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. METALS WEEKLY: Slowdown deepens in China

METALS WEEKLY: Slowdown deepens in China

Highlights for the week

• The PBOC reduced its five-year loan prime rate to 4.30% from 4.45% (reduction of 15bp) and one-year loan prime rate to 3.65% from 3.70% earlier.
• This comes after the PBOC reduced its one-year medium-term lending facility interest rate by 10bp last week in a bid to revive the slowing economy.
• Thermal coal price is likely to remain strong over the next six months at least as Europe approaches winter. Drying up of river Rhine, the key transport route for several commodities and companies in Germany will worsen the situation
• Heat wave in China's Sichuan province will likely lead to lower production of non-ferrous metals while NG crisis in Europe will also lead to a similar action, and demand-supply balance for aluminum and  zinc could turn into deficit by end-CY22.
• Domestic HRC price remained stable WoW at INR57,300/t, while primary TMT price decreased marginally to INR56,800/t. 
• Spread between primary and secondary TMT has narrowed to INR1,000/t; it has been narrowing for the last three months post-spike in thermal coal price.