Boston, MA -- (SBWIRE) -- 11/30/2012 -- From 2012 to 2016 the metals industry in China will be facing a period of steady declines in demand and supply growth. On the demand side, we are expecting a sharp slowdown in Chinese fixed asset investment that will see a softening in demand across metals. We expect construction activity in China to moderate significantly in 2012 and 2013, despite a temporary boost from infrastructure stimulus packages. The boom years of Chinese investment-led growth are over and this will seriously undermine growth of China's metals industry, particularly steel and aluminium.
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Government plans to significantly consolidate the metals and mining industries will be watered down in the coming months due to a continued slowdown in the country's economic growth. In order to cushion the negative impact on social welfare and stability of slower growth, central government will support loss-making state industries as a form of social subsidy. Nonetheless, consolidation will occur due to weaker metals prices and a reorientation of China's economy away from fixed asset investment, towards private consumption. Lower prices will squeeze margins and force smaller, inefficient producers out of business. State-owned companies already have a dominant role in the mining and metals industry and will have an even larger share of the economic pie by 2016.
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