CashNews.co
(Bloomberg) — Chinese commodities producers centered on the old economy are still bearing the brunt of the nation’s economic slowdown, with steelmakers and crude oil processors in particular continuing to rack up losses.
Most Read from Bloomberg
Cumulative losses in the world’s biggest steel industry swelled to 34 billion yuan ($5 billion) over the first nine months of the year, according to data for September released by the statistics bureau on Sunday. The oil refining sector saw losses deepen to 32 billion yuan over the period. Profits at industrial firms more broadly declined at a faster pace than a month earlier.
Steel mills have been forced to slash output to protect margins hammered by China’s protracted property crisis. Bankruptcies could beckon. Oil refiners are also cutting runs, with weak demand for fuels exacerbated by the country’s rapid uptake of electric vehicles. China wraps its third-quarter earnings season this week, with releases due from both its biggest steelmakers and oil and gas companies.
Beijing’s recent measures to stimulate the economy are being closely watched for their impact on raw materials demand. Oil consumption could get a modest lift, according to Goldman Sachs Group Inc., although the focus on clearing China’s housing stock rather than boosting new starts will limit the impact on the steel market.
The two industries are the only major sectors tracked by the statistics bureau that have failed to accumulate profits over the year so far. But other commodities producers are also feeling the pressure of a tepid economy and problems with overcapacity.
Coal mining profits have dropped 22% over the year to data, due to the impact of oversupply on prices. Chemicals-makers, which typically use fossil fuels as feedstock, have seen income fall 4%.
On the Wire
Investors inured to years of Sino-American trade spats seem willing to brave the risk of even higher tariffs following the US presidential election, and are favoring Chinese assets on bets for more stimulus.
Optimism toward China’s copper prices prevailed at this month’s Shanghai Metals Market conference in Qinghai, with smelters set to expand in 2024-25, according to Bloomberg Intelligence.
It may not get the same attention as solar panels and wind farms, but few pieces of infrastructure are more crucial for the fate of the planet than China’s cascade of hydroelectric plants.