Metals – China steel output declines further
The latest data from the National Bureau of Statistics shows that monthly crude steel production in China declined for a second consecutive month in November, due to the nationwide Covid-19 restrictions, the ongoing property crisis, and the start of winter pollution curbs. Steel production in China dropped by 6.5% MoM (up 7.3% YoY) to 74.5mt in November; cumulatively, output fell 1.4% YoY to 935mt over the first 11 months of the year. Meanwhile, steel products output gained 7.1% YoY to 109mt last month while remaining almost flat at 1,226mt between January 2022 and November 2022.
For aluminium, Chinese primary aluminium production rose 9.4% YoY to 3.4mt over the month as the higher runs in Guangxi and Sichuan provinces offset winter production cuts elsewhere. For the first 11 months of the year, output rose 3.9% YoY to a total of 36.8mt.
For copper, the latest LME data shows that total on-warrant stocks for copper reported inflows of 5.1kt (the biggest daily addition since 15 November) to 62.8kt as of yesterday. The entire inflows were reported in Rotterdam warehouses.
Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM
Data from the International Lead and Zinc Study Group shows that the global zinc market remained in a supply deficit of 117kt over the first ten months of 2022, slightly lower when compared to a deficit of 125kt during the same period a year ago. Total refined production fell 3.2% YoY to 11.1mt majorly due to lower output in Europe, whilst total consumption declined 3.2% YoY to 11.2mt between January 2022 and October 2022. For lead, total production fell 1.3% YoY to 10.1mt, while consumption fell marginally by 0.4% YoY to 10.2mt in the first ten months of the year. The lead market reported a supply deficit of 46kt between January 2022 and October 2022 when compared to a surplus of 48kt during the same time last year.
Iron ore dropped for a third day yesterday as traders weigh the impact of China's Covid surge on the economy as the country pivots away from its zero-Covid policy. Covid cases in China are surging after the government embarked on a faster-than-expected reopening, abandoning mass testing and isolation rules.
The postponement of an economic policy meeting in China, which was due to start this week, has also weighed on the sentiment. The market was expecting the meeting to announce more measures to support the property sector, which accounts for around 40% of steel consumption.
| 
