China Resources Quarterly · 2016-02-11 · Platinum and Palladium 56 Mineral sands 57 ... industry...
Transcript of China Resources Quarterly · 2016-02-11 · Platinum and Palladium 56 Mineral sands 57 ... industry...
China Resources Quarterly Southern sum
mer ~
Northern w
inter 2016
China Resources QuarterlySouthern summer ~ Northern winter 2016
China Resources Quarterly
Southern summer ~ Northern winter 2016
ii China Resources Quarterly • Southern summer ~ Northern winter
© Commonwealth of Australia 2016
Creative Commons licence With the exception of the Coat of Arms, this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence. Creative Commons Attribution 3.0 Australia Licence is a standard form license agreement that allows you to copy, distribute, transmit and adapt this publication provided that you attribute the work.
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The Commonwealth’s preference is that you attribute this publication (and any material sourced from it) using the following wording: Source: Licensed from the Commonwealth of Australia under a Creative Commons Attribution 3.0 Australia Licence.
ISSN 978-1-921516-05-4 [Print]
ISSN 978-1-921516-07-8 [PDF]
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced or altered by any process without prior written permission from the Australian Government. Requests and inquiries concerning reproduction and rights should be addressed to:
Department of Industry, Innovation and ScienceGPO Box 9839Canberra ACT 2601
or by emailing [email protected]
China Resources Quarterly • Southern summer ~ Northern winter iii
AcknowledgementsThis publication was jointly undertaken by the Westpac Institutional Bank, a division of the Westpac Group, and the Australian Government Department of Industry, Innovation and Science. The relationship is non–commercial. The report was previously published under the title of the Westpac–BREE China Resources Quarterly.
Editors
Westpac: Elliot Clarke and Justin Smirk. Department of Industry, Innovation and Science: Kate Penney, Marco Hatt and Monica Philalay.
Design and production
Julie Doel
Cover image
Shutterstock
This report was finalised on 5 February 2016.
iv China Resources Quarterly • Southern summer ~ Northern winter
Acknowledgements iii
Contents iv
Acronyms and abbreviations v
Foreword vi
Executive summary 1
Recent developments in the Chinese economy
2
General macroeconomic indicators 6
Resource related macroeconomic indicators
8
Steel 10
Iron ore 13
Metallurgical coal 17
Energy overview 18
Thermal coal 21
Oil 23
Gas 27
Uranium 29
Gold 31
Silver 33
Copper 34
Aluminium 37
Alumina 39
Bauxite 41
Nickel 42
Zinc 45
Lead 49
Tin 50
Molybdenum 54
Tungsten 52
Cobalt 53
Antimony 55
Platinum and Palladium 56
Mineral sands 57
Rare earth oxides 58
Manganese and Cadmium 59
Diamonds and Magnesium 60
Mineral and energy import summary 61
Provincial distribution of energy and resource related activity
Electricity output & consumption 62
Coal and gas 63
Ferrous metals 64
Alumina and aluminium 65
Copper and gold 66
Nickel and zinc 67
Contents
China Resources Quarterly • Southern summer ~ Northern winter v
Acronyms and abbreviations
ABS Australian Bureau of Statistics
ASEAN Association of Southeast Asian Nations
AUD, $A Australian dollar
bcm billion cubic metres
CEIC Chinese Economic Information Company
CFR Cost including freight
CNY, CNH Chinese yuan (onshore & offshore)
cm cubic metres
dltu dry long tonne unit
FDI foreign direct investment
FOB free on board
FX Foreign exchange
G3 United States, Europe and Japan
GDP gross domestic product
GFC global financial crisis
GFCF gross fixed capital formation
GCF gross capital formation
IEA International Energy Agency
IMF International Monetary Fund
koe, mtoe kilogram of oil equivalent, million tonnes of oil equivalent
kgpp kilograms per person
kWh kilowatt hour
LNG liquefied natural gas
Mt million tonnes
na not available
NAR net as received
NIEs Newly Industrialised Economies (Singapore, Taiwan, Hong Kong, South Korea)
ODI outward direct investment
OECD Organisation for Economic Cooperation and Development
OPEC Organisation of Petroleum Exporting Countries
PMI Purchasing Managers Index
PPP purchasing–power parity
ppt percentage point
RMB Chinese Renminbi
SHIBOR Shanghai Interbank Offered Rate
sqkm square kilometres
USD, US$ United States dollar
Growth rate conventions and abbreviations.
“Year–ended growth”, abbreviated %yr, is the level of an indicator in a single period (a month or quarter) versus the corresponding period in the prior year, expressed as a percentage.
The term “smoothed growth” should be understood to represent a 3 month moving average (3mma) of the year– ended growth rate.
“Year–to–date growth”, abbreviated %ytd, is the accumulated level of an indicator at a point in the calendar year (for example year–to–June, year–to–Sep) versus the corresponding point in the prior year, expressed as a percentage.
“Annual average growth”, abbreviated %ann, is the level of an indicator over four quarters, versus the previous four quarter period, expressed as a percentage.
“Month–on–month and quarter–on–quarter growth”, abbreviated %mth or %qtr, is the level of an indicator in one period, versus the immediately prior period, expressed as a percentage.
“Annualised growth or annualised rate”, is the change in an indicator in a single period grossed up to a year, expressed as a percentage. If seasonally adjusted, this may be rendered as %saar.
vi China Resources Quarterly • Southern summer ~ Northern winter
ForewordWelcome to the Southern summer ~ Northern winter edition of the China Resources Quarterly – hereafter the CRQ. The CRQ is a collaborative research venture between the Westpac Institutional Bank (hereafter Westpac) and the Australian Government Department of Industry, Innovation and Science.
The CRQ is the primary reference point for public and private sector decision makers seeking to understand developments in the Chinese economy, with special reference to its demand for resources.
This edition has been compiled against a discouraging economic backdrop. China’s domestic demand profile remains fragile and exports are falling. As a result, nominal activity growth is extremely subdued vis-a-vis the double-digit percentage growth rates that were de rigeur for much of the last decade.
In the resources sphere, the intersection of increasing Australian supply potential and the fact that it is the most resource and energy intensive parts of the Chinese economy that have slowed the most has produced steep declines in the prices of a number of important commodities.
With China’s development model in the midst of a major structural inflection point, and Australia’s own commodity cycle having shifted decisively into the supply phase, it is more vital than ever to trade in fact rather than rumour. The CRQ aims to do its part in this regard by making available rigorous and empirically grounded analysis of macroeconomic and resource industry trends.
China is now the world’s largest national economy in purchasing power parity (internationally comparable volume) terms and the largest producer of industrial value added, however measured. And it is now a free-trade agreement partner of Australia. These observations underscore the value of continuing to deepen our collective understanding of the ever-evolving Chinese economy.
Bill Evans Mark Cully
Chief Economist Chief Economist
Westpac Department of Industry, Innovation & Science
China Resources Quarterly • Southern summer ~ Northern winter 1
Executive summary
The Chinese economy continued to lose momentum through 2015, consistently registering sub-par outcomes over the year. Since the previous edition of the CRQ, aggregate demand moderated further in the December quarter. The principal sources of weakness remain building activity and heavy industry on the domestic front, in addition to soft external demand for Chinese produced goods. Against these negatives however, the services sector remains a key positive, experiencing robust growth in 2015.
Growth in heavy industrial capacity and in mining investment both slowed significantly during 2015, with coal mining and ferrous metals smelting among the weakest segments. Outlays on utilities capex have grown at a healthy pace, while investment in transport infrastructure continues to run at a relatively high level. Public sector capex stabilized in 2015, having experienced steep declines in 2014; that said, overall support for demand from this quarter has been extremely modest.
Real estate construction activity remains weak, and from the point of view of sales turnover, the housing market may be at an important inflection point. In recent months, there has been evidence of dwelling price gains fading before an aggregate spill-over from the early respondents to policy easing to the smaller, less wealthy, non-coastal cities has been achieved. This earlier than anticipated levelling out in the sales rebound will delay any recovery in building activity until deep into 2016.
The heavy industrial sector continues to struggle. The proportion of industrial firms making losses remains historically high; and demand for basic inputs consumed by construction has deteriorated. As a result, excess capacity is looking increasingly pronounced in some sub-sectors; and producer prices continue to decline, as they have done since early 2012.
China’s exports fell in 2015, with the deterioration evident across the G3, in intra–Asian trade and in shipments to extra-regional emerging markets. Demand for imported raw materials has been reasonable (albeit volatile) in volume terms, but the overall import bill has declined due to steep falls in metals, energy and certain food prices.
An unexpected shift in exchange rate policy sparked global comment in the second half of 2015 (and again in early 2016). Yet, with respect to capital flows, the reduction in FX reserves associated with intervention is only part of the story. China’s ongoing development and first steps toward financial liberalisation have seen robust growth in service imports; Chinese bank loans to foreign entities; and outward foreign direct investment.
Commodity prices followed the declines of 2014 and the first half of 2015 with yet further declines through late-2015 and early-2016. Lower prices have been driven largely by increased supply, although as noted above and throughout the CRQ, growth in demand has, in the main, been considerably lower than the norms established in the 2000s.
The global supply trend has been exemplified by Australia’s bulk commodity export volumes, which have continued to increase despite substantially lower prices. Even so, as the period of time that commodity prices spend around their current levels extends, the more pressure will be brought to bear on those mines, in Australia, China and elsewhere, that are operating in the upper quartile of their respective industry cost curves.
2 China Resources Quarterly • Southern summer ~ Northern winter
The Chinese economy had a sub-par year in 2015, with an already weak first six months followed by a distinct loss of momentum in the second half. Since the previous edition of the CRQ, the overarching narrative has changed little. Heavy industry and construction remain the principal sources of weakness domestically; while modest global growth is a major impediment for external demand. Against this weakness, offsetting positives include the structural rise of the Chinese consumer and infrastructure capex associated with China’s continued urbanisation.
Real GDP expanded by 6.8%yr in Q4 2015. That compares to 6.9%yr in Q3; 7.0%yr in Q1 & Q2; 7.2%yr for Q4 2014 and 7.6%yr in Q4 2013.
While not the focus of market participants, nominal GDP has historically given a better guide on current momentum, exhibiting significantly more cyclical amplitude than the volume measure. In the December quarter, it decelerated further to 5.8%yr. Compare this to 7.1%yr just six months prior; 7.4%yr in Q4 2014; and 10.4%yr in Q4 2013. With the exception of the GFC period, the recent phase has produced the slowest nominal growth since the deflationary late 1990s. The change in the GDP deflator, a derived estimate of economy-wide prices, was –1.0%yr in Q4, versus +0.2%yr a year ago and +2.8%yr in 2013.
Looking at the breakdown of (nominal) activity from the production side of the accounts highlights the key tension in the China growth narrative. Whereas momentum in the secondary sector has moderated to just 0.2%yr as at Q4 2015, growth in the tertiary sector (i.e. services production) remains a resoundingly healthy 12%yr, in part due to stronger demand from consumers. The rise of the consumer is made clear in the expenditure detail: two years ago, fixed capital formation and final consumption contributed 4.2ppts and 3.7ppts respectively. At end-2015, the relevant contributions for investment and consumption are 2.5ppts and 4.6ppts.
By sector, nominal investment growth in heavy industrial and extractive industries remains weak, so too for housing and non–residential building (see page 4). Utilities and transport capex however remain at elevated levels. State-owned enterprises continue to contribute a little over a third of the growth in fixed investment.
-10
0
10
20
30
40
50
-10
0
10
20
30
40
50
Mar-93 Sep-97 Mar-02 Sep-06 Mar-11 Sep-15
%yr%yrTotal
Secondary
Tertiary
Sources: Westpac Economics, CEIC
Nominal GDP: total & by broad sector
Various elements of China’s national accounts
-2
-1
0
1
2
3
4
5
6
Investmentppt cont
Consumptionppt cont
Net exportsppt cont
GDP deflator%ytd
%ytd or ppt
Q3 '13 Q4 '13
Q1 '14 Q2 '14
Q3'14 Q4'14
Q1'15 Q2'15
Q3 '15 Q4'15
Sources: CEIC, Westpac Economics.Dec-13 GDP deflator interpolated.
The development of the investment cycle
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
Real estate Manuf Transport Utilities Total
%ytd%ytd
Dec-11 Dec-12 Dec-13
Dec-14 Dec-15
Sources: CEIC, Westpac Economics
Figure 1: Nominal GDP: total & broad sectors
Figure 2: Various elements of the national accounts
Figure 3: The investment cycle: a sectoral view
Recent developments in the Chinese economy
China Resources Quarterly • Southern summer ~ Northern winter 3
It is constructive to complement the national accounts with a range of alternative indicators which also correlate with overall activity. Doing so provides a richer and more complete picture of key macroeconomic trends.
Beginning with the People’s Bank of China’s corporate survey, we see that the largest firms across the nation believe conditions deteriorated further in the final quarter of 2015 – consistent with the national accounts.
The survey’s ‘business situation’ measure has now been below its long-run average for eight consecutive months – and ten of the past eleven. Weakness in domestic orders is a key factor; though, as per this survey and recent PMI results, external demand is also unsupportive, with foreign orders contracting.
Other measures of aggregate activity highlight the impact that weak conditions in the old bellwether sectors of manufacturing and construction have had on raw material demand. Growth in steel demand remains in trend decline, from 12%yr at end 2013 to –0.7%yr at the close of 2015; likewise, though it bounced in 2015, demand for cement is continuing to fall, currently –4.3%yr. Reduced activity in manufacturing has also seen growth in electricity consumption abate.
As noted in our discussion of GDP, in stark contrast to the ongoing deterioration in secondary sector growth, and consequently raw material demand, is robust momentum in services.
This sector is job intensive. And given the stage of development China currently finds itself in, is the key to continued, sustainable wage gains for the urbanising population.
Buoyed by rapidly growing interest in the stock market and wealth management products in 2014/15, the financial sector experienced particularly rapid growth of 23%yr to end-2015.
For real estate services, growth of near 10%yr is modest historically, but still provides solid support for the aggregate pulse. A strengthening trend for the wholesale & retail sectors is to be expected as more jobs are created and a greater share of income is spent on discretionary consumption.
80
85
90
95
100
105
110
115
120
125
130
Dec-99 Dec-02 Dec-05 Dec-08 Dec-11 Dec-145
10
15
20
25Nominal GDP growth (lhs)Business situation* (rhs)Domestic orders* (rhs)
Sources: CEIC, Westpac Economics. * 5000 enterprise survey. Dec-13 nominal GDP growth interpolated.
% long run average%yr
China: business conditions, orders & GDP
Aggregate activity proxies
-30
-15
0
15
30
45
60
-15
0
15
30
45
Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16
Cement (lhs) Steel (lhs)
Electricity (lhs) Exports (rhs)
%yr %yr
Sources: CEIC, Westpac.3mma of year-ended rates.
-10
0
10
20
30
40
50
-10
0
10
20
30
40
50
Mar-93 Sep-97 Mar-02 Sep-06 Mar-11 Sep-15
%yr%yr
Financial services
Real estate services
Tertiary total
Wholesale and Retail
Sources: Westpac Economics, CEIC
Nominal services activity by sector
Figure 4: Business conditions, orders & GDP
Figure 5: The old model: bellwether sectors
Figure 6: The new model: bellwether sectors
4 China Resources Quarterly • Southern summer ~ Northern winter
The real estate sectorReal estate represents around one quarter of nominal urban fixed investment. Real estate investment itself is split roughly 70/30 between residential and non–residential. State–owned enterprises represent around 14% of the total.
In the previous edition of the CRQ, we noted that the real estate slowdown directly accounted for around 45% of the 5.8ppt deceleration in investment growth in the year-to-September 2015. Come December, the contribution to the 2015 capex slowdown increased slightly, to around 47%.
Our interpretation is that the housing market may be at an important inflection point. The cumulative evidence implies that the genuine price and turnover recovery in tier-1 and certain tier-2 cities seen earlier in 2015, responding to the shift in policy stance, strong pass through from benchmark rate cuts to mortgages and the increase in affordability brought about by the weak performance over the last year, is no longer broadening out to the smaller, less wealthy jurisdictions where developer inventories are most pronounced. In short, the impetus provided by easier housing policies is fading before an aggregate spill-over to the smaller, less wealthy, non-coastal cities has been achieved.
In terms of the pricing detail, the net balance of 70 cities seeing month-on-month price appreciation in new dwellings eased to +20.0% in December (41 rising, 27 declining) from +28.6% in September (40 rising, 20 declining); the equivalent figures for secondary markets are +14.3% in December (35 up, 25 down) and +30.0% in September (40 up, 19 down).
The volume of housing sales turnover effectively stalled at just 1.6%yr in December, down from +9.0%yr in September and 16.0%yr in June. After spiking in September to +15.3%yr, starts have consequently slumped again in the past three months, to –6.7%yr in December. On the whole, until we see a broader improvement in prices across the tier-2 and tier-3 cities, we are unlikely to see a material improvement in activity. Herein is justification for continued policy easing by authorities to stoke long-lasting confidence and demand in this key sector of China’s economy.
70 city house prices: net balance m/m chg
-100
-80
-60
-40
-20
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20
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-100
-80
-60
-40
-20
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100
Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16
Net % of cities Net % of cities
New
Secondary market
Sources: CEIC,Westpac Economics
Housing sales, completions & land prices
90
100
110
120
130
140
150
160
170
180
75
100
125
150
175
200
225
250
275
Aug-06 Aug-08 Aug-10 Aug-12 Aug-14
indexindex
Completions (lhs)
Sales (lhs)
Residential land price (rhs)
Sources: CEIC, Westpac. Aug-2006 = 100.Underlying activity data in sqm.Land price is a spliced series of 100 and 70 city series.
Residential sales & starts: volume
-45
-30
-15
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15
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105
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-30
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Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14
%yr%yr
Sales
Starts
Sources: CEIC, Westpac.Underlying data in sqm.3mma of the year-ended growth rate.
Figure 8: Completions, sales & land prices
Figure 9: Housing sales and starts: volumes
Figure 7: 70 city house prices: m/m chg net balance
China Resources Quarterly • Southern summer ~ Northern winter 5
Monetary & financial conditionsThe monetary policy stance has had a basic tightening posture since 2011, related to the unwinding of the stimulus-era legacy, periodically interrupted by a cyclical need to underpin growth and/or accommodate smooth refinancing. The annual flow of credit to GDP peaked at 40% in late 2009; hit a local trough of 25% of GDP in early 2012; rebounded to 33% of GDP in early 2013; and then hit another low south of 23% of GDP as of Q2 2015. While traditional bank loans were a major contributor to the stimulus package, much of the cyclical amplitude since has been related to shadow finance, dominated by the off-balance sheet activity of the banks themselves (figure 10).
Last August, authorities altered the way in which the Renminbi was managed, focusing on a basket of currencies as opposed to the bilateral rate against the USD. Notwithstanding the circa 6.0% depreciation of USD/CNY since then (two-thirds of which came in the first month), the real exchange rate remains strong.
Coupled with real interest rates just a tick below average (despite a series of cuts), a strong real exchange rate means financial conditions are inappropriately restrictive, giving cause for further action from policy makers in coming months.
In aid of financial market stability and confidence in their longer-run objectives, Chinese authorities have intervened in FX markets over the past six months and also tightened capital flow rules. Markets are anxiously assessing these efforts to contain ‘speculative’ capital outflows. While we believe the authorities will prove successful, volatility seems a likely constant in the process.
It is worth highlighting that there are additional factors behind the depletion of FX reserves, namely: a rise in foreign loans made by Chinese banks and outward FDI by Chinese corporates and citizens at a time of weaker export receipts.
As internationalisation and development proceed, private flows will grow rapidly. Bank-related activity; outward direct investment; rapid growth in portfolio flows (from a very low base) and a growing services deficit will all become increasingly important avenues for goods’ surplus recycling.
Financial conditions in China
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-2
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Mar-01 Mar-04 Mar-07 Mar-10 Mar-13 Mar-16
%yr
Real effective RMB (%yr, lhs)Real lending rate (ppt deviation from average, rhs)
Sources: CEIC, Westpac Economics.
ppt
Figure 10: Flow of credit by type, % of GDP
Figure 11: Financial conditions in China
Figure 12: FX reserves & net capital flows by type
Total credit supply – new flows, % of GDP
-10
0
10
20
30
40
50
Mar-03 Mar-06 Mar-09 Mar-12 Mar-15-10
0
10
20
30
40
50%GDP%GDP
Off balance sheet*
Loans, including FX
Other^
Total
Sources: CEIC, Westpac. *RBA definition. ^Mainly bond and equity.
4 quarter sum of new flows.
FX reserves & capital flows
-210
-180
-150
-120
-90
-60
-30
0
30
60
90
120
-210
-180
-150
-120
-90
-60
-30
0
30
60
90
120
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
USDbnUSDbn
Other
FDI inflow
Trade balance
Change in FX reserves
Sources: CEIC, Westpac.Westpac estimates for FX reserves & “other” for Apr-Jun 2015.
6 China Resources Quarterly • Southern summer ~ Northern winter
Qua
rter
lyD
ec–1
2M
ar–1
3Ju
n–13
Sep–
13D
ec–1
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ar–1
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Real
GD
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Nom
inal
GD
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8
Cont
ribut
ions
to re
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DP
perc
enta
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oint
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Fina
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sum
ptio
n ex
pend
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4.3
4.3
3.4
3.5
3.7
5.5
4.0
3.6
3.7
4.5
4.1
4.0
4.6
Gro
ss c
apita
l for
mat
ion
3.2
2.3
4.1
4.3
4.2
3.1
3.6
3.0
3.4
1.2
2.6
3.0
2.5
Net
exp
orts
0.1
1.1
0.1
-0.1
-0.2
-1.2
-0.2
0.8
0.2
1.3
0.3
-0.1
-0.2
Seco
ndar
y in
dust
ry %
ytd
8.2
7.7
7.6
7.8
7.9
7.3
7.5
7.4
7.3
6.3
6.1
6.0
6.0
Tert
iary
indu
stry
%yt
d8.
08.
38.
38.
38.
37.
67.
67.
67.
88.
08.
38.
48.
4
Curr
ent A
ccou
nt %
GD
P 4q
ma
2.5
2.6
2.4
1.8
1.5
1.2
1.5
1.8
2.1
2.8
2.8
2.0
1.4
GD
P de
flato
r %yr
1.9
2.5
1.9
2.3
2.8
1.0
1.1
1.3
0.2
-0.4
0.1
-0.7
-1.0
Fixe
d in
vest
men
t defl
ator
%yr
0.3
0.2
-0.1
0.0
0.9
1.1
0.6
0.4
-0.1
-0.9
-1.2
-2.3
0.0
Land
pric
e in
dex
%yr
2.6
3.9
5.1
6.2
7.0
7.5
7.2
6.1
5.2
3.8
3.4
3.5
3.2
Cons
umer
pric
e in
dex
%yr
2.1
2.4
2.4
2.8
2.9
2.3
2.2
2.0
1.5
1.2
1.4
1.7
1.7
Prod
ucer
pric
e in
dex
%yr
-1.7
-2.5
-2.2
-1.4
-1.7
-1.9
-1.1
-2.2
-4.1
-4.6
-5.4
-5.9
-5.9
Cent
ral r
even
ue 4
qma
%yr
12.8
10.7
10.1
10.8
10.2
10.8
10.8
9.7
8.7
7.3
7.5
8.2
8.3
Cent
ral e
xpen
ditu
res
4qm
a %
yr15
.111
.610
.87.
511
.211
.313
.414
.18.
57.
67.
111
.114
.5
Cent
ral o
pera
ting
posi
tion
4qm
a %
GD
P-1
.6-1
.7-1
.7-1
.4-1
.8-1
.8-2
.3-2
.4-1
.8-1
.9-2
.2-3
.0-3
.2
Mon
ey s
uppl
y M
2 %
yr13
.815
.714
.014
.213
.612
.114
.712
.912
.211
.611
.813
.112
.8
Bank
loan
s (s
tock
) %yr
15.0
14.9
14.2
14.3
14.1
13.9
14.0
13.2
13.6
14.7
14.4
15.8
0.0
Tota
l cre
dit s
uppl
y (n
ew, r
ollin
g an
nual
) %G
DP
29.5
33.0
32.5
31.5
29.4
28.0
29.0
26.0
25.9
24.0
22.4
23.2
22.8
Tabl
e 1:
Gen
eral
mac
roec
onom
ic d
ata
Tabl
e 1
cont
inue
d on
pag
e 7
China Resources Quarterly • Southern summer ~ Northern winter 7
Qua
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2M
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3Ju
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Sep–
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ec–1
3M
ar–1
4Ju
n–14
Sep–
14D
ec–1
4M
ar–1
5Ju
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Sep–
15D
ec–1
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Expo
rts
%yr
9.4
18.9
4.1
3.9
7.5
-4.7
5.0
13.0
8.6
10.0
-2.2
-5.9
-5.3
to G
3-1
.63.
4-4
.92.
69.
42.
89.
310
.53.
87.
6-1
.0-3
.3-4
.2
to A
sia
ex Ja
pan
21.7
36.7
15.2
7.5
6.9
-10.
32.
816
.213
.39.
9-2
.6-7
.4-4
.1
to A
ustr
alia
12.4
5.7
-5.3
3.0
-1.5
1.1
4.8
4.1
5.3
14.4
4.2
1.0
2.0
to n
on–A
sian
em
ergi
ng m
arke
ts10
.222
.20.
4-1
.45.
9-3
.33.
914
.610
.016
.6-5
.0-1
0.0
-14.
7
Impo
rts
%yr
2.7
9.4
5.2
8.4
7.2
3.3
1.5
1.2
-1.4
-17.
9-1
3.5
-14.
2-1
2.0
from
G3
-4.3
-0.8
-0.1
4.3
8.1
11.5
7.4
4.3
2.4
-11.
8-1
0.2
-13.
0-1
1.0
from
Asi
a ex
Japa
n10
.917
.58.
17.
31.
5-4
.71.
73.
5-0
.4-1
4.1
-11.
4-1
4.5
-9.2
from
Aus
tral
ia-8
.17.
59.
119
.033
.524
.82.
4-1
.9-2
0.5
-26.
5-3
0.9
-20.
5-1
8.5
from
non
–Asi
an e
mer
ging
mar
kets
-1.7
-0.9
-6.8
4.9
6.3
2.4
4.5
0.8
-4.4
-36.
7-2
7.6
-20.
5-2
3.0
Trad
e ba
lanc
e U
SDbn
83.3
43.5
65.7
61.5
90.5
16.6
85.9
128.
114
9.5
123.
713
9.5
163.
617
4.8
Cha
nge
in F
X re
serv
es U
SDbn
2613
154
166
159
127
45-1
06-4
5-1
13-3
6-1
80-1
84
Ente
rpris
e su
rvey
– n
et b
alan
ce, 5
0 ba
se
Busi
ness
con
ditio
ns61
.862
.657
.156
.358
.155
.355
.454
.954
.552
.851
.849
.448
.4
Profi
tabi
lity
53.1
52.8
55.6
55.1
57.6
50.9
54.1
55.0
55.0
51.0
52.8
51.1
50.5
Dom
estic
ord
ers
47.7
48.8
50.3
48.2
49.4
44.4
48.5
46.9
46.5
42.5
46.3
43.3
42.5
Fore
ign
orde
rs47
.146
.649
.950
.148
.745
.449
.749
.947
.944
.248
.746
.343
.7
Bank
ing
clim
ate
– %
of a
vera
ge
Dem
and
for l
oans
90.8
98.9
92.6
95.4
95.0
99.9
91.3
85.1
82.9
87.9
77.2
72.4
72.6
Ease
of p
olic
y st
ance
81.7
91.6
91.5
72.6
73.6
68.7
74.1
84.3
90.3
96.9
118.
711
0.1
121.
0
Bank
ers’
confi
denc
e le
vel
99.7
130.
711
6.0
110.
412
9.1
122.
497
.210
7.0
95.0
86.0
78.6
73.5
68.6
Wes
tpac
MN
I Con
sum
er S
entim
ent*
– %
of a
vera
ge
Hea
dlin
e co
mpo
site
100.
410
0.4
101.
496
.110
2.8
98.6
97.3
94.6
92.6
93.9
92.7
96.7
93.2
Expe
cted
fam
ily fi
nanc
es10
1.7
101.
810
3.4
96.7
103.
997
.899
.494
.992
.394
.193
.299
.293
.5
Hou
se p
rice
expe
ctat
ions
99.6
100.
410
0.2
104.
210
2.7
106.
210
5.0
106.
210
4.9
106.
910
5.8
107.
910
4.3
Empl
oym
ent o
utlo
ok10
3.1
107.
710
6.8
96.4
109.
198
.698
.793
.792
.492
.992
.289
.889
.1
Sour
ces:
Wes
tpac
Eco
nom
ics,
CEI
C, M
NI.
Tabl
e 1:
Gen
eral
mac
roec
onom
ic d
ata
* Q
uart
erly
obs
erva
tions
are
the
3 m
onth
ave
rage
.
8 China Resources Quarterly • Southern summer ~ Northern winter
Mon
thly
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Indu
stria
l pro
duct
ion
%yr
3m
ma
7.3
7.2
6.4
6.1
5.9
6.3
6.3
6.3
5.9
5.8
5.8
5.9
Elec
tric
ity6.
03.
82.
8-0
.12.
53.
92.
62.
81.
61.
41.
41.
4
Proc
esse
d cr
ude
oil
7.5
5.4
5.5
4.8
8.2
7.2
6.2
5.6
4.7
3.3
2.2
2.8
Cem
ent*
nana
-21.
2-1
4.4
-11.
6-6
.6-5
.7-5
.1-4
.1-3
.6-4
.3-4
.3
Stee
l pro
duct
s*na
na2.
63.
42.
92.
1-0
.2-0
.9-1
.4-0
.90.
0-0
.7
Non
–fer
rous
met
als*
nana
17.3
19.9
21.1
23.5
22.6
21.2
18.4
16.1
13.6
9.9
Aut
omob
iles*
nana
3.7
-0.6
-2.6
-5.2
-8.9
-10.
6-1
2.3
-7.0
0.1
8.8
Civ
ilian
shi
ps*
nana
26.9
11.0
7.0
-1.7
-1.9
-0.7
-2.3
0.3
-9.8
-9.1
Met
al c
uttin
g to
ols*
nana
4.6
6.9
5.2
9.7
2.5
-1.7
-14.
9-1
6.4
#na
#na
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Fixe
d as
set i
nves
tmen
t %yr
3m
ma
13.3
13.4
13.6
12.2
10.9
10.4
10.5
10.2
8.6
8.4
9.0
9.0
Man
ufac
turin
g, o
f whi
ch13
.312
.910
.59.
99.
99.
38.
77.
76.
46.
87.
47.
4
Hea
vy in
dust
ry12
.711
.58.
77.
56.
87.
16.
25.
43.
44.
94.
95.
7
Har
d in
frast
ruct
ure,
of w
hich
17.6
19.6
22.0
20.5
18.5
17.3
17.3
18.8
16.6
15.5
16.7
15.4
Hig
hway
s21
.029
.224
.421
.920
.521
.118
.414
.912
.213
.815
.713
.4
Railw
ays
14.6
11.9
33.3
34.5
44.3
23.7
26.7
12.3
3.4
-10.
2-1
0.7
-13.
6
Util
ities
15.3
18.2
21.9
20.5
18.1
15.7
15.8
15.8
14.2
12.8
14.5
17.5
Real
est
ate,
of w
hich
5.4
6.3
9.1
5.8
3.2
2.1
2.9
1.7
-0.4
-2.2
-3.5
-3.1
Dw
ellin
gs3.
95.
26.
93.
50.
60.
72.
31.
7-0
.1-1
.8-2
.9-3
.0
Non
–res
iden
tial
8.4
8.8
14.0
10.9
8.7
5.1
4.3
1.9
-1.1
-3.0
-4.8
-3.4
Off–
mar
ket u
rban
con
stru
ctio
n-2
7.7
-18.
7-5
.5-1
0.3
-20.
9-1
3.7
-29.
8-2
7.2
-37.
5-6
.517
.033
.7
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Valu
e of
new
pro
ject
sta
rts
8.1
3.7
2.3
8.8
9.9
-0.2
-4.5
-3.8
1.2
-0.2
-0.2
-0.2
Num
ber o
f new
pro
ject
sta
rts
5.8
5.2
6.0
8.7
12.2
11.3
18.0
17.5
23.6
23.3
23.3
23.3
Loca
l gov
ernm
ent p
roje
cts
15.2
14.8
13.8
12.4
11.0
11.0
10.8
10.7
8.9
9.1
9.1
9.1
Cent
ral g
over
nmen
t pro
ject
s-8
.5-2
.710
.58.
37.
7-2
.92.
80.
33.
2-3
.0-3
.0-3
.0
Stat
e ow
ned
ente
rpris
e in
vest
men
t10
.612
.414
.512
.010
.110
.711
.912
.510
.210
.611
.79.
7
Tabl
e 2:
Res
ourc
e re
late
d ec
onom
ic in
dica
tors
Tabl
e 2
cont
inue
d on
pag
e 9.
* O
utpu
t for
thes
e se
ctor
s w
as n
ot re
leas
ed fo
r the
mon
ths
of Ja
nuar
y an
d Fe
brua
ry. A
s a
cons
eque
nce,
we
have
en
tere
d na
for t
hose
two
mon
ths
and
repo
rted
the
unsm
ooth
ed y
ear–
ende
d ra
te fo
r Mar
ch.
China Resources Quarterly • Southern summer ~ Northern winter 9
Mon
thly
%
yr 3
mm
a un
less
oth
erw
ise
spec
ified
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Volu
me
of h
ousi
ng s
tart
s-2
5.0
-20.
5-1
8.3
-17.
4-1
5.7
-14.
2-1
6.4
-17.
7-7
.6-8
.6-1
0.0
-17.
4
Volu
me
of h
ousi
ng s
ales
-10.
5-1
2.2
-11.
4-3
.66.
812
.716
.616
.614
.29.
77.
75.
2
Valu
e of
hou
sing
sal
es –
Nat
ionw
ide
-11.
4-1
3.8
-14.
2-9
.4-2
.15.
311
.616
.117
.918
.318
.012
.0
East
ern
prov
ince
s-1
3.6
-13.
8-1
3.0
-8.4
-0.6
8.8
17.0
22.9
25.1
25.4
24.7
16.2
Cent
ral p
rovi
nces
-9.8
-16.
8-1
9.2
-12.
3-3
.61.
75.
99.
010
.812
.013
.29.
2
Wes
tern
pro
vinc
es-6
.1-1
0.5
-12.
7-9
.5-5
.1-1
.61.
73.
94.
54.
44.
12.
7
Volu
me
of la
nd s
ales
-35.
8-2
4.4
-32.
4-4
3.5
-41.
7-4
4.5
-30.
6-3
2.6
-33.
6-3
7.1
-34.
9-3
4.9
70 c
ity n
ew d
wel
ling
pric
es n
et %
risi
ng m
–o–m
-88.
6-9
0.0
-50.
0-4
1.4
-32.
9-2
.91.
418
.628
.6-8
.611
.420
.0
70 c
ity se
cond
ary
dwel
ling
pric
es n
et %
risi
ng m
–o–m
-78.
6-7
5.7
-48.
6-7
.117
.132
.934
.334
.330
.027
.134
.314
.3
Aut
o sa
les,
of w
hich
7.6
6.8
3.6
0.9
0.8
-1.1
-3.3
-4.1
-2.7
3.6
11.3
15.8
pass
enge
r car
s10
.310
.98.
76.
54.
80.
5-2
.9-4
.4-2
.24.
413
.418
.5
Exca
vato
r sal
es-3
1.0
-43.
3-4
5.4
-49.
7-3
6.5
-33.
6-3
2.2
-32.
3-3
1.0
-31.
6-2
9.2
-28.
4
Terr
estr
ial f
reig
ht7.
39.
87.
76.
72.
11.
7-0
.5-2
.3-4
.2-6
.0-7
.2-1
2.2
Aqu
atic
frei
ght
18.2
13.0
5.2
1.2
0.8
1.6
4.1
4.1
4.6
5.3
5.9
4.7
Inte
rnat
iona
l air
freig
ht8.
013
.711
.09.
33.
75.
85.
13.
92.
62.
33.
64.
8
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Aug
-15
Sep-
15O
ct-1
5N
ov-1
5D
ec-1
5
Man
ufac
turin
g PM
I – in
dex
– of
whi
ch49
.849
.950
.150
.150
.250
.250
.049
.749
.849
.849
.649
.7
Out
put
51.7
51.4
52.1
52.6
52.9
52.9
52.4
51.7
52.3
52.2
51.9
52.2
New
ord
ers
50.2
50.4
50.2
50.2
50.6
50.1
49.9
49.7
50.2
50.3
49.8
50.2
New
exp
ort o
rder
s48
.448
.548
.348
.148
.948
.247
.947
.747
.947
.446
.447
.5
Raw
mat
eria
l inv
ento
ries
47.3
48.2
48.0
48.2
48.2
48.7
48.4
48.3
47.5
47.2
47.1
47.6
Fini
shed
goo
ds in
vent
orie
s48
.047
.048
.648
.047
.547
.747
.447
.246
.847
.246
.746
.1
Purc
hase
s of
inpu
ts49
.649
.449
.750
.151
.050
.950
.349
.448
.648
.848
.350
.3
Impo
rts
46.4
47.5
48.1
47.8
47.6
48.0
47.8
47.2
48.1
47.5
46.7
47.6
New
ord
ers
to fi
nish
ed g
oods
inve
ntor
ies
ratio
1.05
1.07
1.03
1.05
1.07
1.05
1.05
1.05
1.07
1.07
1.07
1.09
Sour
ces:
Wes
tpac
Eco
nom
ics,
CEI
C.
Tabl
e 2:
Res
ourc
e re
late
d ec
onom
ic in
dica
tors
10 China Resources Quarterly • Southern summer ~ Northern winter
Steel
• In Q4, Chinese steel prices continued on a downward trajectory—averaging 60 to 70% below the Q2 2008 peak. Continued weakness in crude steel consumption, largely attributable to soft demand from the construction sector, aided the fall in steel prices.
• China’s steel production fell 3.1%yr in Q4 to 194 Mt—the lowest since Q4 2012. Falls in production across most of the country—particularly in Liaoning, Xinjiang and Shanxi—more than offset a 293 kt increase in production in the key producing region of Jiangsu.
• The pace of decline in China’s crude steel production has been accelerating, with the 6.1 Mt yoy fall in Q4 the steepest since Q4 2008.
Benchmark steel prices
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
RMB/tRMB/t
hot-rolled sheetrebarplatewire rodcold-rolled sheet (rhs)
Source: Bloomberg
The rebar steel price & input costs
200
250
300
350
400
450
500
550
600
650
700
2535455565758595
105115125135145155165
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
USD/tIndex USD
Australian inputs index (lhs)
Chinese rebar (rhs)
Sources: Westpac Economics, Bloomberg
Input index based on 120kg of scrap, 770kg of met coal & 1400kg of iron ore to produce 1 tonne crude steel
*Australian spot prices for iron ore & coking coal.
China crude steel output: level & growth
-200
-150
-100
-50
0
50
100
150
200
250
-15
0
15
30
45
60
75
90
105
120
Dec-91 Dec-96 Dec-01 Dec-06 Dec-11
%yr Mt
Crude steel output (rolling 3mth sum, rhs)Growth rate (rhs)
Source: CEIC
Figure 13: Benchmark steel prices
Figure 14: Crude steel output: level & growth Figure 15: The rebar price and input costs
Table 3: Steel prices (quarterly averages).
Domestic RMB/t Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Rebar 3507 3527 3348 3258 3078 2940 2577 2435 2226 2055
Hot–rolled sheet 3609 3489 3399 3392 3272 3008 2636 2425 2071 1882
Cold–rolled sheet 4460 4342 4214 4096 4001 3898 3582 3160 2719 2423
Plate 3599 3455 3433 3448 3270 2962 2588 2404 2091 1916
Wire rod 3509 3519 3394 3347 3155 2952 2605 2471 2265 2083
Benchmarks USD/t
Rebar benchmarker 474 477 454 431 408 392 344 314 274 251
HRC benchmarker 494 480 466 454 442 410 359 325 271 245
CRC benchmarker 613 611 597 562 551 534 489 424 356 322
Source: Bloomberg.
China Resources Quarterly • Southern summer ~ Northern winter 11
• China’s excess capacity has contributed to a rapid increase in exports. China’s net export position of crude steel in Q4 was 26 Mt—around 6% of global production and just shy of the record high of 28 Mt recorded in Q3.
• To combat excess capacity in the steel and coal sectors, the Chinese Government announced it will spend RMB 100 billion (US$15.25 billion) every year for up to five years. Over this period it will cut 100–150 Mt of crude steel production by eliminating 90 Mt of capacity.
0
200
400
600
800
1000
1200
1400
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China
India
Japan
South Korea
USA
Sources: World Steel Association; IMF
Consumption, kgpp
Steel demand per headFigure 19: Steel demand per head
Steel end-use by sector
Construction & others
73%
Machinery16%
Autos7%
Appliances 2%
Rail1%
Shipbuilding1%
Source: Bloomberg
Steel inventory cycle: Nov-13 to Sep-15.
-15
0
15
30
45
-3 0 3 6 9 12
inventories%yr
Sales%yr
Nov-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Dec-13
Jun-14
Jul-14
Sep-14
Aug-14
Oct-14
Nov-14
Jan-15Dec-14
Feb-15
Mar-15
Apr-15Oct-15
Jun-15
Nov-15
Chinese construction, steel & cement
-30
-15
0
15
30
45
-10
0
10
20
30
40
Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
%yr 3mma%yr 3mma
Real estate plus hard infra investment (lhs)Steel product output* (rhs)Cement output* (rhs)
Sources: CEIC, Westpac Economics.*Jan-Feb interpolated in 2014 and 2015.
Figure 16: Steel end–use by sector
Figure 18: Steel inventory–to–sales scatter plot
Figure 20: Construction, cement and steel
Figure 17: Steel inventories by product typeChinese steel inventories by product
50
150
250
350
450
50
150
250
350
450Mt Mt
hot rolled long production
Sources: Westpac Economics, Bloomberg
30
40
50
60
70
50
70
90
110
130
Oct-08 Jan-10 Apr-11 Jul-12 Oct-13 Jan-15
cold rolled (rhs)
steel plate (lhs)
12 China Resources Quarterly • Southern summer ~ Northern winter
Table 4: Iron ore prices (USD/t, 62% ferrous metal content unless otherwise indicated).
TSI spot price, CFR Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 133.6 134.9 120.5 103.0 90.4 74.4 62.5 58.5 54.9 46.7
Quarter end 131.4 134.7 116.6 94.0 78.1 71.3 51.4 59.4 56.3 43.6
Quarter high 144.18 140.28 135.27 119.82 98.35 84.17 71.49 65.61 59.2 56.6
Quarter low 118.28 130.35 103.99 89.48 77.97 66.8 51.4 47.1 44.6 38.3
TSI in CNY terms, CFR 818.1 821.8 735.4 642.0 557.6 457.4 389.7 362.7 345.8 298.7
IODEX Aust FOB 122.2 122.6 110.8 93.9 81.4 66.1 57.6 53.2 48.8 49.0
IODEX Brazil FOB 106.9 107.2 95.9 80.4 67.3 54.3 50.9 46.5 40.4 41.9
Sources: Bloomberg; Platts. CFR is cost including freight. FOB is free on board.
• Iron ore prices averaged US$47/t (CFR) in Q4, down 15%qtr and 37%yr. Prices slid as low as US$38/t in mid-December but rebounded to around US$41/t by early February. Increasing supply from Australia and Brazil, amid weaker demand from China’s steel industry, have contributed to downward pressure on prices.
• China’s iron ore port stocks rose 10.4%qtr, to end Q4 at 89 Mt. They were down 6%yr.
• China’s iron ore production (run of mine) was down by 8%yr in 2015. However, the rate of decline in China’s pig iron production relative to the increase in iron ore imports imply a decline in the iron content of domestic
Iron ore prices: spot and forward
20
40
60
80
100
120
140
160
180
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
USD/t
62% CFR Qingdao
SGX 3 month forward
SGX 12 month forward
Source: Bloomberg
Iron ore prices and rebar steel
300
350
400
450
500
550
600
650
700
20
40
60
80
100
120
140
160
180
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
USD/tUSD/t
Iron ore 62% CFR (lhs) rebar (rhs)
Source: Bloomberg
Figure 21: Iron ore prices: spot and forward
Figure 22: Iron ore prices and rebar steel Figure 23: Port inventories versus end demand
Iron ore
Chinese port ore inventories scaled by demand
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
ratioratio
To pig iron production
To crude steel production
Sources: CEIC, Bloomberg, Westpac Economics
China Resources Quarterly • Southern summer ~ Northern winter 13
production. As such, the decline in the metal content of production is likely to be steeper than reported by official statistics. This has provided additional support to demand for seaborne iron ore.
• Falling global bulk freight rates have improved the competitiveness of seaborne iron ore. In early February, the Baltic Dry Index was the lowest since records began in 1985. Reflecting this, iron ore freight rates for Capesize bulk carriers travelling from Western Australia to Qingdao declined to US$3.05/t in late January, down 31%yr and the lowest since 1999.
World trade in iron ore - seaborne
China65%
EU 11%
Japan10%
South Korea
5%other
9%
Imports
Source: World Steel Association
Australia50%
Brazil23%
South Africa
4%
Ukraine3%
Canada2%
other18%
Exports
Figure 27: World trade in iron ore – seaborne
Chinese import volumes by source
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
% shareMtAust (lhs) Brazil (lhs)Other (lhs) Aust market share (rhs)
Source: Bloomberg
Chinese iron ore imports
25
50
75
100
125
150
175
0
2
4
6
8
10
12
Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
USD/tUSDbn
Aust (lhs)Brazil (lhs)Other (lhs)62% CFR Qingdao (rhs)Import unit value (rhs)
Source: Bloomberg
Shares of world iron ore output
Australia36%
Brazil20%
China10%
India6%
Russia5%
other23%
Source: World Steel Association
Figure 24: Chinese import volumes by source
Figure 26: Chinese imports, unit values & prices
Figure 28 : Shares of world iron ore output
Figure 25: Australian iron ore exports to ChinaAustralian iron ore exports to China
0
1
2
3
4
5
6
7
8
9
10
10
15
20
25
30
35
40
45
50
55
60
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
AUDbnMt
volume (lhs) value (rhs)
Source: ABS
14 China Resources Quarterly • Southern summer ~ Northern winter
Iron ore mine cost curve
0 225 450 675 900 1125 1350 1575 1800 2025
USD/t
Others
Sierra Leone
Russia
Canada
China
India
Australia
Brazil
Sources: AME, Westpac. Includes mining, royalties, freight from mine to port, administration and processing.
Cumulative export supply, mt
Chinese ferrous metal miners making losses
0
5
10
15
20
25
30
0
5
10
15
20
25
30
Jun-07 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14
% share% share
Number of Chinese ferrous mining firmsmaking a loss, % of total
Sources: CEIC, Bloomberg, Westpac Economics
Figure 32: Chinese iron ore miners: loss–makers Figure 33: Seaborne iron ore cost curve
• Iron ore imports into China increased 9%yr in Q4. Australia and Brazil increased their share of the seaborne market into China in 2015. Australia’s share increased from 59% to 64% while Brazil’s share increased from 18% to 20%.
• Australia’s iron ore export volumes into China fell 0.9%qtr but increased 7%yr to 162 Mt in Q4. However, due to lower prices, values decreased 14%qtr and 18%yr to $A9 billion—the weakest result since Q1 2010.
• The first shipment from the Roy Hill project left Port Hedland on December 10, following three months of delays. The project aims to eventually produce 55 Mtpa.
Total supply of iron ore by source
0
50
100
150
200
250
0
50
100
150
200
250million tmillion t
Total
Domestic
Imports
Source: CEIC, Westpac.
0
10
20
30
40
50
60
Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15
% share
Rest of worldAustralia
Import share of total supply
Total ore supply by source
Iron ore inventories & supply growth
-40
-20
0
20
40
60
80
-40
-20
0
20
40
60
80
Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15
%yr%yr
Imports
Domestic production
Change in inventories
Sources: Westpac Economics, Bloomberg.Data smoothed.
Ferrous mining profit margins in China
450
550
650
750
850
950
1050
1150
1250
4
6
8
10
12
14
16
18
20
22
24
Dec-07 Dec-09 Dec-11 Dec-13 Dec-15
CNY/tmargin %
Ferrous metal mining margin (lhs)
Domestic ore prices ytd ave (rhs)
Sources: CEIC, Bloomberg, Westpac Economics
Figure 30: Chinese iron ore miners’ margins Figure 31: Chinese output, imports & stocks
Figure 29: China’s total iron ore supply
China Resources Quarterly • Southern summer ~ Northern winter 15
Iron
ore
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
sM
t21
6.7
219.
122
2.0
235.
324
2.1
233.
622
7.1
226.
024
6.3
253.
9
Aus
tral
iaM
t11
1.8
112.
911
8.2
138.
214
9.4
142.
714
4.4
146.
815
8.5
157.
9
Braz
ilM
t40
.544
.441
.638
.944
.745
.841
.842
.350
.157
.5
valu
eU
SDbn
26.3
28.1
28.4
25.7
21.9
18.5
15.8
13.2
14.8
14.1
Raw
pro
duct
ion
*M
t38
7.0
405.
430
4.2
393.
641
0.6
389.
328
0.6
350.
238
1.6
3 62
.6
Iron
ore
stoc
ks a
t por
ts, e
nd o
f qtr
Mt
70.1
81.3
103.
810
5.7
103.
295
.293
.374
.180
.989
.3
wee
ks o
f im
port
sw
eeks
4.1
4.8
6.1
6.2
6.1
5.6
5.5
4.4
4.8
5.3
Aus
tral
ian
expo
rts
to C
hina
Mt
113.
812
6.8
122.
214
5.8
149.
715
2.2
143.
715
4.6
163.
916
2.5
valu
eAU
Dbn
13.6
15.6
14.4
13.4
11.9
10.9
9.8
9.5
10.4
8.9
Met
allu
rgic
al c
oal
Chi
na im
port
sM
t19
.420
.713
.018
.113
.418
.010
.910
.714
.811
.6
valu
eU
SDm
n24
14.0
2418
.016
33.6
1812
.412
70.3
1736
.198
0.2
882.
611
62.8
790.
6
Aus
tral
ian
expo
rts
to C
hina
Mt
12.4
14.0
10.1
11.6
11.2
13.4
7.7
11.0
8.5
8.9
valu
eAU
Dm
n15
4718
2312
4812
3811
4415
1395
711
6093
210
96
Sour
ces:
Bloo
mbe
rg, A
BS, I
HS,
CEI
C. *
Raw
min
e ou
tput
with
a lo
w ir
on c
onte
nt.
Tabl
e 5:
Iron
ore
& m
etal
lurg
ical
coa
l sum
mar
y da
ta
16 China Resources Quarterly • Southern summer ~ Northern winter
Metallurgical coal
• Spot prices for metallurgical coal fell through Q4 and early 2016, weighed down by reduced import demand from China. Low volatility HCC CFR China averaged US$82 in Q4, down 33%yr and 10%qtr. Low volatility PCI CFR China averaged US$72, down 29%yr and 1%qtr, while Semi Soft CFR China averaged US$68, down 7%qtr and 24%yr.
• Australian benchmark prices for high-quality metallurgical coal delivered in Q1 2016 settled at US$81 a tonne (FOB), down from US$89 a tonne in Q4 2015.
• China imported 12 Mt of metallurgical coal in Q4, down 36%yr. China’s imports from Australia fell 41%yr to 6 Mt but remained the primary
50
70
90
110
130
150
170
190
50
70
90
110
130
150
170
190
Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15
USD/tUSD/t
Low Vol PCI Semi Soft Prem Low Vol HCC
Source: Platts
Met coal spot prices
Met coal use and supply by country
China53%
Australia17%
USA7%
Russia7%
India5%
Other11%
Production
Source: IEA.
China61%
other12%
India10%
other OECD
7%
Japan5%
Russia5%
Consumption
World trade in met coal
China21%
Japan17%
OECD Europe
19%
India17%
Other11%
South Korea12%
Ukraine3%
Imports
Source: IEA
Australia56%United
States18%
Canada10%
Russia6%
Mongolia3%
Other7%
Exports
Figure 34: Met coal spot prices
Figure 35: World trade in met coal Figure 36: Met coal use and supply by country
Table 6: Metallurgical coal prices (quarterly average spot prices).
unit Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Prem Low Vol HCC CFR China USD/t 154.7 156.3 135.0 124.3 123.3 121.8 111.8 94.5 90.8 82.0
Low Vol PCI CFR China USD/t 125.9 129.0 115.9 108.7 102.1 101.3 99.9 81.0 72.2 71.5
Semi Soft CFR China USD/t 109.1 110.9 101.1 92.8 87.7 89.7 86.6 76.9 72.5 67.8
Prem Low Vol HCC FOB Aust USD/t 140.9 140.5 120.6 111.4 110.7 110.0 104.0 86.8 82.7 75.8
Prem Low Vol HCC FOB Aust AUD/t 155.4 155.3 133.3 123.1 122.4 121.5 114.9 95.9 91.4 83.8
Source: Platts. CFR is cost including freight. FOB is free on board. HCC is hard coking coal.
China Resources Quarterly • Southern summer ~ Northern winter 17
source of China’s metallurgical coal imports, accounting for over 50%. China’s imports from Mongolia, China’s second largest source of imported metallurgical coal, decreased 15%yr to 3 Mt.
• Although China’s imports of metallurgical coal from Australia fell to 26 Mt in the 2015 calendar year, import volumes were still substantially above the levels recorded in the decade to 2013, which averaged around 8 Mt a year (from 2003-2013).
• Australia exported 8.9 Mt of metallurgical coal to China in Q4, a decline of 34%yr. Export values declined by 28%yr to $A1.1 billion, weighed down by falls in both price and volume.
Met coal seaborne cost curve
0 50 100 150 200 250 300
USD/t
Other Canada
United States Mongolia
Mozambique Australia
Sources: AME, Westpac. include s mining, royalties, freight from mine to port,
administration and processing.
Cumulative export supply, mt
Figure 40: Seaborne met coal cost curve
Chinese met coal import volumes
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
0
1
2
3
4
5
6
7
8
9
Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
USDbnMtAust. (lhs) Mongolia (lhs) Canada (lhs)Russia (lhs) Other (lhs) Value (rhs)
Sources: IHS, CEIC.
Total hard met coal exports: Australia
60
70
80
90
100
110
120
130
140
150
160
170
Nov-02 Nov-04 Nov-06 Nov-08 Nov-10 Nov-12 Nov-1460
70
80
90
100
110
120
130
140
150
160
170100kt mth100kt mth
Hard met coal exports, all destinations
Source: ABS, CoalPortal.com. Seasonally adjusted by Westpac Economics.
Aust met coal exports to China
0
150
300
450
600
750
900
0
1
2
3
4
5
6
Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15
AUDmnMt
volume (lhs) value (rhs) Source: ABS
Hard coking coal seaborne cost curve
0 30 60 90 120
USD/t
Other
Canada
United States
Mongolia
Mozambique
Australia
Sources: AME, Westpac. Includes mining, royalties, freight from mine to port, administration and processing.
Cumulative export supply, mt
Figure 37: Chinese met coal import volumes
Figure 39: Australian met coal exports: total Figure 38: Aust met coal exports to China
Figure 41 : Seaborne hard coking coal cost curve
18 China Resources Quarterly • Southern summer ~ Northern winter
Developments in China’s energy policy
• In December, China realised its 12th Five-Year plan goal of universal electricity access when it connected residents in the remote Qinghai-Tibet Plateau to the electricity grid. This will ensure reliable electricity access to households in the region.
• China and Iraq signed a Memorandum of Understanding (MoU) in December to promote energy cooperation. The MoU covers oilfield development and refinery construction in Iraq and the use of Chinese-made equipment in oil and gas ventures.
• In December, Sinopec and Rosneft signed a MoU on oil and gas projects in eastern Siberia during the 20th China-Russia Prime Ministers’ meeting. China National Petroleum Corporation and Gazprom also agreed on the design and construction of the cross-border section of the China-Russia east-route natural gas pipeline.
• In November, the National Energy Administration (NEA) announced that the 13th Five-Year plan will include plans to upgrade its energy system through innovation. As part of these plans it will coordinate the development of smart grids and distributed energy resources and the efficient allocation of resources in coal and thermal power production and oil refining.
• In late December Pakistan and China signed a financing agreement for a coal project in Pakistan as part of the China-Pakistan Economic corridor (a 3000 km network of roads, railways and energy infrastructure between the ports of Gwadar in Pakistan and Kashgar in Xinjiang). The project will include the development of a 3.8 Mt coal mine and 660 MW co-located power station. It is expected to cost more than US$2 billion, with around US$800 million of the funding to come from China.
• As part of the China-Pakistan Economic corridor initiative, Chinese company Zonergy began construction of the second phase of the world’s largest solar farm in Pakistan’s Punjab province. Once completed it will have total capacity of 1000 MW.
• The NEA announced that more than 1000 coal mines will be closed in 2016, which will remove around 60 Mt of capacity. These closures are in addition to the 70 Mt of capacity removed in 2015.
• The NEA announced plans to cut the share of coal in total energy consumption to 62.6% in 2016, from 64.4% in 2015. It was also announced that wind and solar power capacity would be increased by more than 21% in 2016, supported by an addition of at least 20 GW of wind power capacity and 15 GW of solar power capacity.
Electricity trends
• China generated 5.6 trillion kWh of electricity in 2015, up 2.4%yr, despite slowing economic growth. The largest increases were registered in nuclear power and wind generation, which increased by 32%yr and 19%yr, respectively. Hydro electricity generation increased 4.6%yr, while thermal electricity generation declined by a modest 0.3%yr.
• Investment in new generation capacity increased 12% in 2015 to RMB 409 billion. Lower investment in nuclear and hydro capacity, down 1.6%yr and 19%yr, respectively were offset by a 47%yr increase in investment in thermal generation capacity.
• Despite slower economic growth, overall electricity consumption in China increased 0.5% in 2015 to 5.5 trillion kWh. Consumption across all sectors increased except for the secondary industry, which declined 1.5%yr as activity in energy intensive sectors continued to contract. Tertiary, residential and primary electricity use increased by 7%yr, 5%yr, and 2.7%yr, respectively.
China Resources Quarterly • Southern summer ~ Northern winter 19
Shares of energy output growth
-15
0
15
30
45
-15
0
15
30
45
Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15
Contribution from other sourcesContribution from thermal generationElectricity production
%yr/ppt %yr/pptSources: CEIC,
Westpac
Figure 46: Chinese electricity growth: broad source
World energy production
other non-OECD34%
China19%
other OECD12%
United States14%
Russia 10%
Saudi Arabia
4%
India4%
Indonesia3%
Source: IEA
World energy consumption
other Non-OECD25%
China23%other OECD
18%
United States17%
India6%
Russia6%
Japan3%
Germany2%
Source: IEA
Chinese electricity use by sector
0
300
600
900
1200
1500
1800
Sep-12 Sep-13 Sep-14 Sep-15
Billion kWh
secondary industry residentialtertiary industry primary industry
Source: CEIC.
Chinese electricity output by source
0
200
400
600
800
1000
1200
1400
1600
Sep-98 Sep-01 Sep-04 Sep-07 Sep-10 Sep-13
Billion kWh
thermal hydro nuclear wind
Source: CEIC
Generation capacity by source
0.0
0.2
0.4
0.6
0.8
1.0
0.0
0.2
0.4
0.6
0.8
1.0
Thermal(7%)
Hydro(8%)
Nuclear(19%)
Wind(34%)
Solar(178%)
Billion kWBillion kW
2010 2011 2012
2013 2014 2015
Sources: CEIC, Westpac Economics. Number in parenthesesare CAGRs for the period 2009 to 2014.
Figure 43: World energy productionFigure 42: World energy consumption
Figure 45: Chinese electricity use by sectorFigure 44: Chinese electricity output by source
Figure 47: China’s generating capacity by type
20 China Resources Quarterly • Southern summer ~ Northern winter
Thermal coal
• Lower import demand from China and a slow supply response continued to keep pressure on key thermal coal FOB prices in Q4. Newcastle spot prices fell 18%yr, Richard’s Bay fell 22%yr and Baltic decreased 30%yr.
• The National Energy Administration (NEA) announced that more than 1000 coal mines will be closed in 2016, which will remove around 60 Mt of capacity. These closures are in addition to the 70 Mt of capacity removed in 2015.
• In an effort to cut coal production capacity the NEA announced that no new coal mines will be approved between 2016 and 2018.
40
60
80
100
120
140
160
180
200
40
60
80
100
120
140
160
180
200
Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
USD/tUSD/t
Richards Bay 6000kcal
Baltic 6000kcal
Newcastle 6000kcal
QHD 5800kcal
Source: IHS
Thermal coal prices
Thermal seaborne cost curve
0 100 200 300 400 500 600 700
USD/t
Other
Russia
United States
Indonesia
South Africa
Australia
Sources: AME, Westpac. includes mining, royalties, freight from mine to port,
administration and processing.
Cumulative export supply, mt
Thermal coal stocks: ports & generators
0
5
10
15
20
25
30
35
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
MtQHD Caofeidian JintangTianjin Guangzhou Other
Source: Bloomberg
Figure 48: Thermal coal prices
Figure 49: Thermal coal stocks: ports & generators Figure 50: Export thermal coal cost curve
Table 7: Thermal coal prices (USD/t, NAR unless otherwise indicated).
Quarterly averages Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
QHD 5800kcal 105.8 106.1 105.8 100.3 92.8 96.1 87.4 74.9 68.4 61.0
QHD 5800kcal RMB/t 647.8 646.8 645.2 624.8 571.9 590.5 544.9 464.3 430.6 390.2
Newcastle 6000kcal 77.1 82.0 77.4 72.7 68.0 63.0 63.0 57.8 58.4 51.8
Newcastle 6000kcal AUD/t 84.3 88.6 86.5 77.9 73.5 73.7 80.1 74.4 80.4 71.9
Richards Bay 6000kcal 73.0 83.1 78.7 75.0 70.2 65.8 61.5 61.2 54.7 51.3
Baltic 6000kcal 71.4 78.2 74.3 69.4 69.7 68.7 56.9 55.2 50.6 48.0
Sources: IHS. NAR stands for net as received.
China Resources Quarterly • Southern summer ~ Northern winter 21
• China’s total thermal coal stocks declined 44%yr and 30%qtr to finish Q4 at 16 Mt.
• Following the implementation of the Free Trade Agreement between Australia and China, the tariff on imports of thermal coal from Australia will be eliminated on 1 January 2017.
• China’s imports of thermal coal declined 28%yr to 36 Mt in Q4 in response to relatively slower demand growth. China’s imports of thermal coal from Indonesia declined 22%yr to 17 Mt while imports from Australia fell 34%yr to 10 Mt.
• Australia’s exports to China decreased by 39%yr to 6.8 Mt in Q4 and values declined by 45%yr to $A390 million.
Thermal coal use and supply by country
China41%
USA16%
Indonesia9%
OECD Europe
7%
India8%
Aust4%
Other15%
Producers
Source: IEA.Note: Includes brown coal.
China43%
USA16%
Other non-OECD11%
Indonesia2%
India12%
Australia2%
Other OECD14%
Consumers
Figure 54: Thermal coal use and supply by country
Thermal coal imports
230
260
290
320
350
380
410
440
0
5
10
15
20
25
30
35
Apr-12 Dec-12 Aug-13 Apr-14 Dec-14 Aug-15
billion kWhMtIndonesia (lhs)Australia (lhs)Other (lhs)Thermal electricity generation (rhs)
Sources: CEIC; IHS.
Power generation & coal extraction: capex
-40
-20
0
20
40
60
80
-40
-20
0
20
40
60
80
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15
%yr%yr
Power generation
Coal extraction
Sources: CEIC, Westpac Economics.
Aust thermal coal exports to China
0
50
100
150
200
250
300
350
400
450
500
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15
AUDmnMt
volume (lhs)
value (rhs)
Source: ABS.
World trade in thermal coal
China18%
India23%
OECD Europe
18%
Japan11%
South Korea
8%
Other 22%
Imports
Source: IEA.Note: Includes brown coal.
Indonesia46%
Australia16%
Russia11%
Colombia6%
South Africa6%
other15%
Exports
Figure 51: Thermal coal imports
Figure 53: Capex: coal mining vs power generationFigure 52: Aust thermal coal exports to China
Figure 55: World trade in thermal coal
22 China Resources Quarterly • Southern summer ~ Northern winter
Tabl
e 8:
The
rmal
coa
l sum
mar
y da
ta
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
sM
t60
.967
.671
.058
.149
.750
.438
.140
.141
.736
.2
Indo
nesi
aM
t27
.832
.835
.726
.121
.422
.519
.017
.419
.717
.5
Aus
tral
iaM
t17
.015
.915
.415
.217
.515
.110
.612
.612
.010
.0
valu
eU
SDm
n46
4749
7351
4540
6933
4631
5622
5522
4420
95.8
1682
.0
End
of q
uart
er s
tock
s at
por
tsM
t25
.122
.527
.531
.426
.329
.432
.427
.823
.316
.3
wee
ks o
f im
port
s5.
44.
35.
07.
06.
97.
611
.09.
07.
25.
1
Aus
tral
ian
expo
rts
to C
hina
Mt
11.7
11.6
11.4
12.9
11.8
11.1
10.0
10.0
8.1
6.8
valu
eAU
Dm
n89
2.2
830.
486
2.3
870.
274
1.8
708.
066
4.3
622.
249
3.0
390.
0
Sour
ces:
ABS
, Blo
ombe
rg, I
HS.
China Resources Quarterly • Southern summer ~ Northern winter 23
Oil
• A mix of geopolitical factors and ongoing excess supply contributed to a rapid decline in oil prices in Q4 and early Q1 2016. In mid-January, WTI prices declined to US$26.55/bbl and Brent to US$28.26/bbl.
• WTI prices averaged US$42.02/bbl in Q4, down 10%qtr. Brent prices declined 13%qtr to average US$44.69/bbl and Tapis declined 16%qtr to US$44.24/bbl.
• China’s benchmark gasoline prices ended Q4 1.7%qtr lower than Q3 2015 while diesel prices declined 0.2%qtr.
• China’s cabinet approved the restructuring of the two biggest shipping conglomerates, the China Ocean Shipping (Group) Company
Oil prices
20
35
50
65
80
95
110
125
140
20
35
50
65
80
95
110
125
140
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
USD/bblUSD/bbl
Brent WTI Tapis
Source: Bloomberg.
Oil use and supply by country
other OPEC24%
other non-OPEC24%Saudi
Arabia13%
Russia13%
United States12%
China5%
Canada5%
Iran4%
Production
Source: BP.
other non-
OECD28%
other OECD24%
United States20%
China12%
Japan5%
India4%
Russia4%
Brazil3%
Consumption
Oil use by sector: China & the world
Transport51%
other21%
Industry14%
Residential6%
Services4%
Agri4%
China
Source: IEA.
Transport64%
Other17%
Industry9%
Residential5%
Services2%
Agri3%
World
Figure 56: Oil prices
Figure 57: Oil use by sector: China & the World Figure 58: Oil use and supply by country
Table 9: Crude oil spot prices (USD/bbl, quarterly).
Brent Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15Quarter average 109.7 109.4 107.9 109.8 103.5 77.1 55.1 63.5 51.3 44.7Quarter end 108.4 110.8 107.8 112.4 94.7 57.3 55.1 63.6 49.6 44.4Quarter high 116.6 112.6 111.2 115.1 112.3 94.2 62.6 67.8 62.1 53.1Quarter low 103.0 103.5 105.8 104.8 94.7 57.3 46.6 55.0 42.7 36.1TapisQuarter average 115.9 117.2 114.3 115.0 106.2 79.5 56.1 64.6 52.6 44.2Quarter end 114.5 120.7 113.2 117.0 100.2 58.6 55.9 63.3 53.0 44.8Quarter high 122.2 121.7 118.6 119.4 115.0 98.4 64.2 70.3 64.7 53.7Quarter low 109.1 110.8 111.7 110.1 98.7 58.6 47.4 56.8 43.8 35.6West Texas intermediateQuarter average 105.8 97.6 98.7 103.1 97.6 73.2 48.5 57.8 46.5 42.0Quarter end 102.3 98.4 101.6 105.4 91.2 53.3 47.6 59.5 45.4 41.9
Quarter high 110.5 104.1 104.9 107.3 107.6 91.0 53.5 61.4 57.0 49.6
Quarter low 98.0 92.3 91.7 99.4 91.2 53.3 43.5 49.1 38.1 34.7Source: Bloomberg.
24 China Resources Quarterly • Southern summer ~ Northern winter
0
100
200
300
400
500
600
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China
India
Japan
South Korea
USA
Passenger cars per 1000 residents
Passenger cars per 1000 residentsFigure 62: Automobile penetration
Chinese oil import volumes
0
5
10
15
20
25
30
35 MtOther Saudi Arabia AngolaRussia Iran Oman
Source: CEIC.
World trade in oil
other OECD32%
other non-
OECD21%
United States15%
China10%
Japan7%
India6%
South Korea
5%
Singapore4%
Imports
other non-
OECD41%
other OECD18%
Saudi Arabia
13%
Russia10%
United States
5%
Canada5% UAE
4%
Kuwait4%
Exports
Source: IEA
Chinese imports of Australian oil
0
50
100
150
200
250
300
350
400
450
500
0
50
100
150
200
250
300
350
400
450
500
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)
Source: CEIC.
Oil demand per capita
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China IndiaJapan South KoreaUSA
Consumption toe per capita
Sources: IMF, IEA.
Figure 59: Chinese oil import volumes
Figure 61: World trade in oilFigure 60: Chinese imports of Australian oil
Figure 63: Oil demand per capita
(COSCO) and the China Shipping (Group) Company (China Shipping), creating the largest oil tanker fleet in the world.
• China’s imports of crude oil increased 9%yr to a five year high of 87 Mt in Q4, supported by higher import quotas for private refineries.
• China’s imports of crude oil from Russia and Saudi Arabia, increased 28%yr and 1.8%yr in 2015 to 42 Mt and 51 Mt, respectively. Imports from Angola and Iran decreased 4.8%yr and 3.1%yr, in 2015 to 39 Mt and 27 Mt, respectively.
• In 2015 China’s crude oil imports from Australia declined 12%yr to 2.4 Mt and import values declined 52%yr to US$1 billion.
China Resources Quarterly • Southern summer ~ Northern winter 25
Oil
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
sM
t73
.270
.874
.777
.276
.579
.980
.383
.085
.386
.9
Saud
i Ara
bia
Mt
13.9
13.0
12.7
11.5
12.4
13.1
12.8
13.6
12.1
12.1
Ang
ola
Mt
10.5
9.4
10.7
10.2
9.5
10.4
9.9
9.2
10.2
9.5
Russ
iaM
t6.
16.
07.
57.
88.
09.
88.
610
.910
.912
.1
Iran
Mt
5.5
5.4
6.9
8.7
5.8
6.1
6.7
7.9
6.3
5.7
Om
anM
t6.
87.
46.
08.
57.
67.
77.
86.
59.
28.
6
othe
rM
t30
.429
.531
.030
.533
.332
.934
.635
.036
.638
.9
Chi
na p
rodu
ctio
n
Cru
deM
t51
.453
.251
.352
.252
.053
.952
.253
.854
.053
.9
Gas
olin
eM
t24
.025
.426
.626
.926
.828
.728
.730
.630
.931
.0
Die
sel
Mt
42.7
44.0
42.3
42.9
43.5
46.0
43.8
45.6
44.8
45.4
Chi
nese
impo
rts
from
Aus
tral
iakt
1233
.746
1.8
730.
971
1.9
744.
254
0.3
600.
455
7.2
541.
268
9.7
valu
eU
SDm
n10
52.3
393.
359
9.8
567.
159
4.8
342.
124
7.3
269.
125
1.8
246.
0
Gas
Chi
na p
ipel
ine
impo
rts
Mt
5.2
5.4
4.9
5.9
6.0
6.2
6.7
5.7
5.8
6.5
Chi
na L
NG
impo
rts
kt45
6051
4056
2942
9748
1151
5551
2743
9246
27.3
5522
.1
Qat
arkt
1618
.317
84.8
2570
.013
80.5
1328
.714
58.3
1322
.771
1.3
1152
.716
27.6
Aus
tral
iakt
833.
990
6.2
842.
590
4.6
1162
.290
2.1
1093
.812
86.3
1671
.815
00.2
Indo
nesi
akt
605.
567
6.6
617.
460
8.3
676.
365
2.9
672.
474
5.3
817.
363
0.8
Mal
aysi
akt
679.
068
5.0
842.
969
8.1
622.
682
9.4
820.
011
28.4
473.
982
9.7
othe
rkt
823.
310
87.4
756.
270
5.2
1021
.013
11.7
1218
.452
1.1
511.
793
3.8
Chi
na p
rodu
ctio
nBc
m26
.430
.232
.329
.029
.233
.533
.629
.230
.134
.0
Chi
nese
impo
rts
from
Aus
tral
iakt
833.
990
6.2
842.
590
4.6
1162
.290
2.1
1093
.812
86.3
1671
.815
00.2
valu
eU
SDm
n14
5.7
159.
614
6.4
159.
723
9.1
173.
127
0.9
433.
348
5.4
444.
3
Sour
ce: C
EIC
.
Tabl
e 10
: Oil
and
gas
sum
mar
y da
ta
26 China Resources Quarterly • Southern summer ~ Northern winter
Gas
• China’s LNG import unit values increased 7%qtr in Q4 while pipeline gas unit values declined 13%qtr.
• ENN LNG Trading Company (ENN), the first private company to be authorised to build and operate an LNG import facility in China, began construction of its Zhoushan LNG project (2 Mtpa) in Zhejiang.
• Chevron signed an agreement with China Huadian Green Energy Co. to export up to 1 Mtpa of LNG for 10 years from 2020. This is likely to be sourced from its Wheatstone and Gorgon projects in Western Australia. Chevron also announced a non-binding heads of agreement with ENN to deliver up to 500 ktpa of LNG over 10 years from late 2018.
Gas unit values in China
100
200
300
400
500
600
700
Mar-10 Jun-11 Sep-12 Dec-13 Mar-15
USD/t
LNG pipeline
Source: CEIC.
Gas use by sector: China
Industry31%
Residential30%
other17%
Transport and agriculture
13%
Services9%
Source: IEA
Gas use by sector: World
Industry37%
Residential30%
Services14%
Other11.5%
Transport7%
Agriculture0.5%
Source: IEA
Figure 64: Gas unit values in China
Figure 65: Gas use by sector: World Figure 66: Gas use by sector: China
Gas use and supply by country
other non-
OECD33%
USA21%
Russia17%
other OECD10%
Qatar5%
Iran5%
Canada5%
China4%
Production
Other Non-OECD28%
USA22%
other OECD21%
Russia12%
China6%
Iran5%
Japan3%
Saudi Arabia
3%
Consumption
Source: BP
Gas demand per capita
0.0
0.5
1.0
1.5
2.0
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China IndiaJapan South KoreaUSA
Consumption toe per capita
Sources: IEA, IMF
Figure 68: Gas use and supply by countryFigure 67: Gas demand per capita
China Resources Quarterly • Southern summer ~ Northern winter 27
• Sinopec began shale gas production at its Fuling project (5 bcm a year), the largest shale gas project in China to date.
• China’s LNG imports declined 1.1%yr in 2015 to 19.7 Mt. LNG imports from Qatar declined 29%yr to 4.8 Mt in 2015, while imports from Malaysia and Indonesia increased by 9%yr to 3.3 Mt and 12%yr to 2.9 Mt, respectively.
• China’s LNG imports from Australia accounted for the majority of total LNG imports in 2015. Imports from Australia increased 46%yr in 2015 to 5.6 Mt. Their value increased 127%yr to US$1.6 billion.
World gas exports by country
ROW23%
Russia22%
Qatar12%
other Asia Pacific
12%
Norway10%
other Africa8%
Canada8%
Netherlands5%
Source: BP.
Figure 72: World gas exports by country
China’s gas imports by type
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
Mt
LNG Pipeline
Source: CEIC
Chinese LNG imports from Australia
0
30
60
90
120
150
180
210
240
270
300
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
Mt USDmn
volume (lhs)value (rhs)
Source: CEIC.
World gas imports by country
other Europe
38%
other Asia Pacific12%
Japan11%
ROW11%
Germany9%
United States
8%
Italy6%
China5%
Source: BP
Figure 69: China’s gas imports by type
Figure 71: Chinese LNG imports from Australia
Figure 73: World gas imports by country
Figure 70: Chinese LNG imports by source
Chinese LNG imports by source
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
Mt
Qatar AustraliaIndonesia MalaysiaOther
Source: CEIC
28 China Resources Quarterly • Southern summer ~ Northern winter
UraniumUranium prices
0
100
200
300
400
500
600
700
800
0
20
40
60
80
100
120
140
160
Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15
index USD/lb
USD price (lhs)
USD price index (rhs)
RMB price index (rhs)
Sources: LME, Bloomberg
China’s uranium imports
0
3000
6000
9000
12000
15000
0
300
600
900
1200
1500
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
USDmn
Volume (rhs) Value (lhs)
Source: CEIC, China Petroleum and Chemical Industry Federation
Tonnes
Uranium use by country
Other32%
United States28%
France14%
China12%
Russia6%
South Korea8%
Source: World Nuclear Association.
Global uranium output &reserves
Kazakhstan37%
Other21%
Canada16%
Australia9%
Niger7%
Namibia6%
Production
Source: World Nuclear Association, OECD NEA & IAEA.
Kazakhstan12%
Other35%
Canada9%
Australia31%
Niger8%
Namibia5%
Reserves*
*Reasonably Assured and Inferred, recoverable at US$130 per tonne U3O8
Figure 74: Uranium prices
Figure 76: Global uranium output & reserves
Figure 75: China’s uranium imports
Figure 77: Uranium use by country
Table 11: Uranium summary data.
Units Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Uranium spot price U3O
8USD/lb 35 35 29 32 37 38 36 36 35
China nuclear power output bn kWh 30 27 28 38 37 35 42 50 45
Investment in nuclear RMBbn 20 11 13 14 19 10 11 13 23
China uranium imports t 6216 4045 6801 4985 9281 2041 5659 7505 7439
Value USDmn 677 396 675 482 810 210 587 721 691
Sources: CEIC, Cameco, The Ux Consulting Company, Trade Tech.
China Resources Quarterly • Southern summer ~ Northern winter 29
• The average spot price for uranium fell by 2%qtr and 5%yr in Q4 to US$35/lb.
• Despite a 10%qtr fall in China’s nuclear power output in Q4, nuclear generation increased by 20%yr to 45 billion kWh in 2015.
• China’s investment in new nuclear capacity increased by 19%yr to RMB 22.6 billion in Q4.
• State-owned China National Nuclear Corporation (CNNC) signed contracts for cooperation with Slovakia’s nuclear power plant research institute and Argentina’s Nucleoelectrica.
• China imported 7439 tonnes of uranium in Q4, a decrease of 20%yr. These imports were worth US$691 million, a decline of 15%yr.
China’s nuclear power construction expenditure
0
5
10
15
20
25
30
Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
RMB bn
Source: CEIC
Figure 81: China’s nuclear construction spending
New capacity: planned & underway
0
20000
40000
60000
80000
China OtherAsia
EasternEurope
NorthAmerica
WesternEurope
Africa -Middle
East
SouthAmerica
MWe
Under Construction
Planned
Source: World Nuclear Association
Growth in world energy by source
0
1
2
3
4
Oil Gas Coal Nuclear Other Total
1990 to 2013
2013 to 2035Source: BP
Compound annual growth rate %
Figure 78: Chinese nuclear generation growth
Figure 80: Chinese nuclear generation capacity
Figure 82: Growth in world energy by source
Figure 79: New capacity: planned & underway
Chinese nuclear generation capacity
0
5
10
15
20
25
30
1999 2001 2003 2005 2007 2009 2011 2013 2015
Million kW
Source: CEIC
China’s nuclear generation growth keep
-5
0
5
10
15
20
25
30
-20
0
20
40
60
80
100
120
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15
Nuclear generation (lhs)
Total electricity generation (rhs)
%yr* %yr*
Sources: CEIC, Westpac. * 12mma.
30 China Resources Quarterly • Southern summer ~ Northern winter
Gold
• LBMA gold prices fell through Q4, weighed down by an expected, and then realised, rise in the US Federal Funds rate. In December, the US Federal Reserve increased its benchmark rate by 0.25%, the first increase in almost a decade.
• LBMA gold prices declined 8%yr in Q4 to average US$1104 per ounce. Shanghai Gold Exchange prices declined 4%yr to RMB 228 a gram in Q4.
• According to the World Metal Statistics, world gold mine production fell 1.3%ytd to 2758 tonnes in the first eleven months of 2015. Production in China—the world’s largest producer—increased 1.6%ytd to 425 tonnes.
• According to the World Gold Council, world gold demand increased 8% in Q3 2015 to 1121 tonnes. The increase was supported by a rise in China’s gold demand which increased 13%yr to 240 tonnes.
• China’s gold demand was underpinned by an increase in China’s jewellery consumption, which grew 4%yr to 188 tonnes as lower prices encouraged purchases. Demand for gold bars increased 70%yr to 52 tonnes, supported by the devaluation of the yuan and the release of commemorative coins.
• The Chinese Government’s gold reserves increased by 54 tonnes to 1762 tonnes in Q4, an increase of 3%qtr and 67%yr. Despite the growth, it is reported that gold still accounts for less than 2% of China’s total reserves.
Figure 95: Gold prices, London & Shanghai
0
100
200
300
400
500
0
400
800
1200
1600
2000
Jul 06 Jul 08 Jul 10 Jul 12 Jul 14
RMB/gUSD/oz
LBMA
SGE
Sources: LBMA, Bloomberg
Figure 96: Gold imports via Hong Kong
0
75
150
225
300
375
0
50
100
150
200
250
Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15
RMB/gtonnes
Import Volume (lhs)
SGE Price (rhs)
Sources: CEIC, Bloomberg.
Figure 83: Gold prices, London & Shanghai
Figure 84: Chinese gold imports via Hong Kong
Table 12: Gold prices (USD/oz unless specified otherwise)
LBMA spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 1330 1272 1292 1290 1282 1201 1219 1194 1125 1104
Quarter end 1329 1206 1284 1327 1208 1185 1184 1172 1115 1061
Quarter high 1418 1353 1383 1328 1339 1249 1302 1226 1170 1184
Quarter low 1223 1189 1201 1244 1208 1141 1150 1172 1085 1051
Shanghai avg RMB/g 265 251 256 259 255 238 246 239 229 228
Shanghai avg USD/g 43 41 42 41 41 39 39 38 36 36
Sources: LBMA, Bloomberg.
China Resources Quarterly • Southern summer ~ Northern winter 31
• China’s gold imports via Hong Kong fell 13%ytd to 841 tonnes in the first eleven months of 2015.
• ETF stockholdings closed at 1462 tonnes in December 2015, down 9%yr. The fall likely reflects the effect of a rise in the US Federal Funds rate on the interest in gold as an investment asset. ETF holdings are typically used as a hedge against a low US dollar.
• Australia’s gold export volumes to China increased 26%yr to 53 tonnes in Q4, while the value of gold exports increased 37%yr to $A2.6 billion.
Figure 100: Gold fabrication cons. by country
Other40%
India23%
China28%
USA5%
Turkey3%
Source: World Gold Council.
Figure 88: Gold fabrication cons. by country
Figure 97: Australian gold exports to China
0
5
10
15
20
25
0
250
500
750
1000
1250
Jun-12 Jan-13 Aug-13 Mar-14 Oct-14 May-15 Dec-15
tonnesAUDmn
Volume (rhs)
Value (lhs)
Source: ABS
Figure 99: Gold output by country
Other36%
Other Africa15%
China15%
Australia9%
Russia8%
USA7%
South Africa5%
Peru5%
Source: World Bureau of Metal Statistics
Figure 98: Gold exchange traded funds
-20%
-15%
-10%
-5%
0%
5%
10%
15%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
PriceETF
ETF Stocks %mth (lhs)
Price %mth (rhs)
Sources: Bloomberg, LBMA
Figure 101: Gold end-use by sector
Jewellery67%
Physical bar investment
20%
Electronics8%
Official Coins
5%
Industrial and other
0.4%
Source: World Gold Council.
Figure 85: Australian gold exports to China
Figure 87: Gold output by countryFigure 86: Gold exchange traded funds
Figure 89: Gold end–use by sectorTable 12: Gold prices (USD/oz unless specified otherwise)
LBMA spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 1330 1272 1292 1290 1282 1201 1219 1194 1125 1104
Quarter end 1329 1206 1284 1327 1208 1185 1184 1172 1115 1061
Quarter high 1418 1353 1383 1328 1339 1249 1302 1226 1170 1184
Quarter low 1223 1189 1201 1244 1208 1141 1150 1172 1085 1051
Shanghai avg RMB/g 265 251 256 259 255 238 246 239 229 228
Shanghai avg USD/g 43 41 42 41 41 39 39 38 36 36
Sources: LBMA, Bloomberg.
32 China Resources Quarterly • Southern summer ~ Northern winter
Gol
dun
itSe
p-13
Dec
-13
Mar
-14
Jun-
14Se
p-14
Dec
-14
Mar
-15
Jun-
15Se
p-15
Dec
-15
Chi
na im
port
s (v
ia H
ong
Kong
)t
377.
038
1.9
333.
520
4.1
168.
838
9.1
229.
017
8.8
241.
9na
Dom
estic
pro
duct
ion
t11
5.0
120.
496
.511
4.6
140.
710
0.1
110.
711
8.0
117.
9na
Aus
tral
ian
expo
rts
to C
hina
t43
.350
.947
.040
.129
.742
.539
.440
.156
.453
.4
valu
eAU
Dm
n20
32.3
2254
.721
74.1
1773
.913
17.8
1899
.019
51.9
1974
.628
00.5
2607
.6
Silv
erC
hina
impo
rts
t99
.978
.167
.890
.583
.776
.311
7.7
217.
033
1.9
78.7
Dom
estic
pro
duct
ion
t97
797
791
891
891
891
891
891
891
8na
Sour
ces:
CEI
C, A
BS, W
orld
Met
al S
tatis
tics.
Tabl
e 13
: Gol
d an
d si
lver
sum
mar
y da
ta
China Resources Quarterly • Southern summer ~ Northern winter 33
Figure 103: Silver output & fabrication demand
Other35%
Mexico22%
China13%
Peru14%
Aust7%
Russia5%
Poland4%
Production
Other32%
USA12%China
24%
India20%
Japan7%
South Korea3%
Germany2%
Fabrication
Source: The Silver Institute, Thomson Reuters GFMS.
Figure 102: Silver prices, London & Changjiang
0
3
6
9
12
15
0
10
20
30
40
50
Nov 09 Jan 11 Mar 12 May 13 Jul 14 Sep 15
RMB/gUSD/oz
London Bullion Market spot
Changjiang Silver
Source: Bloomberg
Figure 105: China’s silver end-use by sector
Jewellery19%
Electronics31%
Alloys and solders
15%
Silverware2%
Coins and bars2%
Photographic use1%
Other uses30%
Source: The Silver Institute, Thomson Reuters GFMS
Figure 104: China silver import volumes: annual
0
2000
4000
6000
8000
2003 2005 2007 2009 2011 2013 2015
tonnes
Unwrought Powder Semi-manufactured Other
Source: CEIC
Figure 91: Silver output & fabrication demandFigure 90: Silver prices, London & Changjiang
Figure 92: Chinese silver import volumes: annual Figure 93: Silver end–use by sector
Silver
Table 14: Silver prices (USD/oz unless specified otherwise)
LBMA spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 21.5 20.8 20.5 19.7 19.7 19.7 16.6 16.5 14.9 14.8
Quarter end 21.7 19.5 19.8 21.0 17.0 15.7 16.7 15.7 14.5 16.1
Quarter high 24.5 22.8 22.0 21.1 21.4 21.4 18.3 17.7 15.8 13.7
Quarter low 18.9 19.1 19.2 18.8 17.0 17.0 15.5 15.7 14.7 13.9
Changjiang RMB/g 4.28 4.24 4.15 4.15 4.22 3.59 3.58 3.54 3.31 3.28
Changjiang USD/g 0.70 0.70 0.68 0.67 0.68 0.59 0.57 0.57 0.53 0.54
Sources: LBMA, Bloomberg.
34 China Resources Quarterly • Southern summer ~ Northern winter
Copper
• The average LME copper price declined by 7%qtr in Q4 to US$4892 a tonne. LME copper closed at US$4516 on 23 November—a six year low—before rising to US$4702 at the end of December. The SHFE copper price declined by 7.4%qtr in Q4 to RMB 36,954. Despite low prices, new copper capacity continues to be commissioned. The Las Bambas copper mine in Peru, developed by China’s MMG, commenced production in January with forecast output of about 200,000 tonnes in 2016.
• LME copper stocks were 236 kt at the end of Q4 2015, up 33.2%yr and down 26.4%qtr. SHFE inventories were up 68.5%yr at the end of Q4 at 178 kt.
Figure 106: Copper prices, London & Shanghai
30
35
40
45
50
55
60
65
3
4
5
6
7
8
9
10
Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15
‘000 RMB/t‘000 USD/tLME Spot (lhs)
LME 3mth forward (lhs)
SHFE spot (rhs)
Sources: LME, Bloomberg
Figure 108: Copper use and supply by country
Other39%
China34%
Chile12%
Japan6%
USA5%
Russia4%
Producers
Source: World Bureau of Metal Statistics
China50%
Other29%
USA8%
Germany6%
Japan4%
South Korea
3%
Consumers
Figure 107: LME Prices & inventories
0
200
400
600
800
1000
4000
5000
6000
7000
8000
9000
Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15
ktUSD/t
end of month inventories (rhs)LME spot (lhs, month average)
Sources: LME, Bloomberg.
Figure 94: Copper prices, London & Shanghai
Figure 95: LME prices & inventories Figure 96: Copper use and supply by country
Table 15: Copper prices (USD/t unless specified otherwise)
LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 7073 7153 7041 6787 6994 6624 5818 6043 5259 4892
Quarter end 7291 7395 6636 6955 6736 6359 6051 5721 5093 4702
Quarter high 7341 7395 7440 7035 7184 6860 6309 6448 5762 5344
Quarter low 6719 6939 6435 6600 6736 6306 5391 5646 4888 4516
3 Month forward 7096 7161 7008 6757 6976 6568 5790 6046 5261 4885
Shanghai avg RMB/t 51690 51555 49403 49328 50273 47525 42391 44074 39913 36954
Shanghai avg USD/t 8438 8468 8097 7915 8156 7729 6799 7104 6335 5779
Sources: LME, Bloomberg.
China Resources Quarterly • Southern summer ~ Northern winter 35
• China’s refined copper production decreased by 5%yr to 2.2 Mt in Q4, with smelters agreeing in December to deepen production cuts in 2016 to counter lower prices. Jiangxi and Anhui were the highest producing regions in the first eleven months of 2015, producing 1243 kt and 1141 kt respectively.
• China’s total copper imports in Q4 increased 20%yr to 2324 kt. For the full year 2015 China imported 7713 kt of copper. Chile continued to be the principal source of China’s copper imports with a 31% market share. Total imports from Chile were 2425 kt in 2015, up 13%yr.
• Australia’s copper export volumes (metal content) to China decreased 15%yr to 159 kt in Q4. Export values decreased 5%yr to $A1.1 billion.
Figure 113: Copper output by Chinese province
Other Provinces
32%
Jiangxi17%Anhui
17%
Shandong14%
Gansu12%
Yunnan7%
Zhejiang2%
Source: Bloomberg
Figure 100: Copper demand per capita
Figure 109: China’s copper import volumes
0
100
200
300
400
500
600
700
800
900
1000
May 12 Jan 13 Sep 13 May 14 Jan 15 Sep 15
kt
Other Chile Peru Australia
Scaled by metal content
Sources: Bloomberg, Department of Industry, Innovation and Science.
Figure 112: Copper demand per capita
0
2
4
6
8
10
12
14
16
18
20
10 20 30 40 50GDP per person (thousands of PPP international dollars)
China India Japan South Korea USA
Consumption kgpp
Sources: IMF, World Bureau of Metal Statistics.
Figure 110: Australian copper exports to China
0
100
200
300
400
500
600
700
800
Apr-12 Dec-12 Aug-13 Apr-14 Dec-14 Aug-150
10
20
30
40
50
60
70
80 AUDmnkt
Volume (lhs)
Value (rhs)
Source: ABS
Figure 97: Chinese copper import volumes
Figure 99: Copper end–use by sectorFigure 98: Australian copper exports to China
Figure 101: Copper output by Chinese province
Figure 111: Copper end-use by sector (2015)
Building construction
43%
Electric and electronic products
19%
Transportation equipment
19%
Consumer and general
products12%
Industrial machinery and
equipment7%
Source: United States Geological Survey.
36 China Resources Quarterly • Southern summer ~ Northern winter
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
skt
1731
1819
1836
1699
1725
1935
1729
1774
1886
2324
Aus
tral
iakt
135
128
165
144
140
152
116
142
123
174
Chi
lekt
519
574
542
538
438
629
569
558
580
717
Peru
kt20
021
318
218
219
620
517
219
226
730
0
othe
rkt
877
904
946
834
950
949
872
883
916
1133
Refin
ed p
rodu
ctio
nkt
1715
1909
1651
1823
2027
2321
1834
1951
2009
2205
Wor
ld s
tock
skt
1110
916
909
694
700
769
1037
934
963
n.a
wee
ks o
f sto
cks
wee
ks2.
72.
12.
21.
51.
61.
72.
52.
12.
2n.
a
Aus
tral
ian
expo
rts
to C
hina
kt12
315
412
112
812
613
810
912
214
015
9
valu
eAU
Dm
n88
812
0996
288
190
210
4577
892
110
0410
97
Sour
ces:
Bloo
mbe
rg, W
orld
Met
al S
tatis
tics,
ABS
.
Tabl
e 16
: Cop
per
sum
mar
y da
ta
China Resources Quarterly • Southern summer ~ Northern winter 37
Aluminium
• The LME aluminium spot price averaged US$1495/t in Q4, down 6%qtr and 24%yr. The price reached a six year low of US$1424/t on 23 November. Despite declining prices, LME stocks continued to decline, reaching a seven year low of 2890 kt at the end of December.
• China’s exports of unwrought aluminium and aluminium products increased 14%qtr to 1201 kt in Q4, but remained down 8%yr despite strong growth in production and slower growth in consumption.
• China added over 5 Mt of new aluminium smelting capacity in lower-cost regions in 2015, but also shut 4.9 Mt of capacity due to low prices, excess supply and high stocks.
Aluminium prices, LME and Shanghai
10
12
14
16
18
1.0
1.5
2.0
2.5
3.0
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
‘000 RMB/t ‘000 USD/t
LME Spot (lhs)
LME 3mth forward (lhs)
SHFE spot (rhs)
Sources: LME, Bloomberg.
Aluminium use and supply by country (2014)
Other29%
China52%
Russia7%
Canada5%
UAE4%
India3%
Producers
Source: World Bureau of Metal Statistics
Other28%
China51%
USA10%
Germany4%
Japan4%India
3%
Consumers
Aluminium – LME Prices and Inventories
2000
3000
4000
5000
6000
7000
1200
1400
1600
1800
2000
2200
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
ktUSD/tend of month inventories (rhs)LME spot (lhs, month average)
Sources: LME, Bloomberg.
Figure 102: Aluminium prices, LME & Shanghai
Figure 103: LME prices & inventories Figure 104: Aluminium use & supply by country
Table 17: Aluminium and Alumina prices (USD/t unless specified otherwise)
LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 1781 1769 1708 1798 1987 1966 1800 1765 1591 1495
Quarter end 1803 1765 1731 1851 1935 1832 1789 1647 1562 1508
Quarter high 1877 1849 1768 1871 2114 2099 1872 1919 1693 1608
Quarter low 1730 1695 1642 1715 1838 1828 1742 1642 1486 1424
3 Month forward 1827 1815 1752 1836 2008 1974 1813 1787 1621 1509
Shanghai avg RMB/t 14363 14349 13168 13133 14069 13507 12849 12964 12000 10500
Shanghai avg 2345 2356 2158 2107 2282 2197 2060 2090 1904 1642
Aust FOB Alumina 318 320 328 318 323 355 342 337 292 233
China Alumina RMB/t 2500 2503 2438 2353 2435 2737 2630 2442 2272 1853
Sources: LME, Bloomberg.
38 China Resources Quarterly • Southern summer ~ Northern winter
• In the first 11 months of 2015, China’s aluminium production increased 32%ytd to 29 Mt. Almost all of the increased production came from the Shandong and Xinjiang provinces, where production costs are low due to low-cost energy.
• Despite increased domestic supply, China’s aluminium imports rose 104%yr in Q4 to 73 kt. Imports from Australia rose 171%yr to 15 kt in Q4, which increased Australia’s share of China’s total imports to 21%, up from 18% a year earlier.
• In Q4, Australia’s aluminium exports to China increased 78%yr to 11 kt and export earnings increased 47%yr to $27 million.
Aluminium output by province
Other30%
Shandong25%
Xinjiang19%
Henan10%
Gansu8%
Inner Mongolia
8%
Source: Bloomberg
Figure 109: Aluminium output by province
Chinese aluminium import volumes
0
15
30
45
60
75
90
Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
ktAustralia RussiaUAE TaiwanOther
Source: Bloomberg
0
5
10
15
20
25
30
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China India Japan
South Korea USA
Consumption kgpp
Sources: IMF, World Bureau of Metal Statistics
Aluminium demand per head
Figure 118: Australian aluminium exports to China
0
4
8
12
16
20
0
10
20
30
40
50
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
ktAUDmn
Volume (rhs)
Value (lhs)
Source: ABS
Figure 105: Chinese aluminium import volumes
Figure 108: Aluminium demand per head
Figure 106: Australian aluminium exports to China Figure 107: Aluminium end–use by sectorAluminium end-use by sector (2014)
Transportation manufacturing
38%
Packaging22%
Construction13%
Electrical9%
Machinery8%
Consumer durables
7%
Other3%
Source: United States Geological Survey
China Resources Quarterly • Southern summer ~ Northern winter 39
• Alumina prices continued to decline for a fourth consecutive quarter, falling 20%qtr and 34%yr to average US$233/t (FOB Australia) in Q4. In response to lower prices, Antaike, a government-backed research agency, expects China to cut 11.4 Mt of its production capacity.
• In the first 11 months of 2015, China’s alumina production increased 20%ytd to 51 Mt, supporting increased demand from aluminium smelters.
• In Q4, China’s alumina imports increased 14%qtr to 1512 kt, the highest since Q3 2010. This was supported by a 14%qtr increase in imports from Australia, which remained China’s largest source of alumina imports, at 987 kt.
China’s alumina output by province
Shandong33%
Henan24%
Shanxi19%
Guangxi15%
Other9%
Source: Bloomberg
Figure 114: China’s alumina output by province
Alumina Prices
1500
1750
2000
2250
2500
2750
3000
150
200
250
300
350
400
450
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
RMB/tUSD/t
AUS Fob (lhs)CHN Met grade (rhs)
Source: Bloomberg
China47%
Oceania19%
South America13%
North America6%
Africa & Asia (ex China)
6%
West Europe5%
East & Central Europe
4%
Source: International Aluminium Institute
World alumina output
World alumina trade
Australia45%
Brazil22%
Other18%
USA5%
Ireland5%
Jamaica5%
Exports
Source: World Bureau of Metal Statistics
Other38%
China19%
Canada15%
Russia12%
Norway8%
UAE7%
Imports
Figure 110: Alumina prices
Figure 113: World alumina output
Figure 111: World alumina trade Figure 112: China’s alumina imports
China’s alumina imports
0
100
200
300
400
500
600
700
800
Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
kt
Australia Brazil India Vietnam Other
Source: Bloomberg
Alumina
40 China Resources Quarterly • Southern summer ~ Northern winter
• China is the world’s second largest producer of bauxite, after Australia. In the 11 months to November China produced 60 Mt, unchanged from a year earlier.
• China imported 17 Mt of bauxite in Q4, up 3%qtr and 103%yr, to support increased alumina production. Growth in China’s bauxite imports was largely attributable to Malaysia (up 312%yr) and India (up 66%yr).
• Australia was the second largest source of China’s bauxite imports in Q4, with a market share of 26%, down from 50% a year earlier. While imports from Australia increased 7%yr in Q4, imports from Australia have been displaced by Malaysia, which increased its market share to 48% in Q4, up from 24% a year earlier.
• Malaysia’s government introduced a three month moratorium on bauxite mining in Pahang on 15 January to begin to address growing environmental concerns and illegal mining. Pahang is responsible for 70% of Malaysia’s bauxite production. This is likely to lead Chinese alumina producers to draw down on bauxite stocks in the short term.
• In Q4, Australia’s bauxite exports to China declined 3.5%yr to 4.8 Mt and export earnings increased 10%yr to $251 million.
Figure 118: World bauxite trade
China’s bauxite imports by source
0
1
2
3
4
5
6
7
8
9
Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
MtIndonesia India Australia Malaysia Other
Source: Bloomberg
World bauxite output (2014)
Australia30%
China25%
Other16%
Brazil14%
India8%
Guinea7%
Source: World Bureau of Metal Statistics
Figure 128: Australia’s bauxite exports to China
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-150
10
20
30
40
50
60
70
80
90
100Mt AUDmn
Volume (lhs)Value (rhs)
Source: ABS
Figure 117: World bauxite output
Figure 116: Australia’s bauxite exports to China
World bauxite trade (2014)
Australia38%
Guinea22%
Brazil19%
India12%
Other9%
Exports
Source: World Bureau of Metal Statistics.
China53%
USA18%
Other12%
Ireland6%
Canada6%
Ukraine5%
Imports
Bauxite
Figure 115: China’s bauxite import by source
China Resources Quarterly • Southern summer ~ Northern winter 41
Alu
min
ium
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
skt
137.
719
3.0
175.
596
.151
.530
.534
.445
.970
.073
.4
Aus
tral
iakt
31.7
31.5
48.0
18.9
7.0
5.6
7.7
2.7
12.7
15.3
Indi
akt
13.1
17.7
19.1
0.7
0.8
1.6
6.6
2.0
0.0
0.8
Russ
iakt
28.9
46.1
29.6
24.2
16.9
2.1
1.5
4.3
4.5
0.7
othe
rkt
64.0
97.7
78.8
52.3
26.8
21.2
18.6
36.8
52.9
56.8
Refin
ed p
rodu
ctio
nkt
5560
5837
5755
5747
6045
6393
7205
8010
8185
na
Wor
ld s
tock
skt
7089
7171
7377
7145
6738
6428
4807
4549
4145
na
wee
ks o
f sto
cks
wee
ks7.
97.
97.
36.
96.
66.
34.
54.
03.
7na
Aus
tral
ian
expo
rts
to C
hina
kt28
3534
105
63
319
11
valu
eAU
Dm
n62
7673
2114
189
947
27
Alu
min
a
Chi
na im
port
skt
829.
313
54.4
1483
.712
80.7
1158
.113
53.9
933.
187
9.8
1329
.115
11.5
Aus
tral
iakt
766.
511
77.0
1183
.765
4.9
523.
079
0.7
455.
455
4.5
869.
098
6.9
Chi
nese
pro
duct
ion
Mt
11.6
11.2
11.2
11.5
11.7
12.6
13.3
14.2
14.3
na
Baux
ite
Chi
na im
port
sM
t21
.117
.613
.16.
68.
48.
410
.112
.616
.517
.0
Aus
tral
iaM
t4.
23.
43.
13.
74.
74.
24.
94.
55.
64.
5
Indo
nesi
aM
t0.
00.
00.
00.
21.
12.
02.
55.
58.
08.
2
Aus
tral
ian
expo
rts
to C
hina
Mt
4.2
4.0
2.5
3.9
4.7
5.0
4.7
5.1
5.2
4.8
valu
eAU
Dm
n14
9.5
150.
687
.014
0.9
181.
722
7.5
234.
725
6.9
267.
725
0.6
Sour
ces:
Bloo
mbe
rg, W
orld
Met
al S
tatis
tics,
ABS
.
Tabl
e 18
: Alu
min
ium
, alu
min
a an
d ba
uxite
sum
mar
y da
ta
42 China Resources Quarterly • Southern summer ~ Northern winter
Nickel
• The LME nickel price averaged US$9437 in Q4, down 40%yr and 11%qtr. This is the lowest quarterly price recorded in 12 years, underpinned by persistently high stocks, low consumption growth and a lack of any significant reductions in production in response to declining prices.
• In Q4, LME stocks declined by 2%qtr to a still high 445 kt, while SHFE stocks increased 89%qtr to 48 kt. China port stocks of nickel ore are estimated to have decreased by 32%ytd to 15.8 Mt at the end of November 2015.
• China’s refined nickel production decreased by 1%ytd in the first ten months of 2015 to 297 kt. Production in Gansu increased 5%ytd
Nickel prices, London and Shanghai
40
80
120
160
200
5
10
15
20
25
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
‘000 RMB/t‘000 USD/t
LME Spot (lhs)LME 3mth forward (lhs)SHFE Spot (rhs)
Sources: LME; Bloomberg
Nickel end use and supply by country
China33%
Other31%
Russia12%
Japan9%
Canada8%
Australia7%
Producers
Source: World Bureau of Metal Statistics
China45%
Other27%
Japan9%
USA9%
South Korea
6%
Taiwan4%
Consumers
LME prices and inventories
75
175
275
375
475
5
10
15
20
25
Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
kt‘000 USD/t
end of month inventories (rhs)LME spot (lhs, month average)
Sources: LME, Bloomberg
Figure 119: Nickel prices, London & Shanghai
Figure 120: LME prices & inventories Figure 121: Nickel use and supply by country
Table 19: Nickel prices (USD/t unless specified otherwise)
LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 13916 13909 14643 18465 18576 15799 14338 13008 10561 9437
Quarter end 13860 13970 15735 18715 16505 14935 12460 11680 10070 8665
Quarter high 14775 14635 16225 21200 19795 16825 15455 14415 12060 10710
Quarter low 13160 13270 13365 15780 16505 14650 12460 11680 9305 8160
3 Month forward 13996 13979 14693 18512 18669 15877 14400 13055 10611 9481
Shanghai avg RMB/t 98866 96850 96380 128595 128862 109421 106548 98129 80765 72228
Shanghai avg USD/t 16139 15905 15785 20634 20905 17792 17089 15817 12826 12327
Sources: LME, Bloomberg.
China Resources Quarterly • Southern summer ~ Northern winter 43
to 12.7 kt, while production in Guangxi and Jiangxi fell 71%ytd to 4.4 kt and 33%ytd to 21.6 kt respectively.
• The value of China’s nickel imports increased by 21%yr in Q4 to US$1.5 billion. China’s nickel imports from Russia increased by 342%yr to $US644 million, while China’s imports from the Philippines and Australia fell 55%yr and 33%yr respectively to US$313 million and US$48 million.
• The value of Australia’s nickel exports to China is estimated to have decreased by 22%yr in Q4 to $A741 million.
Nickel output by province
Other43%
Gansu44%
Jiangxi8%
Guangxi2% Xinjiang
3%
Source: Bloomberg
Figure 125: Nickel demand per capita
Chinese nickel import values
0
250
500
750
1000
1250
Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15
USDmn
Indonesia Russia PhilippinesAustralia Other Canada
Source: Bloomberg
Nickel end-use by sector
Stainless and alloy
steel production
45%Nonferrous alloys and
superalloys43%
Electroplating7%
Other5%
Source: United States Geological Survey
Nickel demand per capita
0.0
0.5
1.0
1.5
2.0
2.5
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
ChinaIndiaJapanSouth KoreaUSA
Consumption kgpp
Sources: IMF, World Bureau of Metal Statistics
Figure 122: Chinese nickel import values
Figure 124: Nickel end–use by sectorFigure 123: Nickel output by province
Figure 126: World trade in nickelWorld trade in nickel
Russia40%
Other18%
Australia15%
Canada13%
Norway9%
Singapore5%
Exports
Source: World Bureau of Metal Statistics
Other31%
China19%
USA18%
Germany9%
Singapore15%
India8%
Imports
44 China Resources Quarterly • Southern summer ~ Northern winter
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
sU
SDm
n17
6620
9515
8516
2523
1412
5190
419
1819
5115
10
Aus
tral
iaU
SDm
n11
911
267
112
9971
8187
9748
Cana
daU
SDm
n86
8996
8510
257
7210
798
87
Russ
iaU
SDm
n27
023
332
640
239
614
619
365
578
464
4
Indo
nesi
aU
SDm
n52
191
471
228
81
00
10
Phili
ppin
esU
SDm
n48
244
817
172
013
7569
429
456
261
231
3
othe
rU
SDm
n28
729
921
227
633
428
226
550
735
941
8
Refin
ed p
rodu
ctio
n*kt
6987
7590
9910
282
9391
na
LME
stoc
kskt
248
282
284
305
358
415
433
457
453
441
wee
ks o
f sto
cks
wee
ks7.
27.
68.
59.
110
.713
.814
.711
.316
.216
.9
Aus
tral
ian
expo
rts
to C
hina
kt67
.259
.248
.750
5762
5768
66na
valu
eAU
Dm
n82
173
673
192
910
0294
887
375
678
974
1
Sour
ces:
Bloo
mbe
rg, W
orld
Met
al S
tatis
tics,
Inte
rnat
iona
l Nic
kel S
tudy
Gro
up, C
EIC
.
* N
ote:
Refi
ned
prod
uctio
n da
ta s
erie
s no
long
er in
clud
es s
mel
ter o
utpu
t and
has
bee
n re
vise
d.
Tabl
e 20
: Nic
kel s
umm
ary
data
China Resources Quarterly • Southern summer ~ Northern winter 45
Zinc
• The LME zinc spot price averaged US$1613 in Q4, a decline of 13%qtr and 28%yr. The ongoing decline in prices has been underpinned by a fall in stainless steel production and generally pessimistic commodity market sentiment. However, towards the end of Q4, prices stabilised in response to declining stocks. World production has been affected by mine closures and reductions in production, driven by ore depletion and low prices.
• LME stocks decreased 21%qtr to end the year at 464 kt. However, stocks held at the SHFE increased 20%qtr to 200 kt.
• China’s refined zinc production increased 10%ytd to 5.2 Mt in the first 10 months of
Figure 139: Zinc prices, London and Shanghai
5
10
15
20
25
30
0.5
1.0
1.5
2.0
2.5
3.0
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
‘000 RMB/t ‘000 USD/t
LME Spot (lhs)
LME 3mth forward (lhs)
SHFE spot (rhs)
Sources: LME, Bloomberg
Figure 141: Zinc use and supply by country (2014)
China43%
Other36%
South Korea7%
India5%
Canada5% Japan
4%
Producers
Source: World Bureau of Metal Statistics
China47%
Other32%
USA7%
South Korea
5%
India5% Japan
4%
Consumers
Figure 140: LME prices & inventories
400
600
800
1000
1200
1400
1500
1700
1900
2100
2300
2500
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
ktUSD/tend of month inventories (rhs)
LME spot (lhs, month average)Sources: LME, Bloomberg.
Figure 127: Zinc prices, London & Shanghai
Figure 128: LME prices & inventories Figure 129: Zinc use and supply by country
Table 21: Zinc prices (USD/t unless specified otherwise)
LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 1859 1907 2029 2073 2311 2235 2080 2190 1847 1613
Quarter end 1877 2086 1981 2205 2290 2167 2076 1994 1657 1600
Quarter high 1956 2116 2156 2205 2420 2335 2184 2405 2096 1835
Quarter low 1793 1828 1942 2073 2194 2114 1985 1994 1587 1462
3 Month forward 1896 1932 2027 2079 2314 1932 2092 2192 1855 1634
Shanghai avg RMB/t 14726 14969 14953 15155 16542 16655 16127 16399 14840 13347
Shanghai avg USD/t 2404 2459 2450 2432 2683 2709 2586 2643 2356 2264
Sources: LME, Bloomberg.
46 China Resources Quarterly • Southern summer ~ Northern winter
2015. Growth was particularly strong in Shaanxi where production increased 17%ytd to 808 kt and Gansu where production increased 64%ytd to 336 kt.
• China’s total zinc imports (refined and ore) increased 28%ytd in the first 11 months of 2015 to 1.7 Mt as consumers took advantage of lower prices. Imports from Australia increased 39%ytd to 594 kt. Imports from Peru increased 55%ytd to 386 kt, while imports from Turkey decreased 41%ytd to 11 kt.
• Australia’s zinc exports (by metal content) to China increased 40%yr to 285 kt, with export earnings growing by 34%yr to $A469 million in Q4.
Figure 146: Zinc output by province (2014)
Other29%
Hunan20%
Yunnan20%
Shaanxi16%
Guangxi7%
Inner Mongolia
8%
Source: Bloomberg
Figure 133: Zinc demand per capita
Figure 142: China’s zinc import volumes
0
50
100
150
200
250
Jul 12 Mar 13 Nov 13 Jul 14 Mar 15 Nov 15
kt
Other Australia Kazakhstan Peru Turkey
Source: ILZSG
Scaled by metal content
Figure 144: Australian zinc exports to China
0
30
60
90
120
150
180
0
20
40
60
80
100
120
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
AUDmnkt
Volume (lhs) Value (rhs) Source: ABS
Figure 145: Zinc demand per capita
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
10 20 30 40 50 60GDP per person (thousands of PPP international dollars)
China
India
Japan
South Korea
USA
Consumption kgpp
Sources: IMF, World Bureau of Metal Statistics
Figure 130: Chinese zinc import volumes
Figure 132: Australian zinc exports to China
Figure 134: Zinc output by province
Figure 143: China’s zinc imports by type
0
50
100
150
200
250
Jul 12 Mar 13 Nov 13 Jul 14 Mar 15 Nov 15
kt
Ores and concentrates (metal content) Refined
Source: ILZSG
Scaled by metal content
Figure 131: Chinese zinc imports by type
China Resources Quarterly • Southern summer ~ Northern winter 47
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
skt
345.
542
7.9
431.
034
7.2
353.
037
0.3
391.
041
0.3
506.
1na
Aus
tral
iakt
75.1
142.
813
8.5
119.
511
1.4
125.
111
6.7
141.
216
5.8
na
Kaza
khst
ankt
41.6
39.6
49.9
34.1
52.5
40.6
36.6
53.0
39.2
na
Peru
kt41
.255
.657
.565
65.7
98.5
117.
084
.711
7.9
na
Turk
eykt
16.2
9.5
5.5
5.3
5.5
3.3
3.1
1.8
2.2
na
othe
rkt
171.
518
0.3
179.
612
3.3
117.
910
2.8
117.
612
9.6
181.
0na
Refin
ed p
rodu
ctio
nkt
1340
.714
44.6
1259
.314
05.6
1508
.116
07.3
1458
.116
12.7
1574
.4na
Wor
ld s
tock
skt
1589
1472
1511
1283
1330
1192
1108
1111
1215
na
wee
ks o
f sto
cks
wee
ks6.
25.
66.
24.
94.
94.
54.
54.
04.
5na
Aus
tral
ian
expo
rts
to C
hina
kt11
619
011
991
9020
410
918
320
528
5
valu
eAU
Dm
n17
528
219
515
215
035
018
929
533
546
9
Sour
ces:
Bloo
mbe
rg, W
orld
Met
al S
tatis
tics,
Inte
rnat
iona
l Lea
d an
d Zi
nc S
tudy
Gro
up, A
BS.
Tabl
e 22
: Zin
c su
mm
ary
data
48 China Resources Quarterly • Southern summer ~ Northern winter
LeadFigure 148: China’s lead import volumes
0
20
40
60
80
100
120
140
Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15
ktOther Peru USARussia Australia
Source: ILZSG
Figure 147: LME prices & inventories
100
175
250
325
400
475
1500
1800
2100
2400
2700
3000
Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15
ktUSD/tend of month inventories (rhs)
LME spot (lhs, month average)Sources: LME, Bloomberg
Figure 150: World trade of lead
Other49%
Australia12%
South Korea12%
Canada11%
Belgium8%
Mexico8%
Exports
Source: World Bureau of Metal Statistics
Other47%
USA28%
South Korea
8%
Germany6%
India6%
Spain5%
Imports
Figure 149: Australia’s lead exports to China
0
20
40
60
80
100
120
0
5
10
15
20
25
30
35
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
kt AUDmn
volume (lhs) value (rhs) Source: ABS
Figure 136: Chinese lead import volumesFigure 135: LME prices & inventories
Figure 137: Australian lead exports to China Figure 138: World trade in lead
Table 23: Lead prices (USD/t unless specified otherwise).
LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Quarter average 2102 2111 2106 2096 2181 2000 1806 1942 1714 1681
Quarter end 2075 2206 2041 2129 2083 1853 1808 1754 1656 1802
Quarter high 2238 2259 2212 2160 2269 2095 1882 2140 1857 1817
Quarter low 2017 2027 2008 2016 2051 1814 1696 1742 1625 1555
3 Month forward 2116 2134 2127 2120 2194 2009 1817 1952 1725 1689
Shanghai avg RMB/t 14141 14109 13928 13922 14208 13452 12494 13494 13336 13207
Shanghai avg USD/t 2308 2317 2282 2234 2305 2184 2004 2175 2116 2129
Sources: LME, Bloomberg.
China Resources Quarterly • Southern summer ~ Northern winter 49
unit
Sep-
13D
ec-1
3M
ar-1
4Ju
n-14
Sep-
14D
ec-1
4M
ar-1
5Ju
n-15
Sep-
15D
ec-1
5
Chi
na im
port
skt
227.
924
2.5
224.
021
3.8
284.
827
3.0
220.
419
7.0
238.
3na
Aus
tral
iakt
25.7
29.6
49.6
28.8
47.8
52.0
39.1
31.6
28.9
na
Peru
kt10
.89.
017
.62.
618
.326
.118
.427
.230
.1na
Russ
iakt
30.9
40.0
23.1
25.9
14.8
34.2
23.6
19.9
21.8
na
USA
kt44
.046
.56.
126
.666
.967
.825
.523
.562
.2na
Mex
ico
kt7.
06.
76.
813
.68.
917
.313
.56.
113
.1na
othe
rkt
111.
411
0.6
120.
811
6.3
128.
175
.610
0.3
88.7
94.4
na
Refin
ed p
rodu
ctio
nkt
1152
.011
40.8
1055
.711
05.2
1050
.510
64.7
995.
210
71.6
951.
9na
Wor
ld s
tock
skt
603
586
562
542
577.
356
0.1
546.
446
7.6
448.
9na
wee
ks o
f sto
cks
wee
ks3.
02.
92.
82.
63.
02.
82.
92.
42.
4na
Aus
tral
ian
expo
rts
to C
hina
kt22
.451
.645
.763
.754
.559
.434
.533
.333
.846
.8
valu
eAU
Dm
n47
9786
105
9712
372
7577
116
Sour
ces:
Bloo
mbe
rg, W
orld
Met
al S
tatis
tics,
Inte
rnat
iona
l Lea
d an
d Zi
nc S
tudy
Gro
up, A
BS.
Tabl
e 24
: Lea
d su
mm
ary
data
50 China Resources Quarterly • Southern summer ~ Northern winter
China’s tin output by province
Yunnan55%Hunan
24%
Jiangxi13%
Guangxi6%
Other2%
Source: Bloomberg
Figure 144: China’s tin output by province
LME prices and inventory
0
6
12
18
24
30
10
15
20
25
30
35
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
kt‘000 USD/t
end of month inventories (rhs)
LME spot (lhs, month average)
Sources: LME, Bloomberg
Tin use by sector
Cans and containers
23%
Construction18%
Transport equipment
17%
Electrical12%
Other30%
Source: United States Geological Survey
World tin producers and consumers
Other12%
China51%
Indonesia20%
Peru6%
Bolivia6%
Myanmar5%
Producers
Source: World Bureau of Metal Statistics
Other26%
China50%
USA8%
Japan7%
Germany5%
South Korea
4%
Consumers
Tin prices
50
100
150
200
250
10
15
20
25
30
Aug 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Aug 15
‘000 RMB/t‘000 USD/tLME Spot (lhs)
LME 3mth forward (lhs)
SHFE spot (rhs)
Sources: LME, Bloomberg
Figure 140: LME prices and inventory
Figure 143: Tin use by sector
Figure 141: World tin producers and consumers
Figure 139: Tin prices
Figure 142: China’s tin imports by source
China Tin Imports
0.00
1.00
2.00
3.00
4.00
5.00
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
kt
Other Indonesia Singapore South Korea Taiwan
Source: Bloomberg
Tin
China Resources Quarterly • Southern summer ~ Northern winter 51
World molybdenum output
China43%
USA22%
Chile16%
Other9%
Peru6%
Mexico4%
Source: World Bureau of Metal Statistics
Figure 150: World molybdenum output
China’s molybdenum ore imports
0
10
20
30
40
50
60
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)
Source: CEIC
China’s molybdenum production
0
2
4
6
8
10
12
14
Apr 12 Dec 12 Aug 13 Apr 14 Dec 14 Aug 15
ktSources: CEIC, Department of Industry, Innovation and Science.
China’s molybdenum articles exports
0
5
10
15
20
25
30
35
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnktVolume (lhs)Value (rhs)
Source: CEIC
Figure 146: China’s molybdenum ore imports
Figure 149: China’s molybdenum production
Figure 147: China’s molybdenum articles exports Figure 148: China’s molybdenum ore exports
China’s molybdenum ore exports
0
7
14
21
28
35
42
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnktVolume (lhs)Value (rhs)
Source: CEIC
Molybdenum
Molybdenum prices
10
15
20
25
30
35
40
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
‘000 USD/t
LME Spot
Sources: LME, Bloomberg
Figure 145: Molybdenum prices
52 China Resources Quarterly • Southern summer ~ Northern winter
China’s tungsten product exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-150
20
40
60
80
100
120kt USDmn
Volume (rhs)Value (lhs)
Source: Bloomberg
Figure 156: China’s tungsten output (metal content)
China’s tungsten articles imports
0
3
6
9
12
15
18
21
0
10
20
30
40
50
60
70
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmntonnes
Volume (lhs)
Value (rhs)
Source: CEIC
World tungsten output
China 87%
Russia3%
Other4%
Canada3%
Rwanda2%
Bolivia1%
Source: World Bureau of Metal Statistics
China’s tungsten and articles exports
0
4
8
12
16
20
24
28
32
36
0
50
100
150
200
250
300
350
400
450
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmntonnes
Volume (lhs)
Value (rhs) Source: CEIC
China’s tungsten ore imports
0
4
8
12
16
20
24
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnktVolume (lhs)Value (rhs)
Source: CEIC
Figure 152: China’s tungsten articles imports
Figure 155: World tungsten output
Figure 153: China’s tungsten and articles exports
Figure 151: China’s tungsten ore imports
Figure 154: China’s tungsten products exports
China’s tungsten output (metal content)
0
2
4
6
8
10
12
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
kt
Sources: CEIC, Department of Industry, Innovation and Science.
Tungsten
China Resources Quarterly • Southern summer ~ Northern winter 53
Cobalt use by sector
Superalloys47%
Chemical applications
27%
Metallic applications
17%
Cemented carbides
9%
Source: United States Geological Survey
Figure 162: Cobalt use by sector
China’s cobalt ores imports
0
15
30
45
60
0
8
16
24
32
Jul-12 Apr-13 Jan-14 Oct-14 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)
Source: CEIC
World cobalt refined output
China46%
Other24%
Finland13%
Canada 6%
Zambia5%
Australia6%
Source: World Metal Statistics
China’s cobalt and articles imports
0
25
50
75
100
125
0
5
10
15
20
25
Jul-12 Apr-13 Jan-14 Oct-14 Jul-15
USDmnktVolume (lhs) Value (rhs)
Source: CEIC
Figure 158: China’s cobalt ore imports
Figure 161: World cobalt refined output
Figure 159: China’s cobalt articles imports Figure 160: World cobalt mine outputWorld cobalt mine output
Congo50%
Other26%
Canada6%
China6%
Russia6%
Australia6%
Source: United States Geological Survey
Cobalt
Cobalt Prices - daily
150
200
250
300
350
400
20
25
30
35
40
45
Apr 12 Dec 12 Aug 13 Apr 14 Dec 14 Aug 15
‘000 RMB/t‘000 USD/t
LME Spot (lhs)
LME 3mth forward (lhs)
SHFE spot (rhs)
Sources: LME, Bloomberg
Figure 157: Cobalt prices
54 China Resources Quarterly • Southern summer ~ Northern winter
World antimony mine output
China78%
Other8%
Tajikistan5%
Russia4%
Bolivia4%
Myanmar1%
Source: World Bureau of Metal Statistics
Figure 168: World antimony mine output
China’s antimony ore imports
0
6
12
18
24
30
0
2
4
6
8
10
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)Source: CEIC
China’s antimony mine output
0
5
10
15
20
25
30
35
40
45
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
kt
Source: CEIC
China’s unwrought antimony exports
0
5
10
15
20
0.0
0.5
1.0
1.5
2.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)
Source: CEIC
Antimony prices
0
20
40
60
80
100
120
0
3
6
9
12
15
18
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
‘000 RMB/t‘000 USD/t
Metal Bulletin China Free Market (lhs)
SHFE spot (rhs)
Source: Bloomberg
Figure 164: China’s antimony ores imports
Figure 167: China’s antimony mine output
Figure 165: China’s unwrought antimony exports
Figure 163: Antimony prices
Figure 166: Australian antimony exports to China
Australian antimony exports to China
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-150.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0kt AUDmn
volume(lhs)
value (rhs)
Source: ABS
Antimony
China Resources Quarterly • Southern summer ~ Northern winter 55
Autocatalysts37%
Jewellery31%
Glass7%
Chemical6%
Investment6%
Electrical3%Medical and
biomedical3%
Petroleum3%
Other4%
Source: United States Geological Survey
Platinum end uses by sectorFigure 174: Platinum end use by sector
Palladium prices
400
500
600
700
800
900
1000
100
120
140
160
180
200
220
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
RMB/gUSD/troy oz
Spot (lhs)SHFE spot (rhs)
Source: Bloomberg
World platinum output
South Africa66%
Russia17%
Zimbabwe9%
Canada4%
USA3%
Other1%
Source: World Bureau of Metal Statistics
China’s platinum Imports
0
2
4
6
8
10
12
14
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15
tonnesOther Germany JapanRussia South Africa Switzerland
Source: Bloomberg
Figure 170: Palladium prices
Figure 173: World platinum output
Figure 171: China’s platinum imports Figure 172: China’s platinum exports
China’s platinum exports
0
5
10
15
20
25
30
0
100
200
300
400
500
600
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
USDmnkg
Volume (lhs)
Value (rhs)
Source: Bloomberg
Platinum & Palladium
Platinum prices
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
USD/troy oz
Source: Bloomberg
Figure 169: Platinum prices
56 China Resources Quarterly • Southern summer ~ Northern winter
Australian ilmenite exports to China
0
10
20
30
40
50
0
50
100
150
200
250
H209 H210 H211 H212 H213 H214 H215
%kt
Volume (lhs)Share to China (rhs) Source: Based on ABS
Figure 180: Australian ilmenite exports to China
China’s titanium dioxide exports
0
25
50
75
100
125
150
0
10
20
30
40
50
60
Jul-12 Apr-13 Jan-14 Oct-14 Jul-15
USDmnkt
Titanium white Value (rhs)Source: CEIC
Australian zirconium exports to China
0
10
20
30
40
50
60
70
80
0
50
100
150
200
250
300
350
400
H209 H210 H211 H212 H213 H214 H215
%ktVolume (lhs)Share to China (rhs)
Source: Based on ABS
Aust titanium dioxide exports to China
0
3
6
9
12
15
18
21
0
1
2
3
4
5
6
7
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
AUDmnkt
Volume (lhs)
Value (rhs)
Source: ABS
China’s titanium dioxide imports
0
18
36
54
72
90
0
5
10
15
20
25
Jul-12 Apr-13 Jan-14 Oct-14 Jul-15
USDmnktTitanium whiteOtherValue (rhs)
Source: CEIC
Figure 176: China’s titanium dioxide exports
Figure 179: Australian zirconium exports to China
Figure 177: Aust titanium dioxide exports to China
Figure 175: China’s titanium dioxide imports
Figure 178: Australian rutile exports to ChinaAustralian rutile exports to China
0
4
8
12
16
20
24
28
32
0
5
10
15
20
25
30
35
40
H209 H210 H211 H212 H213 H214 H215
%kt
Volume (lhs)
Share to China (rhs)
Source: Based on ABS
Mineral Sands
China Resources Quarterly • Southern summer ~ Northern winter 57
Yttrium oxide exports
0
2
4
6
8
10
12
14
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Sep-12 Jun-13 Mar-14 Dec-14 Sep-15
USmnKt
Volume (lhs)
Value (rhs)
Source: CEIC
Figure 186: Yttrium oxide export
Cerium oxide & hydroxide exports
0
3
6
9
12
15
18
21
24
27
30
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Sep-12 Jun-13 Mar-14 Dec-14 Sep-15
USmnKt
Volume (lhs)Value (rhs)
Source: CEIC
Europium oxide exports
0
1
2
3
4
5
6
7
8
9
10
0
0.0001
0.0002
0.0003
0.0004
0.0005
0.0006
0.0007
0.0008
0.0009
0.001
Sep-12 Jun-13 Mar-14 Dec-14 Sep-15
USmnKt
Volume (lhs)
Value (rhs)
Source: CEIC
Lanthanum oxide exports
0
13
25
38
50
63
75
88
100
0
0.5
1
1.5
2
2.5
3
3.5
4
Sep-12 Jun-13 Mar-14 Dec-14 Sep-15
USmnKt
Volume (lhs)
Value (rhs)
Source: CEIC
Figure 182: Cerium oxide & hydroxide exports
Figure 185: Europium oxide exports
Figure 183: Lanthanum oxide exports Figure 184: Neodymium oxide exports
Neodymium oxide exports
0
4
8
12
16
20
0
0.04
0.08
0.12
0.16
0.2
Sep-12 Jun-13 Mar-14 Dec-14 Sep-15
USmnKt
Volume (lhs)
Value (rhs)
Source: CEIC
China’s exports of rare earth oxidesChina’s total rare earth oxides exports
0
1
2
3
4
5
6
Sep-12 Sep-13 Sep-14 Sep-15
KtCerium Oxide and HydroxideLanthanum OxideYttrium OxideNeodymium OxideEuropium Oxideother
Source: CEIC
Figure 181: China’s total rare earth oxides exports
58 China Resources Quarterly • Southern summer ~ Northern winter
World cadmium consumption
China33%
Belgium31%
Other15%
Japan12%
Sweden6%
USA3%
Source: World Bureau of Metal Statistics
Figure 192: World cadmium consumption
China’s manganese ore imports
100
150
200
250
300
350
400
600
850
1100
1350
1600
1850
2100
Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
USDmnkt
Volume (lhs) Value (rhs)Source: Bloomberg
World cadmium production
China33%
Other30%
South Korea17%
Japan8%
Kazakhstan6%
Mexico6%
Source: World Bureau of Metal Statistics
Australian manganese exports to China
0
20
40
60
80
100
120
140
160
0
100
200
300
400
500
600
700
800
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
AUDmnkt
Volume (lhs) Value (rhs)
Source: ABS
Manganese and Cadmium Prices
50
100
150
200
250
300
350
0
5
10
15
20
25
30
Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
‘000 USD/t‘000 RMB/t
Maganese - Shanghai price (lhs)
Metal Bulletin Cadmium price (rhs)
Source: Bloomberg
Figure 188: China’s manganese ore imports
Figure 191: World cadmium production
Figure 189: Australian manganese exports to China
Figure 187: Manganese & cadmium prices
Figure 190: World manganese mine outputWorld Manganese mine output
China26%
South Africa26%
Other22%
Australia14%
Gabon7%
Brazil5%
Source: World Bureau of Metal Statistics
Manganese & Cadmium
China Resources Quarterly • Southern summer ~ Northern winter 59
Shares of world magnesium output
China88%
USA4%
Russia3%
Israel3%
Kazakhstan2%
Source: World Bureau of Metal Statistics
Figure 198: Shares of world magnesium output
World diamond imports
India38%
UAE17%
China4%
Israel3%
other9%
Volume
European Community
29%
India30%
UAE11%
UAE9%
Israel9%
Botswana7%
China5%
Value
European Community
28%
Source: Kimberley Process Certification Scheme
China’s magnesium exports
35
50
65
80
95
110
125
10
15
20
25
30
35
40
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
USDmnkt
Volume (lhs)
Value (rhs)
Source: CEIC
World diamond output
Russia41%
Other11%
Congo, Democratic Republic of
8%
Canada6%
Australia5%
Zimbabwe3%
Volume
Botswana26%
Russia34%
Canada9%
Angola9%
Other6%
South Africa
6%
Namibia5%
Value
Botswana33%
Source: Kimberley Process Certification Scheme
Figure 194: World diamond imports
Figure 197: China’s magnesium exports
Figure 195: World diamond output Figure 196: Magnesium pricesMagnesium Prices
5
10
15
20
25
1800
2200
2600
3000
3400
Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16
‘000 RMB/tUSD/tonne
Metal Bulletin Spot (lhs)
SHFE spot (rhs)
Source: Bloomberg
Diamonds & MagnesiumWorld diamond exports
UAE16%
India8%
Russia9%
Botswana12%
Congo, Republic
of3%
Other24%
VolumeUAE14%
Botswana16%
Russia8%
Israel7%
Switzerland5%
Other23%
ValueEuropean
Community29%
European Community
27%
Source: Kimberley Process Certification Scheme
Figure 193: World diamond exports
60 China Resources Quarterly • Southern summer ~ Northern winter
Table 25: China mineral and energy import summary
unit Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Iron ore Mt 222.0 235.3 242.1 233.6 227.1 226.0 246.3 253.9
from Australia Mt 118.2 138.2 149.4 142.7 144.4 146.8 158.5 157.9
Australian share % 53 59 61.7 61.1 63.6 65.0 64.4 62.2
Thermal coal Mt 71.0 58.1 49.7 50.4 38.1 40.1 41.7 36.2
from Australia Mt 15.4 15.2 17.5 15.1 10.6 12.6 12.0 10.0
Australian share % 22 26 35 30 28 32 29 28
Metallurgical coal Mt 13.0 18.1 13.4 18.0 10.9 10.7 14.8 11.6
from Australia Mt 6.5 8.6 5.9 10.3 5.3 5.5 8.7 6.1
Australian share % 50 47 44 57 49 51 59 53
Aluminium kt 175.5 96.1 51.5 30.5 34.4 45.9 70.0 73.4
from Australia kt 48.0 18.9 7.0 5.6 7.7 2.7 12.7 15.3
Australian share % 27 20 14 18 22 6 18 21
Alumina kt 1484 1281 1158 1354 933 880 1329 1512
from Australia kt 1184 655 523 791 455 555 869 987
Australian share % 80 51 45 58 49 63 65 65
Bauxite Mt 13.1 6.6 8.4 8.4 10.1 12.6 16.5 17.0
from Australia Mt 3.1 3.7 4.7 4.2 4.9 4.5 5.6 4.5
Australian share % 24 55 55 50 49 36 34 26
Copper kt 1836 1699 1725 1935 1729 1774 1886 2324
from Australia kt 165 144 140 152 116 142 123 174
Australian share % 9 8 8 8 7 8 7 7
Table 25 continued on page 61
China Resources Quarterly • Southern summer ~ Northern winter 61
Table 25 continued:
unit Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Oil Mt 74.7 77.2 76.5 79.9 80.3 83.0 85.3 86.9
from Australia Mt 0.7 0.7 0.7 0.5 0.6 0.6 0.5 0.7
Australian share % 1.0 0.9 1.0 0.7 0.7 0.7 0.6 0.8
Gas (LNG) kt 5629 4297 4811 5155 5127 4392 4627 5522
from Australia kt 843 905 1162 902 1094 1286 1672 1500
Australian share % 15 21 24 18 21 29 36 27
Zinc kt 431.0 347.2 353.0 370.3 391.0 410.3 506.1 na
from Australia kt 138.5 119.5 111.4 125.1 116.7 141.2 165.8 na
Australian share % 32 34 32 34 30 34 33 na
Nickel USDmn 1585 1625 2314 1251 904 1918 1951 1510
from Australia USDmn 67 112 99 71 81 87 97 48
Australian share % 4 7 4 6 9 5 5 3
Lead kt 224.0 213.8 284.8 273.0 220.4 197.0 238.3 na
from Australia kt 49.6 28.8 47.8 52.0 39.1 31.6 28.9 na
Australian share % 22 13 17 19 18 16 12 na
Tin kt 2.0 2.0 2.3 2.5 1.6 2.9 3.0 2.9
from Australia kt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Australian share % 0 0 0 0 0 0 0 0
Uranium t 4045 6801 4985 9281 2041 5659 7505 7439
Sources: CEIC, Bloomberg, IHS.
62 China Resources Quarterly • Southern summer ~ Northern winter
Electricity generation and consumption
Electricity consumption by region, 2014
N/A or negligible
<80 billion KWh 80–
160 billion KWh 160–
300 billion KWh >300
billion KWh Source: CEIC
Figure 200: Electricity consumption by region, 2014
Figure 199: Electricity generation by region, 2015
Electricity generation by region, 2015
N/A or negligible
<100 billion KWh
100–200 billion KWh
200–300 billion KWh
>300 billion KWh Source: CEIC
China Resources Quarterly • Southern summer ~ Northern winter 63
Coal and gas
Gas production by region, 2015
N/A or negligible
<0.5 Bcm
0.5–3 Bcm
3–10 Bcm
>10 Bcm Source: CEIC
Coal production by region, 2015 (estimated)
N/A or negligible
<60 Mt
60–120 Mt 121–
180 Mt
>181 Mt Source: CEIC
Figure 202: Gas production by region, 2015
Figure 201: Coal production by region, 2015 estimate
64 China Resources Quarterly • Southern summer ~ Northern winter
Ferrous metals
Crude steel production by region, 2015
N/A or negligible
<1.5 Mt
1.5–2.5 Mt
2.5–10 Mt
>10 Mt Source: Bloomberg
Figure 204: Crude steel production by region, 2015
Iron ore production by region, 2015
N/A or negligible
<2 Mt
2–5 Mt
5–10 Mt
>10 Mt Source: Bloomberg
Figure 203: Iron ore production by region, 2015
China Resources Quarterly • Southern summer ~ Northern winter 65
Alumina and aluminium
Aluminium production by region, 2014
N/A or negligible
<100 kt
100–500 kt 500–
2000 kt
>2000 kt Source: Bloomberg
Alumina production by region, 2013
N/A or negligible
<2 Mt
2–5 Mt
5–10 Mt
>10 Mt Source: CEIC
Figure 206: Aluminum production by region, 2014
Figure 205: Alumina production by region, 2014
66 China Resources Quarterly • Southern summer ~ Northern winter
Copper and gold
Mined gold production by region, 2014
N/A or negligible
<1.5t
1.5-2.5t
2.5-10t
>10t Source: CEIC
Figure 208: Mined gold production by region, 2014
Copper production by region, 2014
N/A or negligible
<50 kt
50–200 kt
200–500 kt
>500 kt Source: Bloomberg
Figure 207: Copper production by region, 2014
China Resources Quarterly • Southern summer ~ Northern winter 67
Nickel and zinc
Zinc production by region, 2015
N/A or negligible
<100 kt
100–500 kt 500–
1000 kt
>1000 kt Source: Bloomberg
Figure 210: Zinc production by region, 2015
Nickel production by region, 2015
N/A or negligible
<3 kt
3–10 kt
10–30 kt
>30 kt Source: Bloomberg
Figure 209: Nickel production by region, 2015
68 China Resources Quarterly • Southern summer ~ Northern winter
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70 China Resources Quarterly • Southern summer ~ Northern winter
China Resources Quarterly Southern sum
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