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Tough times ahead for metal firms, says CNIA

By Jiang Wei (China Daily)
Updated: 2009-03-19 07:42

Visitors look through a non-ferrous metal bearing at an exhibition in Beijing. Wu Changqing

China's non-ferrous metal industry is expected to witness hard times this year after drastic profit drops in 2008, according to the China Non-Ferrous Metals Industry Association (CNIA).

Related readings:  Profit for non-ferrous metals industry to drop 45% in 2008  China to push consolidation in non-ferrous sector  NDRC to further regulate nonferrous metal industry

"This year will be the toughest for the non-ferrous metal sector due to the impact of the financial crisis," said Kang Yi, chairman, CNIA.

The industry earned a profit of about 80 billion yuan in 2008, down 45 percent compared with 2007, according to the association.

CNIA said the sector's core business revenue was expected to rise 10 percent year-on-year to 2.1 trillion yuan in 2008. But 73 major enterprises in the sector reported a combined loss of 12.75 billion yuan in the fourth quarter of last year, showing a rising trend of monthly losses.

China's output of 10 major non-ferrous metals stood at 25.19 million tons last year, up 6.72 percent from 2007. The growth is the lowest in eight years and is 16.72 percentage points lower than 2007.

Kang said most aluminum enterprises are still in the red in spite of the country buying aluminum to set up a national reserve system. Though the companies are surplus in production capacity, they still have to buy highly priced raw materials.

Copper refiners will also make slim profits this year, he said. Kang said the stimulus plan, which was approved by the State Council late last month, would give a boost to the industry this year amid the global economic downturn.

Under the stimulus package, China may increase tax rebate rates on non-ferrous metal exports. It will also support exports of technology-intensive non-ferrous metal products with high added value.

The stimulus plan for the industry will speed up the establishment of a national reserve system for non-ferrous metals. Kang said with the stimulus plan the country hopes to encourage non-ferrous enterprises to upgrade themselves and also survive the financial crisis.

He said the country would cap the total capacity of non-ferrous metal producers, shut down small refiners and encourage restructuring among major metal makers.

Details of the stimulus package are likely to be released soon. "An optimistic view is that the market in the second half of this year will be better than last year, which means enterprises will still make thin profits," Kang said.