Reviews
MONTHLY REVIEW OF BASE METALS IN CHINA
Review on China base metals in Apr. and forcast in May
Base nonferrous metals,In March,got improved in production, which
all,with the exception of nickel,marked a rise compared with thoses in
Feb.Data,released from former CNNC,is as follows:
Output in Mar.:420.4 thousand tons,up 6.1% from Feb;
Output from Jan to May:1197.3 thousand tons, up 10. 5% from 1083. 7
thousand tons of the same period of last year;
Of which,aluminium listed the first as per production,which indicated
17.8% up,followed is nickel, up 15. 2%. Increase in refined output
resulted from substantial both imports and domestic concentrate. For
example,the first quarter saw 28. 4% up in imports of copper
concentrate,ended at 243.2 thousand tons,while alumina closed at 424.9
thousand tons,up 37.6%,and lead concentrate finished at 61.4 thousand
tons,up 66.9%.
Furthermore,in March,existed more imports of copper and aluminium, as
well as more exports of lead and zinc.
Other statistics from the customs listed herein:
Exports in March:worth US$0.236 billion,up 41.5%;
Imports in March:worth US$0.327 billion,up 51.3%;
Unfavourable trade balance:US$0.09 billion,1.8 times as much;
Imports of copper and semis:up 45.5%;
Imports of aluminium and semis:77.8%;
Exports of lead cocentrate:up 84.3%;
Exports of zinc concentrate:up 26.4%;
Exports of tin concentrate:up 54.4%
As for refined products,in the first quarter, imports of six base
metals,with refined aluminium excluded,indicated a obvious rise, while
exports of the same metals,with the exception of refind copper, lead
and zinc,embelmed a substantial drop on the contrary.
Into 1998,nonferrous metals market has faced a sluggish demand
,therefore,oversupply prevails.As for price,it bascially dominated by
LME,although copper bounced a little.On domestic means of production
markets,base metals lasted the downtrend,which existed in March , but
with tin somewhat excluded.
It is predicted that domestic market,impacted by oversupply, changes
little in May,and base metals will run downwards,but with tin excluded.
Table 2 The domestic average price of base metal in April (yuan/ton)
1998 +,-difference %
March April compared to in last month
means of production market in differecnt regions
copper 17550.0 17524.3 -0.15
aluminium 14040.8 13939.9 -0.72
lead 5642.8 5442.9 -3.54
zinc 10012.1 9822.8 -1.89
tin 51516.7 51666.1 0.29
nickel 61791.5 58617.7 -5.14
Shanghai Metal Exchange
copper 17939.0 18255.9 1.77
(w.a.p. of all months)
aluminium 13929.5 13855.5 -0.53
(w.a.p. of all months)
zinc - - -
(w.a.p. of all months)
nickel - - -
(w.a.p. of all months)
copper 17968.4 18241.3 1.52
(three-month forward)
aluminium 13966.5 13860.5 -0.85
(three-month forward)
Shenzhen Metal Exchange
copper 17409.2 17546.2 0.79
(this month)
aluminium 13925.9 13808.2 -0.85
(this month)
copper 17874.6 18213.4 1.89
(three-month forward)
aluminium 14033.5 13917.4 -0.83
(three-month forward)
COPPER
Copper price, in domestic future markets, varied according to that in
LME,while LME went up in April,domestic marekt also ran in upward channel
,but by a small margin.w.a.p at SHME ended at 18256yuan/t, up 1. 77%
,while three month closed at 18241.3yuan/t, only up 1. 52%. Basically
,domestic market failed to gain the same as LME did, main factors
,attributed to such situation,included:
1.Moderate rise in output
Data concerned is from CNNC,fingures is as follows:
output of copper concentrate in Mar:85811t,up 16%;
output of copper concentrate from Jan to Mar:224239t,up 6.1%;
In Feb,Guixi Smelter closed for maintenance,but by the middle Feb
,it production restarted.Up to Mar,the smelter has reached its capacity
of last year.This,to some extent,resulted in the increase of output. On
the other hand,calculated on the current base,annual output of copper
ill total 1250 thousand tons,with output copper concentrate a little
up from consumption.
2.Substantial imports and obviously cut-off exports
Statistics ,related to copper trade and from the Customs, is as
follows:
import
copper and alloy from Jan to Mar:85811t,up 16%
in which
refined copper:32677t
blister:35256t,up 97.2%
semis from Jan to Mar:121072t,up 22%
export
copper and alloy from Jan to Mar:16239t,down 37.6%
in which
refined copper:13433t
blister:2404t
semis from Jan to Mar:18048t,down 4.07%
Main reasons,related to rising imports,are as follows:
Firstly,domestic price run higher than in LME, therefore, some
traders employed hedging for profit;secondly,there existed import quota
.Besides,there were a large quantity of smuggled copper, and they
pressed effect on domestic market.On the other hand,down in export came
from Southeast Asian turmoil.
3.Sluggish demand
National economy moves forward smoothly and steadily, though, some
enterprises faced many difficulties,such as low economic profit, and
shortage of fund,along with substantial stock of social necessities. In
some sectors,consumption for copper dipped.As for copper import, semis
imports got more and more,and this situation hampered the consumption
of refined copper. It was estimated that all sectors consume 1200
thousand tons of refined copper,down 4.5% than in last year.
4.Relatively booming future market but without big investors coming in
By statistics,copper transaction,in SHME,ended 6930 thousand tons in
the first quarter of this year,up 174.8%,while SZME finished at 1500
thousand tons,up 50.96%.Relatively thick turnover attributed to rising
margin on other else commodities except metals,so neighbouring fund got
attacted.Meanwhile,domestic price ended higher than in LME.In addition
,premium existed for forward delivery,accompanying more import. On the
other hand,dismantling of CNNC has also excerted some effect on
domestic future markets.
For the present,more stock exists in China.By the end of April, the
number closed at 47 thousand tons, given the consideration of 70
thousand tons in both SZME and CQME,it is safe to say that demand for
copper fails to be robust.In our opinion, domestic price in May will
vary according to that in LME,which finishes at 18500yuan/t.
ALUMINIUM
Into 1998,aluminium in future markets presents a thin turnover
.Recently,authorities concerned are arranging future markets by placing
some peculative big investors on the spot.Therefore,there was a small
markets.Taking SZME for example,in April,spot and there month ended at
13808.2yuan/t and 13917.4yuan/t respectiely,up 0.85% and 0.83% in turn
from in March,while month settlement on means of production markets
finished at 13939.9yuan/t,down 0.72%.
From Jan to Mar,aluminium went down in price in China, as a result
,imports dropped down.According to the customs, imports of unwrought
aluminium and alloy in the first quarters of this year closed at 46. 8
shousand tons,down 35.7%.In the recent years, countries in Southeast
Asia have been important importers from China,so Southeast Asian crisis
had done damage to Chinese import.However,sluggish domestic demand and
low price resulted in more exports of aluminium ingot. Based on the
Customs,exports of unwrought aluminium and alloy in the first quarter
closed at 72.8 thousand tons,up 79% from last year, while net exports
ended at 26 thousand tons,up from 21 thousand tons of last year.
Production and trade
unit:0,000t
in Mar by MAr. grow rate(%)
output
alumina 27.45 78.00 9.63
aluminium ingot 17.44 51.44 17.78
import
alumina 15.00 42.00 37.5
aluminium 5.52 11.76 -9.4
in which
aluminium ingot 2.34 4.68 -35.7
semis 3.18 7.07 24.4
export
aluminium 4.73 9.41 67.6
in which
aluminium ingot 3.76 7.28 79.0
semis 0.63 2.13 26.1
In general, domestic market will be controlled by both LME and
domestic aluminium trade.It is estimated that future delivery finishes
at 13500-14200yuan/t.
Lead
In the first quarter of this year, domestic market lagged behind
international one,and the same trend existed all April long. Average
price on means of production markets closed at 5442.9yuan/t,down 3. 54%
from in March.By tha end of March,international market began to rebound
,minority of enterprises in China tried to raise ex- factory price
,though,most of them didn't follow the step,therefore, it failed to
undertake forwards. Taking for example Zhuzhou Smelter, average ex
-factory price ended at 5117yuan/t,down 1. 6% from March. Up to the
middle April,actual ex-factory price dipped down to 4900yuan/t.
1.More import and supply as per concentrate
Owning to increasingly imports,concentrate plunged sharply in price
.By now,it has broken down to 3000yuan/t. Up to the middle April
,concentrate,graded at 58% and from Siding Lead and Zinc Mine closed at
2300yuan/t,down 23% from the early this year.According to the Customs
,in March,13.2 thousand tons of concentrate had been imported, while
from Jan to Mar it rose up to 61.4 thousand tons, up 66. 9% from the
last year.At the same time,exports was relatively far less than imports
.It is estimated that concentrate price will further decline, owning to
more import and less export.
2.Production rises at a good pace
The latest data,related to lead industry,is as follows:
concentrate output(with recycling) in 1997 ends at 710 thousand tons,
a little up than in 1996;
concentrated output, in the first quarter of this year,closes
at 139.1 thousand tons,up 14.4% from in the same period of last
year.
Based on aforesaid data, it can be concluded that output of
concentrate in 1998 will amount to 72 thousand tons.
3.Export turns for the better but less than the same period of last
year
lead and lead alloy in Mar:17.7 thousand tons,two times as many as
in Feb;
lead and lead alloy from Jan to Mar:36.3 thousand tons;
net exports of lead and alloy:33.6 thousand tons.
In the second quarter ,exports will override that in the first
quarter of this year,owning to higher international market. Given the
more imports of concentrate,it is predicted that exports of lead and
lead alloy all the year long will come up with 170 thousand tons or so.
4.Slow increase in consumption
At present,consumption level main is related to availablity of fund
.By survey,most lead-acid battery enterprises suffers from money-losing
,with a few of them excluded. However, output of battery , through all
China ,chalks up more and more.Besides,dependant on technical updating
,standard of lead-consuming average drops little by little. Therefore
,the demand for lead in the battery industry rises at a bad pace
.According to statistics,46 back-born enterprises in 1997 consumed 168
thousand tons of lead.It is estimated that all consumption of lead and
lead alloy, in domestic battery circles amounts to 240 thousand tons
,which accounts for 52% of total demand.Since 1998,the battery industry
have not gotten improved obviously,though,given the substantial supply
of lead and continuous drop in price,battery industries will fail to buy
any lead unless they need it promptly.As a result, production in the
battery sector will keep low rate.It is estimated that consumption of
lead will overweigh that in the last year,which ends at 470 thousand
tons or so.
Deriving from the above- mentioned, 80 thousand tons of oversupply
there exists on domestic markets.However,some smelters will close for
maintenance in May, and more exports also is expected, therefore
,relative shortage of supply will make price stable.
Zinc
In the past period,domestic price was higher than on international
markets.Accordingly,when international market began to rebound, domestic
market failed to respond. In the middle of April, a few producers
adjusted their ex-factory,while most of producers didn't follow the
step.In April,average price,published by Huludao Zinc Plant ended at
10067yuan/t,with Zhuzhou Smelter and Shanguan Smelter at 9600yuan/t and
9357yuan/t respectively.Quotation on means of production markets closed
at 9822.8yuan/t,down 1. 89% from March. Other factors, attrituting to
decline in price,was oversupply,which still exists in 1998.
1.concentrate market
Owning to more output and import,concentrate went down in price. By
the late April,concentrate,graded at 50%,dipped to 4000yuan/t, down 5%
from the early period of this year.Some data,related to zinc industry, is
as follows:
concentrate output from Jan to Mar:180.5 thousand tons,up 13%;
imports of concentrate in Mar:10.5 thousand tons;
imports of concentrate from Jan to Mar:31.5 thousand tons,down 3.8%;
exports of concentrate in Mar:8.3 thousand tons;
exports of concentrate from Jan to Mar:13.5 thousand tons,down 61.2%;
Estimated on the basis of zinc markets at home and abroad, China will
be a net importer country in 1998.
2.Production
In 1998,macro-management,carried out by the state,has effect on zinc
industry,and the result can be descriped from three parts. Firstly, CNNC
got suddenly dismantled by the state,and local companies or institutes
are also adjusted. The influence, resulting from this event, hasn't
emerged by far.Secondly,environmental protection has been strenghened
.As a result,some small-scaled smelters,distributed in Guizhou, Yunnan
and Sichun provinces,were shut down; thirdly, enterprise emerger and
acquisition prevail in China,therefore,some of them will be emerged, and
other will be closed.As a whole,smelting capacity will increase at a
low speed.Output of lead,released by former CNNC,is 318.6 thousand tons
,up 4.89% from the same period of last year.In 1997,1430 thousand tons
of lead had been yielded,and output in 1998,estimated, amounts to 1450
thousand tons.
3.Consumption
The same trend exists as lead sectors.Especially speaking,during the
nine-five year plan period,China will build mercury-free zinc powder
production sites.Responding to this motion, some firms from other
countries,such Belgium and Japan,has put on the table the plan that
they intend to cooperate with Chinese partners. In addition, so rapid
development of alkali battery will give an impetun to the demand for
mercury-free zinc powder.
4.Trade
Zinc trade from Jan to Mar
import export
quantity(t) change % quantity(t) change %
concentrate 31470 -3.8 13490 -61.2
refined 3148 84.2 89425 -28.2
alloy 18191 64.7 2402 -39.6
semis 9100 -5.0 2700 42.7
As illustrated above,zinc and zinc alloy saw a sharp increase in the
first quarter of this year,while exports dropped solidly. So far as
international markets is concerned, robust demand in European and
American countries will,to some extent,support Chinese exports,which is
predicted at 400 thousand tons.
Domestic market faces oversupply,though, large- scaled producers are
sensitive to international markets, therefore, domestic price will
maintain stable as long as LME trades at US$1100.
Tin
China had made great contribution to continous rise in price on the
international market in April.With domestic production kept steadily
,China has still maintained high level export, though, such situation
doen't excert negative effect on international circles, but acts as
stable agent-----firstly,it hampered the skyrocketing price of tin, and
secondly,it also alleviates the burden of oversupply in domestic market.
Hereby are the data,released from both former CNNC and customs.
output of concentrate in March:5274t;
output of concentrate in the first quarter of this year:13725t,
up 7.8% from the same period of last year;
exports of tin in March:4740t
in which
refined:3754t;
alloy:845t;
semis:141t;
exports of tin in the first quarter of this year:11480t,up 6%
in which
refined:3754t,up 14.8%
output,supply and trade of refined tin in Jan.,1998 unit:ton
in March from Jan to Mar difference %
output 5274 13725 7.8
import 114 283 16.0
export 3754 8776 26.3
supply 1634 5232 -13.2
Rising in exports helped to make domestic tin price rebound.In April,
average price ended at 51700yuan/t,up 0.29% from in March. Ex- factory
from main producers closed at 48000- 50000yuan/t, though, actual
settlement finished at 47000yuan/t.
Domestic price varies in tandem with exports. If the latter is
carried out smoothly and steadily,then,domestic price will alse chalk
up.
Nickel
Average price, quotated in means of production markets ended in April
at 58617 yuan/t,a substantial drop-off from that in March.Ex-factory price
also declined in turn, which closed at 55000yuan/t. As a result
,some producers cann't do nothing but put their processing lines idle.
The data,relevant to nickel sector,is as follows:
output of electrolytic nickel in March:2300t;
output of electrolytic nickel from Jan to Mar:7063t,up 15. 2%, which
was premarily produced by Sichuan Copper and Nickel Company,Ltd.
output of concentrate in March:3772;
output of concentrate from Jan to Mar:10648t,mainly from Jinchuan
Herein was nickel trade in the first quarter of this year
imports of nickel concerned:1885t,up 31.9%
in which
semis:1652t,up 42.5%;
refined:204t;
alloy:29t
exports of nickel concerned:2133t,up 162%
in which
refined:2066t,2.4 times as much
In perspective,if international market rebounds ,domestic nickel,at
55000yuan/t,will be confronted by a little pressure.Otherwise,domestic
producers face no alternative but cut off their capacities when
international market further declines.
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