The slowdown in the economy of China is impacting on raw Materialswho see how the benefits of coal mining and the metal production as the worsening housing crisis and the production of goods and services slows down.
According to the data of the National Statistics Office published last Sunday, the steel industry is the most affected, since the benefits of the producers of ferrous metal fell a 91% in the first seven months of the year. Meanwhile, the profits of the producers of base metals fell 37% and those of the miners of coal 26%which exceeds the general fall of the 16% in the industrial profitability of the Asian giant.
The latest earnings reports offer a dark outlook for companies of the call “old economy“. According to data published by the agency BloombergSinopec, China’s top oil refiner, reported that first-half net profit fell 19% due to slow recovery.
WhileChina Shenhua Energy Co.. its largest coal miner, presented a drop in net profit of 13% and assured that basic fuel prices could fall again in the second half of the year.
However, better prognoses may lie ahead for the metallurgical companies linked to the energy transition. In that sense, Goldman Sachs He noted the significant strength of green copper consumption in China, with demand for electric vehicles and renewables up 74% in the year to July.
coal under pressure
The prices of this fossil fuelwhich supports the industrial production of Chinahave fallen by almost a third throughout 2023, after beijing ordered a massive increase in supply to support the reopening of the economy.
According to the projection of Fitch Solutionsdemand has been lukewarm and expectations of how strong the post-pandemic recovery has been have not materialized.
However, it should be noted that the loss of the mining sector is the profit of the energy sector, since generators take advantage of the fall in coal prices to return to profitability. The benefits of the sector increased by 51% until the seventh month of the year, according to data from the Statistics Officecited by Bloomberg. This trend could continue in the coming months, as Shenhua it expects electricity demand to grow faster in the second half of the year than in the first, according to the company.