General Wire — 12 August 2026

Economics

Sourced from Bloomberg’s Energy Daily.

China’s oversupplied commodity markets are defying the economic rulebook, and prolonging the country’s weak inflation. Prices for everything from solar materials to construction steel have fallen toward, and sometimes below, the cost of production. The textbook response would be plant closures, shrinking supply and a price rebound. It is not happening, for three reasons. Producers have become sophisticated hedgers, selling output forward into rallies and then continuing to produce against those hedges even when spot falls below cash cost. Provincial governments, weighing jobs, taxes, bank loans and social cohesion, would rather keep an unprofitable plant open than shutter it. And input costs keep falling as struggling manufacturers squeeze suppliers, who cut raw-material prices to defend share — so the survival threshold moves down with them. — Bloomberg · Bloomberg

Producers are also finding new income to keep the lights on. Copper smelters have leaned on byproducts, with higher chemical prices — largely a consequence of the Iran war — turning sulfuric acid into a meaningful revenue line. In aluminium, low alumina prices hurt feedstock producers but widen margins for processors: one industry’s glut becomes the next one’s cost advantage. Everyone is waiting for somebody else to capitulate first. — Bloomberg