• 1 hour China: The New King Of Caviar
  • 7 hours Gold Mid-Tiers Rally On Fresh Earnings Reports
  • 1 day Can The British Pound Overcome Brexit?
  • 1 day Is A Gold Breakout Near?
  • 2 days Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 2 days Disney Beats Out Comcast In $71.3B Mega-Merger
  • 2 days The Feds Continue To Prop Up Equities Markets
  • 2 days Bejing's Sway In South China Sea Is Fading
  • 3 days Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 3 days Airbnb In Acquisition Mode Ahead Of IPO
  • 3 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 3 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 4 days Putin Signs “Digital Iron Curtain” Into Law
  • 4 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 4 days Tesla Looks To Jump Into Indian Market
  • 4 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 5 days Homeowners Experiment With Risky New Investment Trend
  • 5 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 5 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 5 days Ford CEO Gets Raise After Massive Layoff Round
The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

  1. Home
  2. Markets
  3. Other

Chinese Environmental Crackdown Could Lift Commodity Prices

I’ve been writing the last few weeks about the unfolding metals supply crisis in China. Triggered by a wave of environmental checks at mining and processing facilities across the country. 

One of the big questions is: how much production will be impacted by the environmental crackdown?

And this week, we began to get answers. 

Key producer China Minmetals confirmed Monday that it has been targeted by environmental regulators. With the company saying it will be forced to complete a massive upgrade of its smelting facilities. 

Those smelters are primarily located in the province of Hunan. Where regulators said they found widespread environmental damage at Minmetals facilities located along major waterways. 

Faced with those findings, Minmetals will now launch an upgrading program at its smelters. At a reported cost of 10 billion yuan, or about $1.5 billion. 

Those upgrades will affect Minmetals’ output of copper, lead and zinc. The company didn’t specify exactly how much production will be impacted, but given the financial scale it’s likely a significant amount of output is involved. 

Some or all of that production will almost certainly have to be halted during the upgrading work. Meaning recent supply loses from closures for environmental inspections will now be extended for months. 

That’s going to make Chinese supply of copper and lead/zinc tighter for longer. Meaning we could see continued upward momentum in import demand to fill the gap.  Related: Is OPEC Throwing In The Towel On U.S. Market Share?

It’s also critical to remember: this is just the first firm targeted publicly by environmental regulators. With a fourth round of checks just wrapping up, we could see more firms and facilities being shut for upgrades like these. 

This will continue to be one of the biggest stories for global mining and metals prices. Watch for more news on closures, as well as stats on Chinese metal production and imports.

Here’s to taking a breather.

By Dave Forest

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment