Short news metals
June 5, 2014 Category Automotive Metals & Minerals, Short news metals
- China will close more steel and cement plants this year than originally planned to deal with oversupply in capacity, the Ministry of Industry and Information Technology (MIIT) said. This year will see the elimination of 28.7 million tons of annual steel capacity and 50.5 million tons of cement capacity. China’s crude steel output rose to a record high of 779 million tons last year. The Ministry also said 420,000 tons of annual aluminum capacity and 115,000 tons in lead smelting will be eliminated this year.
- A group of workers in China made more than CNY2 million by secretly using a gold-plating bath at an electronics factory in Chongqing and then selling the precious metal.
- Baoshan Iron & Steel Co has lowered product prices for a second straight month, signaling a lack of confidence in near-term demand. It cut hot-rolled steel prices for June delivery by CNY80 a ton and cold-rolled steel prices by CNY100 per ton. This does not reflect seasonal factors as Baosteel has lowered prices for June only twice since 2006. Baosteel is China’s largest listed steel company, and its pricing policy typically serves as a benchmark for the rest of the industry in China. It supplies about half of the nation’s auto sheet market. Baosteel cited lower steel prices when it reported first-quarter net profit fell 7% from a year earlier to CNY1.51 billion.
- The Shanghai Gold Exchange will launch Shanghai Gold – a spot gold trading mechanism similar to Loco London Gold – in Shanghai’s pilot free trade zone (FTZ) this year. Shanghai Gold is a new international pricing mechanism to boost the city’s position as an international financial center, Xu Luode, Secretary General of the Shanghai Gold Exchange said.
- China’s steel industry will face higher financial risks in the second quarter. Zhao Xizi, Chairman of the All-China Chamber of Commerce for Small and Medium-Sized Metallurgical Enterprises, said banks will require at least CNY140 billion of debt to be paid back by steel companies ahead of schedule. Due to overcapacity and ongoing losses, many steel mills chose to continue production simply in order to keep banks from asking them to repay their loans. Industrial analysts said domestic steel companies have an average debt ratio of more than 70%. In the first quarter, 15 of 35 listed steel companies in China reported losses.
- Australia’s Foreign Investment Review Board (FIRB) has given the green light to Baosteel and Aurizon Holdings’ takeover bid for iron ore and coal miner Aquila Resources. The deal still requires approval from more than half of Aquila’s shareholders. Aquila has advised shareholders to take no action, pending an independent review of the offer.
- The port of Qingdao, China’s third-largest foreign trade port, has halted shipments of aluminum and copper due to an investigation by authorities, according to reports, which the port denies. Metal imports have been partly used to raise finance, where traders can pledge metal as collateral to obtain better terms. In some cases the same shipment can be pledged to more than one bank, fueling hot money inflows and spurring a clampdown by the authorities. There might be a discrepancy between documented and physical metal in warehouses of at least 80,000 tons of aluminium and 20,000 tons of copper.
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