The Status Quo and Forecast for China Copper Industry

Transcription

1 The Status Quo and Forecast for China Copper Industry Li Yusheng China Nonferrous Metals Industry Association London UK October 13, 2015 China Nonferrous Metals Forum 13th Oct. 2015

2 CONTENTS 1 China's copper industry review 2 China's copper market analysis in Jan.-Aug China's copper market Forecast for 2015/2016 China Nonferrous Metals Forum 13th Oct

3 China's copper industry review A Rapid growth in copper production 01 1 B C Copper imports continued to grow Technology and equipment improved D Refined copper consumption increased significantly China Nonferrous Metals Forum 13th Oct

4 China's copper industry review A Rapid growth in copper production Cu in Concentrate, kt Refined Cu, mlnt Cu Semis, mlnt CAGR 7.9% 13.1% 17.3% Cu in Concentrate Refined Cu Cu Semis Source: CNIA China Nonferrous Metals Forum 13th Oct

5 China's copper industry review B Copper imports continued to grow kt Copper concentrate * kt 600 Copper blister kt 4000 Refined Copper Source: China Customs China Nonferrous Metals Forum 13th Oct Note: * Gross weight

6 China's copper industry review C Technology and equipment improved Flash smelting, Ausmelt, ISA process and enriched oxygen bottom-blowing smelting, and other advanced technology are widely used in copper smelting. 1 By the end of 2005, China's copper smelting capacity was 1.83 mlnt, of which, backward capacity was around 400 kt; by the end of 2014, copper smelting capacity reached 5.50 mlnt, of which, flash smelting capacity was 2.25 mlnt ( double flash capacity 1.20 mlnt), and most of the backward smelting capacity was phased out. China Nonferrous Metals Forum 13th Oct

7 China's copper industry review D Refined copper consumption increased significantly Refined copper consumption: China v.s. World In 2000, China's refined copper consumption was 1.87 mlnt, accounted for 12.4% of the global total. In 2014, China s refined copper consumption reached 9.45 mlnt, accounting for 44.3% of the global total. The CAGR of refined copper consumption was 12.3% during China Nonferrous Metals Forum 13th Oct Source: CNIA ICSG

8 China's copper industry review D Refined copper consumption increased significantly Refined copper consumption by sectors Remarks Consumer goods: refrigerator,air-conditioner, freezer, door-lock, small household applicance, kitchen utensil, etc. Machinery: locomotive, construction machinery,instruments, heavy mining machinery, machinery tool manufactruing, etc. China Nonferrous Metals Forum 13th Oct Source: CNIA

9 China's Copper market analysis in Jan.-Aug A Copper supply 01 2 B Refined copper consumption China Nonferrous Metals Forum 13th Oct

10 China's Copper market analysis in Jan.-Aug China s copper market demonstrated the following characteristics in the first eight months: Production and consumption slowed down 01 Import of copper scrap, blister and refined copper decreased, that of copper concentrate was an exception Inventory in bonded warehouse was falling Smelting/Refining Capacity were still increasing, but some projects are delayed China Nonferrous Metals Forum 13th Oct The refined copper consumption was weak, but the apparent consumption in the first 8 months saw slight growth

11 China's Copper market analysis in Jan.-Aug A Copper supply--production in January-August 2015 Copper-in- Concentrate Jan-Aug 2014 Y-O-Y Jan-Aug 2015 Y-O-Y % % 01 2 Refined Copper % % Copper semis % % kt Source: CNIA Note: Copper concentrate- metal weight, copper semis gross weight China Nonferrous Metals Forum 13th Oct

12 China's Copper market analysis in Jan.-Aug A Copper supply--copper imports in Jan - Aug 2015 kt In Jan.-Aug. of 2015, copper concentrate import reached 8.12 mlnt, with an increase of 11.4% yoy, as copper smelting capacity expansion in rencent years and 01 higher TC/RC in The refined copper import decreased, especially for bonded warehouse import reduced by 19.3% to 878kt. Products Copper * concentrate Copper scrap Jan-Aug y-o-y Import % Import % The SHFE/LME ratio rebounded in Q3 2015, refined copper import from bonded warehouse increased. Copper blister/anode Refined Copper Import % Import % Export % China Nonferrous Metals Forum 13th Oct Source: China Customs * Gross weight

13 China's Copper market analysis in Jan.-Aug B tment in Power Industry in Jan.-Aug In the first 8 months, China's Refined copper apparent consumption was mlnt, ticked up 0.42% year-on year, far lower than 17.70% in Because Production 01 growth slowed down Refined copper import dropped Macro economic growth lower than expectation The output of major industrial products mostly saw decrease. Refined Copper Output Refined Copper Net Import Refined Cu Apperent Consumption Source: CNIA Jan-Aug 2014 Y-O-Y Jan-Aug 2015 kt Y-O-Y % % % % % % China Nonferrous Metals Forum 13th Oct

14 China's Copper market analysis in Jan.-Aug B Refined copper consumption Investment in Power Industry in Jan.-Aug Bln yuan Yoy: -1.5% Yoy: 11.6% Jan-Aug 2014 Jan-Aug 2015 Power generation Power grid Mln KW Newly Installed Power General Capacity Yoy: 8.9% Jan-Aug 2014 Jan-Aug 2015 Soure:China Electricity Council China Nonferrous Metals Forum 13th Oct

15 China's Copper market analysis in Jan.-Aug B Refined copper consumption Major Industrial Products Output (copper usage) in January- August Products 0 Source: NBS Unit China Nonferrous Metals Forum 13th Oct January - August 2014 January - August 2015 yoy % Output yoy % Output Automobiles mln unit Power Equipments mln kw AC Motors mln kw Household Refrigerator mln unit Household Freezers mln unit Househoud Air mln unit Conditioners Transformer mln KVA Power Cables mln Km Communication Cables mln Km (double) Copper Semis mlnt

16 China's copper market Forecast 2015/ Mine copper Smelting/refining capacity change Copper supply/demand balance China Nonferrous Metals Forum 13th Oct

17 China's copper market Forecast 2015/2016 Mine projects, mainly in Yunnan and Tiebt, mine copper will see a net increase of 100 kt (metal content) capacity in next 2 years. By the end of 2015, China s copper smelting capacity will be 6.00 mlnt, and copper refining capacity will reach mlnt, the capacity increase lower than expectation as capital strain and enviromental pressure In 2016, both smelting and refining capacity will see a net increase around 550 kt, lower than previous years. China s production of copper concentrate will see no much increase in next 2 years, and refined copper will grow at a rate of below 5%, and will remain a moderate growth in the future. Refined copper consumption may continue to slow down, the power industry is the main driver in the future, China will still be a major contributor to global refined copper consumption. China Nonferrous Metals Forum 13th Oct

18 China's copper market Forecast 2015/2016 Copper Mine Copper mines: there are a good number of mines under construction, most of which are small scale ones. In 2015, no big mine comes on stream. 01 However, there is potential to grow in the future. in 2016, Shaxi Copper Mine in Anhui, Pulang Copper Mine in Yunnan, will come on stream. There are also a couple of big mines to be developed or under construction, Qulong Copper Mine and Xiongcun Copper Mine in Tibet, Tuwu Copper in Xinjiang, etc. Mine copper output in 2015 will be 1.70 mlnt, with a decrease of 2.4% yoy, and 1.80 mlnt, with an increase of 5.9% yoy. China Nonferrous Metals Forum 13th Oct

19 China's copper market Forecast 2015/2016 Copper Smelting The capacity increase is lower than previous forcast, may be even lower, because some projects have postponed to come on stream as scheduled, and some projects will suspend production, 01 because of capital tight or enviromental pressure. By 2016, the smelting capacity and refining capacity will further grow to 6.55 Mt and Mt, respectively, with a increase of 550 kt for both smeling and refining. or even lower if some projects are delayed or some are closed due to environmental problem and lower copper price. Copper smelting capacity change in Smelter Year of commissioned 2015 kt 2016 kt Huludao Dongfang Copper Dongying Fangyuan Copper Xinjiang Wuxin Copper Yantai Penghui -60 Qinghai Copper Zhongtiaoshan North Copper JInchuan(Guangxi) China Minmetals Hunan Zhejiang Heding Copper Xinjiang Xinhui Copper GUangxi Nanguo Copper Henan Yuguang Gold & Lead China Gold Zhongyuan Smelter Liaoning Yuandong Copper Feishang Copper Total Source: Antaike China Nonferrous Metals Forum 13th Oct

20 China's copper market Forecast 2015/2016 Refinded copper import will show a downward trend. 01 Supply and Demand Supply Constrined by downward copper price and slow expansion of copper smelting/refining capacity, in the next 2 years, the growth rate of China's copper output will continue to slow down, ageraging at 5% year-on-year. Demand The Chinese economy has entered a state of "new normal", the gear of growth is shifting from high speed to medium-to-high speed, China's refined copper consumption will no longer maitain high growth rate in the future, but a moerate pace. In , Chinese government will invest 2 trillion RMB in upgrading power distribtution network, it will be the main driver for copper demand in China. The real estate is hard to have good performance, vehicle purchase quotas in some cities and enviromental issue will impact the vehicle production, copper demand in transportation sector will slow down; constrined by high inventory for air-conditioner, the copper demand growth in ACR will be lower. China Nonferrous Metals Forum 13th Oct

21 China's copper market Forecast 2015/2016 Refined copper supply/demand kt 2015 Y-O-Y 2016 Y-O-Y Output 8, % 8, % Import* 3, % 3, % Export* % % Demand 9, % 10, % Balance 1,239 1,140 Source: CNIA Antaike* China Nonferrous Metals Forum 13th Oct

22 In summary China s copper industry experienced fast growth in , reflected by production, consumption, and improvement of technology & equipment. The expansion of smelting/refining capacity drives up demand for copper raw materials. In 2015/2016, copper smelting/refining capaicty will continue to increase;constrined by domectic copper concentrate production, copper concentrate supply/demand gap continues to widen, copper concentrate import will still increase. At the same time, China s copper industry has entered a new normal, copper production and consumption will be in a medium-high level growth rate, from two-digit growth rate to one-digit growth rate. China's refined copper surplus will decrease as the financing import weakens. The One Belt and One Road Initiative" will give China more options in raw materials import, in terms of suppliers and type of raw materials (copper concentrate, copper blister or copper cathode) China Nonferrous Metals Forum 13th Oct

23 Thank you for your attention! China Nonferrous Metals Forum 13th Oct