Written by Louis Jackson, Jiaking Lee and Amy Lev
BEIJING/Hong Kong (Reuters) -The prices of goods from steel to the Polysilicon have increased this month as Chinese investors are betting at the end seriously in dealing with excessive ability around the world in the world.
The prices of nine industrial commodities, including coal, steel, and Polysilicon, are a brick of solar panels, alumina, and lithium carbonate by 10 % to 68 % this month, while stock prices in steel makers, solar panels and clean energy companies over the CSI 300 normative index.
The moves coincide with Beijing’s invitation on July 1 to address “uncontrolled price competition”, or excessive ability, and recognize that he intends to deal with a continuous problem that feeds shrinkage at home and commercial barriers abroad.
Since then, government media has amplified this message with warnings against engagement, a popular sign now to the intense competition that it becomes self -destructive.
“I think this addresses a source of great concern for investors, which is the profit margin pressure on some of the very promising sectors,” said Tai Hui, the chief market strategy in the Asia Pacific Market at JPMorgan Asset Management.
Old economy heroes, including steel, coal industries and the latest industries such as solar panels and electric cars, are wrestling with excessive capacity and low prices, which previously led to many warnings but little work.
This month, some reactions from ministries, organizers and local governments indicate that Beijing’s signal is received.
Two days after the Supreme Policy meeting on July 1, the Ministry of Industry called for reducing price wars in the solar energy sector. The Chinese PV industry index increased about 11 % this month.
Polysilicon prices increased by 68 % after local media reported that the largest producers are preparing to buy smaller competitors and unify the sector.
Last week, a lithium mine worker in northwestern China was temporarily closed for non -compatible mining, prompting speculators to betting that more closures could follow.
This week, cocoon coal prices used to make the steel to the daily limit of three consecutive sessions increased after the National Energy Administration ordered inspection in mines to verify excess production.
Beijing has certainly paid the repairs of the display side before, the last of which was about a decade to reduce production in cement, steel, glass and coal industries.
However, the task is more difficult this time due to the high levels of private ownership in many of these industries, wrong incentives at local and national levels, and limited options for other sectors to accommodate lost jobs.
