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China 1Q production and trade review
Chinese production and trade data for 1Q shows that domestic production has
again been boosted by commodity prices, while refined metal imports
continue to be replaced by raw materials in many instances.
Latest news
Base metals fell in Wednesday LME trading amid some profit taking ahead of
the US Federal Reserve policy statement, with copper down 2.3% to close
below $9,300/t. Meanwhile, LME nickel stocks dropped 3.3% overnight, with
the level now 13% below that at the start of 2011 amid strong stainless output.
US durable goods orders increased by 2.5% MoM in March, following an
upwardly revised 0.7% rise in February from an initial estimate of a 0.6%
decline. The March increase was significantly stronger than consensus
market expectations (1.6%) and is clearly indicative of expansion in industrial
production, with positive implications for metals demand.
China’s NDRC has meet with leading producers to try in an attempt to
stabilise spot coal pricing, according to the China Coal Times. Prices have
jumped to RMB815/t at QHD, up 5% since the end of March. It has been
suggested that price ceilings will be introduced if coal prices continue to
surge, although we would note this was not effective in 2008, with the
government having limited ability to directly limit coal prices outside of
managing demand.
Nyrstar reported a fire overnight on Tuesday at its Balen zinc smelter in
Belgium, one of the world's ten largest plants. Although the smelter has been
shut down, we understand that damage is not thought to be extensive and a
prompt restart of the plant is anticipated, with minimal impact on metal
production. While it appears that this incident has not caused any significant
disruption to production, we take this opportunity to repeat our view that the
zinc market is not running any significant surplus on an ongoing basis today.
Balen produced ~251,000 tonnes of zinc in 2010, equal to ~12% of European
output and ~2% of world output.
Feedback from industry sources paints a bleak picture on the short-term
outlook for manganese ore prices. Major producers and traders expect prices
to be flat to down over the next three to six months, despite global crude steel
production running close to all-time record levels recently (~95% of all
manganese units are used in steelmaking), driven by China. Prices for May
shipments were recently reduced by 12–17% MoM, and the third quarter of
the year typically sees softer demand for seasonal reasons; we expect crude
steel output to dip in the coming months. Meanwhile, Mn ore stocks held in
Chinese ports continue to climb and now stand at 3.9mt (gross weight wet
basis), equivalent to almost four months of imports based on the March trade.
Preliminary US trade statistics suggest steel imports in March totalled 2.22mt,
19.3% up YoY and the highest level since October 2008. The most dramatic
YoY increase was in cold rolled sheet, up 113% to 141.5kt. Such an increase
in US exports was to be expected, given the large pricing arbitrage in recent
months between the US market and those elsewhere. However, with much of
the import increase coming from NATFA trading partners, the effect on
international trade is more muted.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
China 1Q production and trade review
Chinese production and trade data for 1Q shows that domestic production has
again been boosted by commodity prices, while refined metal imports
continue to be replaced by raw materials in many instances.
Latest news
Base metals fell in Wednesday LME trading amid some profit taking ahead of
the US Federal Reserve policy statement, with copper down 2.3% to close
below $9,300/t. Meanwhile, LME nickel stocks dropped 3.3% overnight, with
the level now 13% below that at the start of 2011 amid strong stainless output.
US durable goods orders increased by 2.5% MoM in March, following an
upwardly revised 0.7% rise in February from an initial estimate of a 0.6%
decline. The March increase was significantly stronger than consensus
market expectations (1.6%) and is clearly indicative of expansion in industrial
production, with positive implications for metals demand.
China’s NDRC has meet with leading producers to try in an attempt to
stabilise spot coal pricing, according to the China Coal Times. Prices have
jumped to RMB815/t at QHD, up 5% since the end of March. It has been
suggested that price ceilings will be introduced if coal prices continue to
surge, although we would note this was not effective in 2008, with the
government having limited ability to directly limit coal prices outside of
managing demand.
Nyrstar reported a fire overnight on Tuesday at its Balen zinc smelter in
Belgium, one of the world's ten largest plants. Although the smelter has been
shut down, we understand that damage is not thought to be extensive and a
prompt restart of the plant is anticipated, with minimal impact on metal
production. While it appears that this incident has not caused any significant
disruption to production, we take this opportunity to repeat our view that the
zinc market is not running any significant surplus on an ongoing basis today.
Balen produced ~251,000 tonnes of zinc in 2010, equal to ~12% of European
output and ~2% of world output.
Feedback from industry sources paints a bleak picture on the short-term
outlook for manganese ore prices. Major producers and traders expect prices
to be flat to down over the next three to six months, despite global crude steel
production running close to all-time record levels recently (~95% of all
manganese units are used in steelmaking), driven by China. Prices for May
shipments were recently reduced by 12–17% MoM, and the third quarter of
the year typically sees softer demand for seasonal reasons; we expect crude
steel output to dip in the coming months. Meanwhile, Mn ore stocks held in
Chinese ports continue to climb and now stand at 3.9mt (gross weight wet
basis), equivalent to almost four months of imports based on the March trade.
Preliminary US trade statistics suggest steel imports in March totalled 2.22mt,
19.3% up YoY and the highest level since October 2008. The most dramatic
YoY increase was in cold rolled sheet, up 113% to 141.5kt. Such an increase
in US exports was to be expected, given the large pricing arbitrage in recent
months between the US market and those elsewhere. However, with much of
the import increase coming from NATFA trading partners, the effect on
international trade is more muted.
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