The faster increase in the selling prices of a wide range of
metal products than the PPI (producer price index) in April and May
has greatly boosted the average profit margin of downstream
enterprises in the non-ferrous metals industry.
The price gap is expected to widen in coming months because of
projected increase in demand, according to industry experts at the
2007 China Lead, Zinc and Downstream Market Forum, held yesterday
in Hangzhou by CBI China, a major commodities research firm and
informational provider.
The downstream enterprises that stand to benefit most from the
widening price gap include many processors of non-ferrous
metals.
The average rate of increase in the sales prices of many
non-ferrous metals falls in line with the national inflation trend,
analysts said. National Bureau of Statistics figures show the PPI
rose 2.9 percent and 2.8 percent in April and May while the
consumer price index gained 3 percent and 3.4 percent for these
months.
"Downstream enterprises in non-ferrous metals industry will
generate more earnings in the years to come, for the consumption is
expected to grow in the longer term," said Wu Xijun, an analyst
with Shenzhen Zhongjin Lingnan Nonfemet Co Ltd.
The forum also named the increasing impact of zinc prices on the
development of the non-ferrous metals industry, as the domestic
market is in urgent need of the metal.
Analysts predicted an oversupply of some 100,000 tons of zinc in
China's market. But the continuous rise in consumption is widely
seen as the key factor to the upward trend of the non-ferrous metal
in the long run.
Xuan Long, an analyst with Nanhua Futures Co, said the
oversupply may bring down zinc prices in the second half of the
year.
(China Daily June 29, 2007)