Latest news with #LewisJackson
Yahoo
6 days ago
- Business
- Yahoo
Markets bet Beijing is getting serious about China's overcapacity
By Lewis Jackson, Jiaxing Li and Amy Lv BEIJING/HONG KONG (Reuters) -Commodity prices from steel to polysilicon have surged this month as Chinese investors bet Beijing is finally serious about addressing overcapacity across the world's second-largest economy. Prices for nine industrial commodities including coal, steel, polysilicon, a building block for solar panels, alumina and lithium carbonate have climbed by 10% to 68% this month while share prices in steelmakers, solar panel manufacturers and clean energy companies have outpaced the benchmark CSI 300 Index. The moves coincide with Beijing's call on July 1 to tackle "disorderly price competition," or overcapacity, and an acknowledgement it intends to deal with a persistent problem fuelling deflation at home and trade barriers abroad. Since then, state media has amplified that message with warnings against involution, a now-popular reference to competition so fierce it becomes self-destructive. "I think that addressed a big concern for investors, which is the profit margin squeeze on some of the very promising sectors," said Tai Hui, Asia Pacific chief market strategist at JPMorgan Asset Management. Champions of the old economy including steel and coal and newer industries such as solar panels and electric vehicles are grappling with overcapacity and falling prices, which had previously prompted many warnings but little action. This month, some of the reactions from ministries, regulators and local governments suggest Beijing's signal is being received. Two days after a top-level policy meeting on July 1 called for action, the industry ministry pledged to curb price wars in the solar sector. China's photovoltaic industry index is up about 11% this month. Polysilicon prices are up 68% after local media reported that the two biggest producers were preparing to buy up smaller rivals and consolidate the sector. Last week, a lithium miner in northwest China was temporarily shut for non-compliant mining, leading speculators to bet that more closures could follow. This week, prices for coking coal used to make steel rose to their daily limit for three consecutive sessions after the National Energy Administration ordered inspections at mines to check for excess production. To be sure, Beijing has pushed supply-side reforms before, most recently about a decade ago to cut production in the cement, steel, glass and coal industries. However, the task is more difficult this time due to higher levels of private ownership in many of these industries, misaligned incentives at the local and national levels, and limited options for other sectors to absorb lost jobs. It's unclear how far authorities are determined to go in curbing production and which other sectors they may target. China's leadership is sending a clear and positive signal about their commitment to address overcapacity, but progress is likely to be much slower this time around and it could take a year or two to see improvement in company profits, said Laura Wang, Chief China Equity Strategist for Morgan Stanley based in Hong Kong. "In the next three to six months, we are relatively conservative in terms of how much actual capacity shutdown you would be able to see," Wang said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Markets bet Beijing is getting serious about China's overcapacity
By Lewis Jackson, Jiaxing Li and Amy Lv BEIJING/HONG KONG (Reuters) -Commodity prices from steel to polysilicon have surged this month as Chinese investors bet Beijing is finally serious about addressing overcapacity across the world's second-largest economy. Prices for nine industrial commodities including coal, steel, polysilicon, a building block for solar panels, alumina and lithium carbonate have climbed by 10% to 68% this month while share prices in steelmakers, solar panel manufacturers and clean energy companies have outpaced the benchmark CSI 300 Index. The moves coincide with Beijing's call on July 1 to tackle "disorderly price competition," or overcapacity, and an acknowledgement it intends to deal with a persistent problem fuelling deflation at home and trade barriers abroad. Since then, state media has amplified that message with warnings against involution, a now-popular reference to competition so fierce it becomes self-destructive. "I think that addressed a big concern for investors, which is the profit margin squeeze on some of the very promising sectors," said Tai Hui, Asia Pacific chief market strategist at JPMorgan Asset Management. Champions of the old economy including steel and coal and newer industries such as solar panels and electric vehicles are grappling with overcapacity and falling prices, which had previously prompted many warnings but little action. This month, some of the reactions from ministries, regulators and local governments suggest Beijing's signal is being received. Two days after a top-level policy meeting on July 1 called for action, the industry ministry pledged to curb price wars in the solar sector. China's photovoltaic industry index is up about 11% this month. Polysilicon prices are up 68% after local media reported that the two biggest producers were preparing to buy up smaller rivals and consolidate the sector. Last week, a lithium miner in northwest China was temporarily shut for non-compliant mining, leading speculators to bet that more closures could follow. This week, prices for coking coal used to make steel rose to their daily limit for three consecutive sessions after the National Energy Administration ordered inspections at mines to check for excess production. To be sure, Beijing has pushed supply-side reforms before, most recently about a decade ago to cut production in the cement, steel, glass and coal industries. However, the task is more difficult this time due to higher levels of private ownership in many of these industries, misaligned incentives at the local and national levels, and limited options for other sectors to absorb lost jobs. It's unclear how far authorities are determined to go in curbing production and which other sectors they may target. China's leadership is sending a clear and positive signal about their commitment to address overcapacity, but progress is likely to be much slower this time around and it could take a year or two to see improvement in company profits, said Laura Wang, Chief China Equity Strategist for Morgan Stanley based in Hong Kong. "In the next three to six months, we are relatively conservative in terms of how much actual capacity shutdown you would be able to see," Wang said.
Yahoo
6 days ago
- Business
- Yahoo
Markets bet Beijing is getting serious about China's overcapacity
By Lewis Jackson, Jiaxing Li and Amy Lv BEIJING/HONG KONG (Reuters) -Commodity prices from steel to polysilicon have surged this month as Chinese investors bet Beijing is finally serious about addressing overcapacity across the world's second-largest economy. Prices for nine industrial commodities including coal, steel, polysilicon, a building block for solar panels, alumina and lithium carbonate have climbed by 10% to 68% this month while share prices in steelmakers, solar panel manufacturers and clean energy companies have outpaced the benchmark CSI 300 Index. The moves coincide with Beijing's call on July 1 to tackle "disorderly price competition," or overcapacity, and an acknowledgement it intends to deal with a persistent problem fuelling deflation at home and trade barriers abroad. Since then, state media has amplified that message with warnings against involution, a now-popular reference to competition so fierce it becomes self-destructive. "I think that addressed a big concern for investors, which is the profit margin squeeze on some of the very promising sectors," said Tai Hui, Asia Pacific chief market strategist at JPMorgan Asset Management. Champions of the old economy including steel and coal and newer industries such as solar panels and electric vehicles are grappling with overcapacity and falling prices, which had previously prompted many warnings but little action. This month, some of the reactions from ministries, regulators and local governments suggest Beijing's signal is being received. Two days after a top-level policy meeting on July 1 called for action, the industry ministry pledged to curb price wars in the solar sector. China's photovoltaic industry index is up about 11% this month. Polysilicon prices are up 68% after local media reported that the two biggest producers were preparing to buy up smaller rivals and consolidate the sector. Last week, a lithium miner in northwest China was temporarily shut for non-compliant mining, leading speculators to bet that more closures could follow. This week, prices for coking coal used to make steel rose to their daily limit for three consecutive sessions after the National Energy Administration ordered inspections at mines to check for excess production. To be sure, Beijing has pushed supply-side reforms before, most recently about a decade ago to cut production in the cement, steel, glass and coal industries. However, the task is more difficult this time due to higher levels of private ownership in many of these industries, misaligned incentives at the local and national levels, and limited options for other sectors to absorb lost jobs. It's unclear how far authorities are determined to go in curbing production and which other sectors they may target. China's leadership is sending a clear and positive signal about their commitment to address overcapacity, but progress is likely to be much slower this time around and it could take a year or two to see improvement in company profits, said Laura Wang, Chief China Equity Strategist for Morgan Stanley based in Hong Kong. "In the next three to six months, we are relatively conservative in terms of how much actual capacity shutdown you would be able to see," Wang said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-07-2025
- Business
- Yahoo
Australia PM touts green steel as iron ore miners meet Chinese steelmakers
By Lewis Jackson and Melanie Burton SHANGHAI (Reuters) -Australia and China should cooperate more closely over green steel, Prime Minister Anthony Albanese said in Shanghai on Monday, even as he called on the world's largest steelmaker to address excess capacity for the metal. China relies on Australia for roughly two-thirds of the iron ore consumed by its vast steel industry, a trade that will earn Canberra A$105 billion ($68.90 billion) this financial year, according to the latest government estimates. However, attempts to clean up an industry responsible for roughly a tenth of all emissions put that trade for Australia at risk as decarbonisation requires higher grades of iron ore, found in countries like Guinea and Brazil. Green steel refers to metal produced using renewable energy such as hydrogen to limit or eliminate the use of coal, cutting carbon emissions. Speaking before a meeting between Australian iron ore miners and Chinese steelmakers, Albanese framed green steel as a way to grow Australia and China's decades-long trade relationship. "Achieving the goal of the Paris Agreement would require the decarbonisation of steel value chains, presenting an opportunity for Australia and China to progress our long-term economic interests," he said. Albanese also offered to work with China to reduce overcapacity in its steel industry, which is fuelling record exports that are in turn triggering a wave of tariffs and duties from trade partners like Vietnam and South Korea. Australia could lose as much as half its revenue from the sector if it fails to start producing green iron, a specialised lower emissions product, as other countries start making steel using renewable energy, a think tank said last year. Successfully building a green iron industry could double those revenues, the report suggested. Australian iron ore is too low-grade to be directly processed into green steel so it needs an additional processing step. When this step is undertaken with renewable energy such as hydrogen or biomass instead of coal, it is called green iron which becomes a low-carbon base for green steel production. Top iron ore miners Rio Tinto, BHP Group, and Fortescue, who also attended the meeting, all have green iron projects underway, with Fortescue set to produce green iron from a pilot plant this year. Fortescue founder Andrew Forrest, in China with Albanese, said the relationships forged between Chinese steelmakers and Australian miners strengthened the bonds between both countries and security issues were a "distraction." Forrest was responding to a question about whether a debate around security that emphasises China's risk was detrimental to the two countries' economic relationship, in the context of China framing itself as a more stable partner than the United States. Australia and New Zealand both said they did not receive adequate warnings of live-fire drills by China's navy in the Tasman Sea between Australia and New Zealand earlier this year. "Australia has a multilayered relationship, as it must, with China, and to really build up the strength of a bilateral relationship you need those strong friendships, that very real business trust between each other," Forrest said. ($1 = 1.5239 Australian dollars)
Yahoo
14-07-2025
- Business
- Yahoo
Australia PM touts green steel as iron ore miners meet Chinese steelmakers
By Lewis Jackson and Melanie Burton SHANGHAI (Reuters) -Australia and China should cooperate more closely over green steel, Prime Minister Anthony Albanese said in Shanghai on Monday, even as he called on the world's largest steelmaker to address excess capacity for the metal. China relies on Australia for roughly two-thirds of the iron ore consumed by its vast steel industry, a trade that will earn Canberra A$105 billion ($68.90 billion) this financial year, according to the latest government estimates. However, attempts to clean up an industry responsible for roughly a tenth of all emissions put that trade for Australia at risk as decarbonisation requires higher grades of iron ore, found in countries like Guinea and Brazil. Green steel refers to metal produced using renewable energy such as hydrogen to limit or eliminate the use of coal, cutting carbon emissions. Speaking before a meeting between Australian iron ore miners and Chinese steelmakers, Albanese framed green steel as a way to grow Australia and China's decades-long trade relationship. "Achieving the goal of the Paris Agreement would require the decarbonisation of steel value chains, presenting an opportunity for Australia and China to progress our long-term economic interests," he said. Albanese also offered to work with China to reduce overcapacity in its steel industry, which is fuelling record exports that are in turn triggering a wave of tariffs and duties from trade partners like Vietnam and South Korea. Australia could lose as much as half its revenue from the sector if it fails to start producing green iron, a specialised lower emissions product, as other countries start making steel using renewable energy, a think tank said last year. Successfully building a green iron industry could double those revenues, the report suggested. Australian iron ore is too low-grade to be directly processed into green steel so it needs an additional processing step. When this step is undertaken with renewable energy such as hydrogen or biomass instead of coal, it is called green iron which becomes a low-carbon base for green steel production. Top iron ore miners Rio Tinto, BHP Group, and Fortescue, who also attended the meeting, all have green iron projects underway, with Fortescue set to produce green iron from a pilot plant this year. Fortescue founder Andrew Forrest, in China with Albanese, said the relationships forged between Chinese steelmakers and Australian miners strengthened the bonds between both countries and security issues were a "distraction." Forrest was responding to a question about whether a debate around security that emphasises China's risk was detrimental to the two countries' economic relationship, in the context of China framing itself as a more stable partner than the United States. Australia and New Zealand both said they did not receive adequate warnings of live-fire drills by China's navy in the Tasman Sea between Australia and New Zealand earlier this year. "Australia has a multilayered relationship, as it must, with China, and to really build up the strength of a bilateral relationship you need those strong friendships, that very real business trust between each other," Forrest said. ($1 = 1.5239 Australian dollars) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
