December 14, 2021 – Economy stabilization in 2022: The Chinese government has made stabilizing the domestic economy a priority in 2022. Coal, steel and stainless steel futures up. Chinese aluminum inventories continue to empty, prices up as much as 1.7%. Aluminum scrap prices rise. Supply chain problems eased only slightly. Congestion outside U.S. ports remains at record levels. Demand remains high.
China: Stabilization of economy priority in 2022
China wants to focus on stabilizing the economy in 2022 and has prioritized this goal. This also seems to interest investors. Among other things, increased government infrastructure investments and support for small and medium-sized enterprises are expected. In addition, targeted measures to stimulate credit growth could animate consumer demand in the course of the year and improve the prospects for China’s consumer goods manufacturers.
Commodity markets with gains for coke, steel and stainless steel
Markets in China have also already responded positively, leading to rising prices in coking coal, which is still in short supply, of up to 6%. Steel and stainless steel futures also gained as much as 1.6% to 1.8% today.
Aluminum prices and tight scrap supply
Chinese aluminum inventory in social warehouses is down about 40% since last Thursday. Downstream demand has picked up due to more attractive prices and easing production constraints. However, with the heating season and the Winter Olympics starting soon, new production constraints are likely. Aluminum futures gained as much as 1.7% on the SHFE
Aluminum scrap in China continues to be scarce
Chinese aluminum scrap prices remain high and even rose further last week due to tight availability.
Supply chain problems only slightly eased
Freight rates from China to the U.S. West or East Coast have declined by about 26% since September. This was achieved by 24-hour operations at U.S. ports. Container congestion has been reduced by about 40% as a result.
Ships still jam off U.S. ports
However, ship congestion off U.S. ports remains at record levels. Data suggesting that congestion has decreased sharply should be taken with a grain of salt – because ships that have recently been waiting to enter ports up to 150 miles away are not recorded.
Easing congestion by increasing fleet size
About 6% more container fleet capacity is expected to be available in 2022. In addition, the United States is investing US$17 billion to upgrade its port infrastructure. This could contribute to further easing in freight rates in the second half of 2022.
US demand remains very high
An increase in fleets is also urgently needed. Demand in the United States remains high, as shown most recently by the Manufacturing PMI for November 2021.
- Enormous metal demand for renewable energies until 2050
- 8.8 bn EUR, record investment in automotive chips sector
- US manufacturing sector continues to grow in Nov 2021
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.