BIR World Mirror on Non-Ferrous Metals - Issue January/February 2016

How strong will the headwinds be?

The start of 2016 was very disappointing but somehow expected, with the crude oil price falling below US$ 30 per barrel before bouncing back a few dollars. All non-ferrous commodities were dragged down at the same speed. This reminds me of our Prague Convention last October when guest speaker Becky E. Hites of US-based Steel-Insights LLC was asked how low the market would go. Her answer was lower than you think.

Over the past two decades, we have all relied on the Chinese market. However, Chinese customs statistics show that its imports in 2015 were 11% lower than in the previous year. The sharp drop in the Shanghai stock index has contributed to the fall in the metal markets. With Chinese New Year just a week away at the time of writing, most manufacturing facilities closed earlier than usual and will take longer out than the traditional two-week holiday.

Unlike most other countries, the USA performed well in 2015 with GDP growth at 2% and above, while the PMI was above the 51 mark. However, the Federal Reserve has sent out a warning to investors about a “significant headwind” in 2016 owing to slow global growth, deceleration in China, short-term disruption and retiring baby boomers. If the headwind is as forecasted by the Fed, then we must ask how strong will it be for us?

This is the year of China’s AQSIQ renewals and Mr Ma, our consultant in Beijing, will provide us with more updated information.

by David Chiao
Uni-All Group Ltd (USA)
President of the Non-Ferrous Metals Division
29th January 2016

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