Towards the end of November, there were a number of announcements of supply cuts from China’s metal producers. In particular, producers of nickel and zinc pledged to cut output by 20% next year, while copper producers promised to lower production by nearly 10%. Admittedly, China’s producers have a poor record on curbing supply but even if the cuts are not forthcoming in their entirety, we are expecting output to fall in 2016. Indeed, we had been expecting lower production anyway, as mine supply of many metals looks set to decline, so Chinese refineries may have struggled to source raw materials.
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