Chinese producers of metals, polysilicon and other key materials are continuing to operate and expand even as prices fall, extending oversupply across commodity markets.
That persistence is defying the usual economic pattern in which lower prices curb output, helping keep producer prices weak and adding to China’s broader deflationary pressure.
The imbalance matters beyond individual sectors because these materials sit upstream in the industrial chain, spreading price weakness through manufacturing and complicating efforts to revive inflation.
For the wider economy, stubborn commodity oversupply has become another sign that China’s weak demand and industrial glut are proving harder to correct than standard market theory suggests.