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China Metals Report Q2 2011


China Metals Report Q2 2011

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Price $530.00
Meta Description No
Publisher Business Monitor International
Date of Report Apr 8, 2011
Quick Overview
China's consumption and supply of copper, steel, aluminium, lead, nickel and tin increased substantially in 2010 due to base effects as the world's second largest economy returned to growth above 9%. We expect strong growth in both supply and demand across these sectors as China continues to feed its near insatiable hunger for refined metals. We expect aluminium to increase at an average annual rate of 5.2%, reaching 20.4mnt (million tonnes) in 2015, from 15.7mnt in 2010, with most of this growth driven by Yunnan Aluminium and Henan Bowei Aluminium. Moreover, we expect consumption of aluminium to grow faster due to the development of infrastructure, averaging 9.2% per annum over the period, reaching 24.8mnt, from 15.9mnt in 2010. In a similar vein, we expect refined copper production to reach 6.32mnt in 2015, marking an average annual rate of growth of 6.3% from 4.62mnt in 2010. Again, consumption is set to outpace production, averaging 7.0% per annum from 7.49mnt in 2010 to 10.5mnt in 2015.
In terms of lead production, we forecast an annual average growth rate of 6.2%, reaching 5.7mnt by 2015. Yuguang Gold & Lead Co will account for much of this in production as the company plans to increase total refined lead output by 50% to 700ktpa (thousand tonnes per annum) by 2015. We expect refined lead consumption to reach 6.0mntpa in 2015, marking an average increase of 7.5% per annum. In addition, we forecast steel consumption to average 5.8% growth to 2015, reaching 745mnt, up from 561mnt in 2010. Steel production will reach 743mnt in 2015, marking average growth of 3.5% per annum from 2010 when output was 627mnt. Finally, we expect a 5.7% growth in Chinese refined tin production, reaching 186.1kt in 2015.
As well as forecasting growth across all sectors, we highlight the trend of Chinese consumption outpacing production. This will mean China becomes more reliant on the import of refined metals, perhaps from Australia, one of the largest producers of refined metals. That said, China appears to be seeking greater self-sufficiency and thus we note upside risks to our forecasts for production, as the government may search for greater domestic exploration and production.
There are two other risks to our outlook. First, the supply of refined metals could be at risk from efforts to increase energy efficiency and reduce power usage, as was seen at the end of 2010. Indeed, while it tends to be the smaller refineries that are less efficient, refined metal production is highly fragmented and the smaller refineries account for a substantial proportion of output. Second, our forecasts for consumption growth are in line with overall GDP growth and thus any downturn in the economy would reduce growth in base metals consumption. Our expectations for demand are therefore exposed to the effects of monetary and fiscal tightening as the Chinese government attempts to stop the economy from overheating.
Table of Contents
Executive Summary ........................................................................................................................................ 6
SWOT Analysis ................................................................................................................................................ 7
China Political SWOT .......................................................................................................................................................................................... 7
China Economic SWOT ........................................................................................................................................................................................ 8
China Business Environment SWOT ..................................................................................................................................................................... 8
Global Market Overview.................................................................................................................................. 9
Steel Forecast ....................................................................................................................................................................................................... 9
Table: BMI’s Steel Forecasts ................................................................................................................................................................................ 9
Table: Steel Prices (US$m/t) ............................................................................................................................................................................... 10
Commodity Strategy – Metals Update .......................................................................................................... 15
Aluminium........................................................................................................................................................................................................... 15
Copper ................................................................................................................................................................................................................ 15
Lead .................................................................................................................................................................................................................... 16
Nickel .................................................................................................................................................................................................................. 16
Tin....................................................................................................................................................................................................................... 17
Zinc ..................................................................................................................................................................................................................... 18
Gold .................................................................................................................................................................................................................... 19
Regional Overview ........................................................................................................................................ 20
Table: Top 10 Asian Steel Producers, 2009 ........................................................................................................................................................ 20
Forecast Scenario ......................................................................................................................................... 24
Steel: Excess Capacity Will Be Hard To Curb .................................................................................................................................................... 24
Top Producing Regions (10kt*) & Share Of Total (%) ....................................................................................................................................... 25
Table: China Metals Industry Indicators and Forecasts (Steel), '000 tonnes unless stated .................................................................................. 28
Aluminium ................................................................................................................................................................................................................ 30
Infrastructure Development to Drive Consumption ............................................................................................................................................ 30
Key Development Plans ...................................................................................................................................................................................... 31
Production Growth ............................................................................................................................................................................................. 32
Demand Growth.................................................................................................................................................................................................. 32
Copper ..................................................................................................................................................................................................................... 33
Production & Consumption To Maintain Rapid Growth .................................................................................................................................... 33
Key Expansion Plans .......................................................................................................................................................................................... 34
Production and Consumption Forecast .............................................................................................................................................................. 35
Lead ......................................................................................................................................................................................................................... 36
Still-Strong Growth Ahead .................................................................................................................................................................................. 36
Main Expansion Plans ........................................................................................................................................................................................ 36
Lead Output ........................................................................................................................................................................................................ 37
Lead Demand ...................................................................................................................................................................................................... 37
Tin ............................................................................................................................................................................................................................ 38
Supply Deficit Remains Despite Increased Output .............................................................................................................................................. 38
China Refined Tin Production ............................................................................................................................................................................ 39
Nickel ....................................................................................................................................................................................................................... 40
Growth In Production To Slow ........................................................................................................................................................................... 40
Nickel Production ............................................................................................................................................................................................... 41
Consumption to Slow .......................................................................................................................................................................................... 41
Nickel Demand ................................................................................................................................................................................................... 42
Macroeconomic Outlook ..................................................................................................................................................................................... 43
Table: China – Economic Activity, 2008-2015 ................................................................................................................................................... 46
Competitive Landscape ................................................................................................................................ 47
Steel .................................................................................................................................................................................................................... 47
Iron Ore Supplies ................................................................................................................................................................................................ 52
Aluminium........................................................................................................................................................................................................... 53
Table: China’s Aluminium Smelter Capacities ................................................................................................................................................... 54
Financial Results ................................................................................................................................................................................................ 56
Company Profiles .......................................................................................................................................... 57
Chinalco ............................................................................................................................................................................................................. 57
China Steel Corporation ..................................................................................................................................................................................... 58
Chung Hung Steel ............................................................................................................................................................................................... 59
Commodity Forecasts ................................................................................................................................... 60
Metals Update .......................................................................................................................................................................................................... 60
Aluminium........................................................................................................................................................................................................... 60
Copper ................................................................................................................................................................................................................ 61
Lead .................................................................................................................................................................................................................... 62
Nickel .................................................................................................................................................................................................................. 63
Tin....................................................................................................................................................................................................................... 64
Zinc ..................................................................................................................................................................................................................... 65
Gold .................................................................................................................................................................................................................... 66
Global Assumptions, Q211........................................................................................................................... 67
Table: Global Assumptions, 2009-2015 .............................................................................................................................................................. 67
Table: Regional Real GDP Growth, 2010-2013 (% change y-o-y) ...................................................................................................................... 68
Table: Selected Exchange Rates, 2010-2013 (average) ...................................................................................................................................... 68
Developed States ................................................................................................................................................................................................. 69
Table: Developed States’ GDP Growth, 2010-2013 (% change y-o-y) ................................................................................................................ 69
Emerging Markets .............................................................................................................................................................................................. 70
Table: Emerging Market’s GDP Growth, 2010-2013 (% change y-o-y) .............................................................................................................. 71
Consensus Forecasts........................................................................................................................................................................................... 72
Table: Consensus Forecasts, 2011 And 2012 ..................................................................................................................................................... 72
Country Snapshot: China Demographic Data ............................................................................................. 73
Section 1: Population .......................................................................................................................................................................................... 73
Table: Demographic Indicators, 2005-2030 ....................................................................................................................................................... 73
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 74
Section 2: Education And Healthcare ................................................................................................................................................................. 74
Table: Education, 2002-2005 ............................................................................................................................................................................. 74
Table: Vital Statistics, 2005-2030 ....................................................................................................................................................................... 74
Section 3: Labour Market And Spending Power ................................................................................................................................................. 75
Table: Employment Indicators, 2001-2006 ......................................................................................................................................................... 75
Table: Consumer Expenditure, 2000-2012 (US$) ............................................................................................................................................... 75
Table: Average Annual Manufacturing Wages, 2005-2012 ................................................................................................................................ 76
BMI Methodology .......................................................................................................................................... 77
How We Generate Our Industry Forecasts ......................................................................................................................................................... 77
Cross Checks ...................................................................................................................................................................................................... 77




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