Yang Cao, Metal Bulletin Research. Chinese alumina market review & outlook

Transcription

1 Yang Cao, Metal Bulletin Research Chinese alumina market review & outlook 1

2 TABLE OF CONTENT Part 1 Alumina price analysis Page 3 Part 2 Fundamental analysis Page 6 Part 3 Chinese bauxite import analysis Page 13 Part 4 Chinese bauxite/alumina market outlook Page 22 Part 5 Key takeaways & Contact Page

3 (RMB/tonne) (RMB/tonne) Chinese alumina prices increased significantly in Q Chinese alumina & SHFE aluminium price Chinese domestic alumina price fell in H1 2014, due to decline in SHFE aluminium price and oversupply situation SHFE 3M price [LHS] Chinese domestic alumina price [RHS] although it rebounded significantly in Q3 last year, due to: (1) Recovery of SHFE aluminium price (2) Expectation of a tightening supply in Chinese alumina market. Since Q3, new aluminium smelting capacities in North West China have come on stream Idled smelting capacity has been reactivated Alumina producers have relatively low alumina stocks which in turn provided support to alumina prices Feb 12 Aug 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Source: MBR, MB, SHFE 3

4 Feb 11 May 11 Aug 11 Nov 11 Feb 12 May 12 Aug 12 Nov 12 Feb 13 May 13 Aug 13 Nov 13 Feb 14 May 14 Aug 14 Nov 14 Feb 15 ($/t) ($/t) MB Australia Alumina Index also rebounded sharply after falling to multi-month low FOB Australia [LHS] Chinese domestic alumina [LHS] Price difference [RHS] MB Australia Alumina Index also decreased in H1 2014, mainly due to the closure of smelting capacity The index dropped to $306.69/tonne on June 20 th 2014, the lowest level since the index was launched in August USD/CNY Since August, FOB Australia index also rebounded sharply, due to: Significant increase in Chinese domestic alumina price Appreciating CNY against USD Low ocean freight rate Feb 11 Aug 11 Feb 12 Aug 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Source: MBR, MB 4

5 TABLE OF CONTENT Part 1 Alumina price analysis Page 3 Part 2 Fundamental analysis Page 6 Part 3 Chinese bauxite import analysis Page 13 Part 4 Chinese bauxite/alumina market outlook Page 22 Part 5 Key takeaways & Contact Page

6 (million tpy) Chinese alumina capacity reached mtpy in 2014, 9.6% y-o-y up Chinese alumina capacity Chinese alumina capacity by province (2014) % Chinese alumina capacity [LHS] Y-o-y % change [RHS] 40% 35% Chongqing, 2.5% Inner Mongolia, 1.9% Yunnan, 1.2% % 22.7% 30% 25% 20% Guangxi, 11.5% Guizhou, 5.8% Shandong, 30.1% 30 15% % 8.6% 9.6% 10% 5% Henan, 19.5% 2.6% Source: MBR 0% Shanxi, 27.4% 6

7 (million tonnes) (million tonnes) Among all provinces, only Chongqing witnessed a y-o-y fall in alumina output Chinese alumina production Chinese alumina production by province China alumina production [LHS] Y-o-y % change [RHS] 29.1% 23.5% 51.31m 35% 30% 25% % 19.4% 0.3% 1.6% % % 4.2% 7.4% 14.2% 6.0% 15% 10% 5% % 19.0% -50.1% 96.7% 0 Source: MBR, IAI % Source: MBR 7

8 (000 tonnes) ($/tonne) (000 tonnes) Chinese alumina importing origins have become more diversified Chinese alumina import & import price Chinese alumina imports by countries China alumina imports [LHS] China alumina import price [RHS] 2014 total: 5.28m tonnes (37.8% y-o-y up) Australia India U.S.A. Total imports y-o-y % [RHS] Brazil Vietnam Others 900% 800% 700% % Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec % 400% % % % 0% % 0-200% Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 8

9 (million tonnes) (million tonnes) Chinese MGA demand exceeded 50m tonnes in 2014 Chinese primary aluminium production Chinese metallurgical-grade alumina demand 30.0 Chinese primary aluminium production [LHS] Y-o-y % change [RHS] % new smelting capacity: 4.6 mtpy 26.7% 25% 20% % 12.6% 15% % 13.0% 10.4% 10% % % %

10 Primary aluminium capacity additions have outpaced alumina capacity additions Inner Mongolia Xinjiang 1800 Xinjiang Gansu Shanxi 1700 Shandong 3000 Jilin Liaoning Heilongjiang 1500 Gansu Qinghai Inner Mongolia Beijing Tianjin Hebei Ningxia Shanxi Shandong Xizang Primary aluminium (000 tpy) Total: 4.6 mtpy Guangxi Alumina (000 tpy) Total: 5.8 mtpy 600 Shannxi HHenan Jiangsu Anhui Shanghai Hubei Sichuan Chongqing Zhejiang Jiangxi Guizhou Hunan Fujian Yunnan Guangxi Guangdong Taiwan Hainan Reactivated capacity

11 China witnessed a significant deficit in 2014, although it has been offset by the alumina imports million tonnes Alumina production Alumina consumption Balance Alumina imports Alumina stock

12 TABLE OF CONTENT Part 1 Alumina price analysis Page 3 Part 2 Fundamental analysis Page 6 Part 3 Chinese bauxite import analysis Page 13 Part 4 Chinese bauxite/alumina market outlook Page 22 Part 5 Key takeaways & Contact Page

13 (Millions tonne) ($/tonne) Chinese bauxite imports Malaysia Others [LHS] Indonesia [LHS] 2014 total: 36.5m tonnes (49.0% y-o-y down) India Australia [LHS] Imported bauxite CIF price [RHS] 8.016m tonnes in January 2014 a record high Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Source: MBR, WBMS 13

14 Chinese importers look for alternatives after Indonesian export ban Australi a 24% India 3% Brazil 1% Fiji 1% Indones ia 71% Brazil 1% Fiji 1% Australi a 20% Ghana Guinea 1% 1% India 8% Indones ia 68% Malaysia 4% Dominic an Republic 5% India 13% Brazil 2% Ghana 2% Indonesi a 31% Guinea 1% Australia 41% Fiji 1% 2012 total imports: 40.1m tonnes 2013 total imports: 71.6m tonnes 2014 total imports: 36.5m tonnes 14

15 Global bauxite economic reserves India 0.9 Bt Laos 2.0 Bt Malaysia China 0.8 Bt Vietnam 2.1 Bt Indonesia 1.0 Bt Jamaica 2.0 Bt Guyana 0.9 Bt Suriname 0.6 Bt Guinea 7.4 Bt Fiji 0.4 Bt Brazil 3.4 Bt Australia 5.4 Bt 15

16 Which countries will become major exporters of bauxite to China? Guinea 7.4 Bt India 0.9 Bt Laos 2.0 Bt Australia became the largest exporter of bauxite to China in Especially after Gove was shut down, all its bauxite has been exported to China. 2015f: ~ 20 million tonnes Malaysia China 0.8 Bt Australia 5.4 Bt Vietnam 2.1 Bt Indonesia 1.0 Bt Fiji 0.4 Bt Jamaica 2.0 Bt Guyana 0.9 Bt Suriname 0.6 Bt Brazil 3.4 Bt 16

17 Which countries will become major exporters of bauxite to China? India 0.9 Bt Laos 2.0 Bt Malaysia China 0.8 Bt Vietnam 2.1 Bt Malaysia might become the second largest bauxite exporter to China, although this might be restricted by its port loading capability. 2015f: ~ 8 million tonnes Indonesia 1.0 Bt Jamaica 2.0 Bt Guyana 0.9 Bt Suriname 0.6 Bt Guinea 7.4 Bt Fiji 0.4 Bt Brazil 3.4 Bt Australia 5.4 Bt 17

18 Which countries will become major exporters of bauxite to China? India is also a large bauxite exporter to China. However, there are news that India might increase its bauxite export duty which will increase Chinese buyers import cost. 2015f: ~ 5 million tonnes India 0.9 Bt Laos 2.0 Bt Malaysia China 0.8 Bt Vietnam 2.1 Bt Indonesia 1.0 Bt Jamaica 2.0 Bt Guyana 0.9 Bt Suriname 0.6 Bt Guinea 7.4 Bt Fiji 0.4 Bt Brazil 3.4 Bt Australia 5.4 Bt 18

19 Which countries will become major exporters of bauxite to China? India 0.9 Bt Laos 2.0 Bt Malaysia China 0.8 Bt Vietnam 2.1 Bt Indonesia 1.0 Bt Brazil: export can reach 2 mtpy Ghana: export can reach 2 mtpy Dominican Republic : export can reach 2-3 mtpy 2015f: others total: ~3 million tonnes Jamaica 2.0 Bt Guyana 0.9 Bt Suriname 0.6 Bt Guinea 7.4 Bt Fiji 0.4 Bt Brazil 3.4 Bt Australia 5.4 Bt 19

20 There are still many issues Chinese bauxite importers need to consider Quality Bauxite quality differentiates between different countries Infrastructure Infrastructure restrictions such as port facilities, mining capabilities, etc Cost Import cost has kept going up 20

21 TABLE OF CONTENT Part 1 Alumina price analysis Page 3 Part 2 Fundamental analysis Page 6 Part 3 Chinese bauxite import analysis Page 13 Part 4 Chinese bauxite/alumina market outlook Page 22 Part 5 Key takeaways & Contact Page

22 Demand for imported bauxite will not be met if China stays at current bauxite import levels million tonnes f Bauxite imports Alumina production using imported bauxite Demand for imported bauxite Balance

23 Chinese alumina market will continue to be in large deficit in 2015 million tonnes f Alumina production Alumina consumption Balance Alumina imports Alumina stock

24 TABLE OF CONTENT Part 1 Alumina price analysis Page 3 Part 2 Fundamental analysis Page 6 Part 3 Chinese bauxite import analysis Page 13 Part 4 Chinese bauxite/alumina market outlook Page 22 Part 5 Key takeaways & Contact Page

25 Key takeaways Both Chinese domestic alumina price and MB Australia Alumina Index dropped in H but rebounded sharply in Q due to expectation of a tightening supply in Chinese alumina market Chinese primary aluminium capacity additions have outpaced alumina capacity additions, which means China will witness another year of significant deficit in its alumina market This deficit will be offset by Chinese alumina imports, which has already happened since Chinese alumina importing origins have also become more diversified before 2014, it was mainly importing from Australia. But in 2014, a relatively large amount of imports have come from Brazil, India and Vietnam After Indonesian bauxite export ban, Chinese importers were looking for alternatives we expect Australia will remain the largest exporters of bauxite to China, while Malaysia might become the second largest bauxite exporter. China will also import from India, Fiji, Brazil, Ghana, Dominican Republic, Guinea and Guyana However, there are still many issues Chinese bauxite importers need to consider, e.g. bauxite quality, infrastructure restrictions, and transportation cost, etc 25

26 Metal Bulletin Research provide dedicated aluminium market analysis and forecasting services Short term forecasts MBR Aluminium Weekly Market Tracker Regular insight and price forecasting with downloadable data Week 2 features specific alumina & bauxite market analysis with two year supply/demand forecast and historical alumina & bauxite trade flows Long term forecasts MBR Strategic Outlooks In-depth and extensive studies for longer outlooks. This updated report focuses on Bauxite & Alumina industry with a 15 year outlook All major market developments and changes detailed along with supply/demand balances and price forecasts for metal grade alumina and bauxite prices 26

27 Metal Bulletin Research provide dedicated aluminium market analysis and forecasting services Look out for your free sample MBR Aluminium Weekly Market Tracker at the conference Contact us today and ask about special delegate offers: 27

28 If you have any questions regarding this presentation, please do not hesitate to contact me at: Telephone: +44 (0)