China's top leaders at the ceremony for the 18th Communist Party Congress in Beijing, November 2012.
As China steps into what would presumably be the second five-year term of President Xi Jinping, analysts are expecting authorities to strengthen regulations around environmental protection as well as continue or even accelerate capacity reduction programs for the coal and steel industries launched in 2016.
On Oct. 18, China will kick off its 19th National Party Congress, where 2,287 delegates would gather in Beijing for the once-in-five years meeting associated with leadership change.
While it is widely projected that Xi will remain on the post for a second term and may even seek a third term, the tone of the congress as well as a work report from Xi will give the market a peek into the country's policy direction for the next several years.
Helen Lau, an analyst at Argonaut Securities in Hong Kong covering the metals, mining and energy sectors, told S&P Global Market Intelligence that the mining sector is unlikely to be directly mentioned in the report, as "China is developing into a less commodity-intensive economy that focus on the service and high technology sectors".
But the industry will be interested to find out how Beijing will continue with its economic reforms, such as environmental protection and capacity cuts, according to Lau. "These would be more long-term plans that will impact the country for the next five, 10 or 20 years."
On environmental protection, Lau expected Beijing to further strengthen regulations as it plays a key role in Xi's ambitious economic agenda. "In addition, Beijing needs to fulfill climate promises made under the Paris accord to build up trust globally," Lau said.
The country has ordered production suspensions at steel mills to control emissions, and is planning to cancel a third of iron ore mining licenses as part of an air-pollution crackdown. It is also curbing coal use and is on track to build the world's largest clean coal power system by 2020.
The transition towards a cleaner economy also coincides with the country's slowing growth of demand for industrial metals.
Lau expected Beijing to continue with existing policies on capacity cuts, as the scheme has delivered favorable results for various sectors.
"Overall, it is very unlikely to see any big surprise [from the congress]. It is more likely to be reiteration [of existing policies]," Lau said, noting that the Chinese congress will be different from the Brexit vote or U.S. President Donald Trump's election, which created volatility in metal prices.
An analyst in China, who asked not to be named, told S&P Global Market Intelligence that broader supply-side reform, which includes capacity cuts as well as closure of zombie companies and restructuring plans, will accelerate and extend to more industries after the congress.
Mixed-ownership reform was also highlighted by the analyst as a potentially hot topic under the congress agenda. The analyst expected the work report from Xi to reveal more details about how Chinese leadership will spell out the direction of the reform.
"It was not included in the work report in the 18th party congress. But in the past five years and this year in particular, it is quite clear that the government has been accelerating the reform," the analyst said, referring to moves by authorities to introduce more private capital into industries that have been traditionally controlled by the government.
Meanwhile, the market will also be sensitive to hints relating to macroeconomic indicators, such as growth targets for GDP, according to both analysts.