure but outlook still optimistic in 2011
----Interview with Mr. Wang Xiangyang, Vice General Manager Assistant of Shenyang Chengtong Metal Co., Ltd.
Asian Metal: Good day, Mr. Wang! Thank you very much for the chance of exchanging market opinions with you. Firstly, copper prices kept falling in the past days, and how do you think about that?
Wang: In fact, the current copper market trend is in line with our expectation before, and the direction mainly depends on the policy changes and the psychological expectation, not the fundamentals. Although the exchange rate influences copper prices, it is not the key factor.
Asian Metal: Some participants attributed the recent price tumble to a series of unfavorable macro news. On the one hand, as investors considered Ireland's deteriorating sovereign-debt situation, the US dollar against the Euro rebounded to a seven-week high, and most base metal prices slid. On the other hand, China’s central bank raises the deposit reserve requirement ratio, and may continue to increase the interest rate. How do you think about that?
Wang: Copper prices increase so greatly and rapidly, and the retreat is in accord with our expectation. In addition, with the year-end approaching, China might continue to tighten moves to curb inflation. Furthermore, China consumer price index rises so fast, and China’s tightening moves are on the way.
Asian Metal: What do you think about the Ireland’s debt problems?
Wang：The Ireland’s debt situation will weigh on the sentiment on copper market, but it will not deteriorate as that in the first half of this year. However, China would raise the interest rate, which will attract more money into China.
Asian Metal: Then do you think how long will copper prices fall? Will the price rebound further after a consolidation?
Wang: I think copper prices may not surge in the near term, and the whole copper market may not improve before next year. With the year-end coming, Chinese government will step up measures to control inflation. Currently, copper market trend mainly depends on macro policies. Therefore, we prefer to watch the market for a while, and wait for a further change of CPI.
Asian Metal: Except China’s expected tightening moves, US Federal Reserve Bureau initiated a new round of quantitative easing to stimulate the sagging economy. Furthermore, US government may continue to step up more measures to boost the economy. If it comes true, copper futures on the LME are likely to go up further. In this case, copper prices in China may follow suit. Is that right?
Wang: At first, I think copper price trend in London usually lags behind that of in Shanghai this year, and copper price direction in China plays an important role in the whole market. In addition, The US Federal Reserve announced that they will buy USD 600 billion of U.S. government bonds over the next eight months in an effort to kick-start a "disappointingly slow" economic recovery. However, I think it will have little influence on base metal markets. The Federal Reserve may continue to step up measures to stimulate the economy.
Asian Metal: Recently, as investors considered Ireland's deteriorating sovereign-debt situation, the US dollar against the Euro rebounded to a seven-week high. Moreover, China is still tightening monetary policy.
Wang: You mean the interest rate war, which will continue in the near term. In this case, many countries may step up measures, and the Euro will not slump as that in the first half of this year. In addition, the Ireland’s debt problem will impact on copper market, but not definitely. In the long term, copper market outlook is still very optimistic.
Asian Metal: Additionally, China auctioned aluminum, lead and zinc from state reserves in the past days, and do you think it will sell copper in the following days?
Wang: In fact, China State Reserve Bureau sold base metals in order to control the price rally, and the quantity is limited. As far as I know, the State Reserve Bureau holds around 200,000t of copper cathodes. If it sells copper cathodes, the quantity is not enough to influence the market trend. Therefore, I do not think it will sell copper cathodes in the near term. In 2011, there will be still a lot of liquidity in the commodity markets, and more money will flow into copper market. Therefore, I am still optimistic about copper market next year. However, the sentiment in copper market becomes a little weak, and copper prices may retreat further.
Asian Metal：How do you think about copper supply and demand currently?
Wang: In fact, copper fundamentals do not play important roles in the price trend.
Asian Metal: Since August, many copper products producers began to reduce production due to power shortage, since local government cut power to meet the energy-saving targets. In this case, copper demand keeps shrinking in the domestic market.
Wang: In the second half of this year, copper demand from Chinese consumers does weaken, but the shrinking demand has little influence on copper market trend.
Asian Metal: What about the business of your company?
Wang: Our sales volume of copper cathodes keeps falling in the second half of this year. From September, copper demand has decreased by about 1/3 in the Northwest China. One the one hand, orders from end-users are on the decline. On the other hand, consumers begin to purchase copper scraps instead of copper cathodes, since the price gaps keep widening. In this case, it is difficult for us to conclude deals.
Asian Metal: Ok, thanks for Mr Wang to share your views with us.
Wang: Thank you.
Wang: In fact, the current copper market trend is in line with our expectation before, and the direction mainly depends on the policy changes and the psychological expectation, not the fundamentals. Although the exchange rate influences copper prices, it is not the key factor.
Asian Metal: Some participants attributed the recent price tumble to a series of unfavorable macro news. On the one hand, as investors considered Ireland's deteriorating sovereign-debt situation, the US dollar against the Euro rebounded to a seven-week high, and most base metal prices slid. On the other hand, China’s central bank raises the deposit reserve requirement ratio, and may continue to increase the interest rate. How do you think about that?
Wang: Copper prices increase so greatly and rapidly, and the retreat is in accord with our expectation. In addition, with the year-end approaching, China might continue to tighten moves to curb inflation. Furthermore, China consumer price index rises so fast, and China’s tightening moves are on the way.
Asian Metal: What do you think about the Ireland’s debt problems?
Wang：The Ireland’s debt situation will weigh on the sentiment on copper market, but it will not deteriorate as that in the first half of this year. However, China would raise the interest rate, which will attract more money into China.
Asian Metal: Then do you think how long will copper prices fall? Will the price rebound further after a consolidation?
Wang: I think copper prices may not surge in the near term, and the whole copper market may not improve before next year. With the year-end coming, Chinese government will step up measures to control inflation. Currently, copper market trend mainly depends on macro policies. Therefore, we prefer to watch the market for a while, and wait for a further change of CPI.
Asian Metal: Except China’s expected tightening moves, US Federal Reserve Bureau initiated a new round of quantitative easing to stimulate the sagging economy. Furthermore, US government may continue to step up more measures to boost the economy. If it comes true, copper futures on the LME are likely to go up further. In this case, copper prices in China may follow suit. Is that right?
Wang: At first, I think copper price trend in London usually lags behind that of in Shanghai this year, and copper price direction in China plays an important role in the whole market. In addition, The US Federal Reserve announced that they will buy USD 600 billion of U.S. government bonds over the next eight months in an effort to kick-start a "disappointingly slow" economic recovery. However, I think it will have little influence on base metal markets. The Federal Reserve may continue to step up measures to stimulate the economy.
Asian Metal: Recently, as investors considered Ireland's deteriorating sovereign-debt situation, the US dollar against the Euro rebounded to a seven-week high. Moreover, China is still tightening monetary policy.
Wang: You mean the interest rate war, which will continue in the near term. In this case, many countries may step up measures, and the Euro will not slump as that in the first half of this year. In addition, the Ireland’s debt problem will impact on copper market, but not definitely. In the long term, copper market outlook is still very optimistic.
Asian Metal: Additionally, China auctioned aluminum, lead and zinc from state reserves in the past days, and do you think it will sell copper in the following days?
Wang: In fact, China State Reserve Bureau sold base metals in order to control the price rally, and the quantity is limited. As far as I know, the State Reserve Bureau holds around 200,000t of copper cathodes. If it sells copper cathodes, the quantity is not enough to influence the market trend. Therefore, I do not think it will sell copper cathodes in the near term. In 2011, there will be still a lot of liquidity in the commodity markets, and more money will flow into copper market. Therefore, I am still optimistic about copper market next year. However, the sentiment in copper market becomes a little weak, and copper prices may retreat further.
Asian Metal：How do you think about copper supply and demand currently?
Wang: In fact, copper fundamentals do not play important roles in the price trend.
Asian Metal: Since August, many copper products producers began to reduce production due to power shortage, since local government cut power to meet the energy-saving targets. In this case, copper demand keeps shrinking in the domestic market.
Wang: In the second half of this year, copper demand from Chinese consumers does weaken, but the shrinking demand has little influence on copper market trend.
Asian Metal: What about the business of your company?
Wang: Our sales volume of copper cathodes keeps falling in the second half of this year. From September, copper demand has decreased by about 1/3 in the Northwest China. One the one hand, orders from end-users are on the decline. On the other hand, consumers begin to purchase copper scraps instead of copper cathodes, since the price gaps keep widening. In this case, it is difficult for us to conclude deals.
Asian Metal: Ok, thanks for Mr Wang to share your views with us.
Wang: Thank you.