Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Friday, January 25, 2013

China Economist Sees Inflation Risk

Inflation is the main concern in China’s economy in 2013, and regulators should also move to deal with risks from wealth-management products and China’s burgeoning stock of money, said a former adviser to China’s central bank.

“The main concern in 2013 is on prices” said Li Daokui, an economist at Tsinghua University and former academic member of China’s monetary policy committee. Mr. Li thinks that inflation for 2013 could average around 4% for the year, with a peak of 5% or more in the second half. That considerably higher than a 2.6% increase in prices in 2012.

Speaking to The Wall Street Journal at the World Economic Forum in Davos, Switzerland, Mr. Li said he sees growth in China’s gross domestic product at 8.1% to 8.3% in 2013, a slight acceleration from 7.8% growth in 2012. Stronger growth could also contribute to a resurgence in China’s property prices. “House prices could surprise people,” he said.

Rising prices could push China’s central bank to start tightening policy mid-year, Mr. Li said, with use of open market operations to drain liquidity the most likely mechanism. Movements on interest rates, if required, would come through liberalization of rates, rather than movement in the benchmark rate, Mr. Li said.

The rapid growth in China’s wealth-management product sector represented a risk to the economy, Mr. Li said. Wealth-management products—short-term investments that offer some of the security of a deposit with higher interest rates—have grown rapidly in the past few years to equal more than 10% of the deposits in the banking system, according to some estimates.

Tuesday, January 22, 2013

China eyes 60% of total steel capacity by 2015

China aims to bring around 60% of total steel capacity under the control of its top 10 steel mills by 2015 as part of a wide-ranging plan to restructure its industries.

China, the world's largest steel producer, aims to bring around 60 percent of total steel capacity under the control of its top 10 steel mills by 2015 as part of a wide-ranging plan to restructure its industries.

The Ministry of Industry and Information Technology (MIIT) announced on Tuesday it would encourage big state firms to acquire smaller rivals in a variety of industrial sectors, including automobile and machinery manufacturing as well as agriculture, metals and cement.

It said it would also seek to bring 90 percent of automobile production under the control of its top 10 firms by the end of 2015 as well as 90 percent of aluminium production capacity.

The government also plans to cut the number of firms involved in the exploration, smelting and separation of rare earths over the next three years.

Around half of China's total steel capacity is now owned by the 10 biggest steel firms following previous restructuring programmes, but Beijing has struggled to overcome obstructionism and red tape from local bureaucracies, or change the economic incentives that have allowed small and private mills to thrive.

"It is still quite difficult to consolidate and the key issue remains the local governments -- they remain big supporters of steel mills," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.

Overcapacity has been identified as one of the biggest problems facing the sector and the reason why profit margins remain perilously thin.

Chi Jingdong, vice-secretary general of the China Iron and Steel Association, told a conference in December that total steel capacity now stands at 980 million tonnes -- a surplus of nearly 300 million tonnes.

ENVIRONMENTAL CURBS

China said last month that it would also winnow down the number of small and private mills by raising environmental requirements, forcing steel producers to improve efficiency and install new equipment.

According to new guidelines included in a "five-year plan" to combat pollution, steel mills will not be permitted to build new capacity in 47 large cities, including Beijing, Shanghai, Tianjin and Chongqing.

While the new rules are likely to increase environmental costs, the majority of small and profitable private mills are likely to have the resources to upgrade and -- if necessary -- relocate, but most have already done so, said Liu.

Analysts say market forces are likely to be the determining factor in the end, and while the faltering economy has hurt the industry, officials have said it could also be a blessing if it puts the minnows under more pressure to restructure.

But Liu said conditions were still not bad enough to force some of the smaller players out of business.

"Even though we talk about the economic slowdown, the steel mills are fine -- they are still making a decent return."

Reuters

Thursday, January 10, 2013

China's record iron ore imports boost recovery hopes

Iron ore imports roared to a record high in December and for the full year, boosting hopes that a recovering economy in China will lift its appetite for imports.

Author: Fayen Wong and Ruby Lian

China's imports of iron ore roared to a record high in December and for the full year, while crude imports also climbed, boosting hopes that a recovering economy in the world's top commodities consumer will lift its appetite for imports.

Robust Chinese trade data, which saw December exports trumping expectations to rise 14.1 percent to a seven-month peak, also gave further evidence that a demand recovery was well under way in the world's second-largest economy.

Monday, January 7, 2013

The Pound's Little-Known Crisis of 2015

It may be only a matter of weeks before the Pound's next great decline begins...

by Paul Tustain

RIGHT AT the top of the banking pyramid you have an institution called the Bank for International Settlements (BIS), writes Paul Tustain – founder and director of BullionVault. It acts like a central bank for central banks.

Germany can draw down currency from the Bank of England and deposit it into the BIS. Again, it just writes the cheque drawn on the importer's central bank, and pays it into its BIS account. You could say Germany has placed its 'Foreign Currency Reserve' at the BIS.

The BIS does lots of things I don't understand. But I am starting to understand the Special Drawing Right (SDR). It's a sort of 'compost' currency worth – at the moment – about the same as a Pound. You can mix it up yourself in the garden – as a heap of slowly rotting currencies in the following proportions: US Dollars (0.66) Euros (0.42) Yen (12) and Pounds (0.11). The package gets acquired by exporters when they flip all sorts of other accumulated foreign currency.

Friday, December 28, 2012

Iron ore up most since 2010 on China hopes

The steel making ingredient is rallying the most in around two years on expectations that China will import a record amount of iron ore in 2013

Author: Phoebe Sideman and Isaac Arnsdorf

Iron ore is rallying the most in about two years as analysts predict that China, the biggest buyer, will import a record amount in 2013 as its accelerating economic growth spurs demand for steel.

Trade to China will climb 6.9 percent to 778 million metric tons in 2013, or 65 percent of all shipments, according to the median of 10 analyst estimates compiled by Bloomberg. Seaborne demand will exceed supply for at least a 10th year, Morgan Stanley data show. Prices will climb as much as 22 percent to $170 a ton by June, according to Justin Smirk of Westpac Banking Corp., who correctly predicted this year’s slump and was the most accurate industrial-metals forecaster tracked by Bloomberg.

Prices tumbled to a three-year low in September as China slowed for seven consecutive quarters, before rallying 56 percent since then on mounting confidence the nation’s growth will accelerate for at least the next six months. The rebound will boost earnings for suppliers and Vale SA, the biggest exporter, is expected to report a 19 percent increase in profit next year, analyst estimates compiled by Bloomberg show.

“We’re confident to stay bullish for now,” said Smirk, the economist at Westpac in Sydney who beat as many as 25 others in predicting metals prices for two consecutive quarters on a rolling two-year basis. “We’re seeing the recovery come through in China. They’ve made a switch to their policy adjustments from being contractionary to be more stimulatory.”

London Dry

Ore at China’s Tianjin port, a global benchmark, was last at $139.40, for an annual gain of 0.6 percent and a fourth- quarter average of $119.88. The Standard & Poor’s GSCI gauge of 24 raw materials gained 0.2 percent and the MSCI All-Country World Index of equities rose 13 percent. Treasuries returned 2 percent, a Bank of America Corp. index shows.

The Tianjin price will average $119 in the first quarter and $122 in the following three months, the medians of 14 analysts’ estimates shows. Investors can trade swaps handled by brokers including SSY Futures Ltd., London Dry Bulk Ltd., GFI Group Inc., Clarkson Plc and Freight Investor Services Ltd. The derivatives market may total as much as 150 million tons this year, from 53 million tons in 2011, The Steel Index Ltd., which publishes the Tianjin price, said last month.

Seaborne trade will climb 6 percent to 1.18 billion tons next year, the same pace as in 2012, says London-based Clarkson, the world’s biggest shipbroker. Morgan Stanley estimates that seaborne demand will exceed supply by 28 million tons next year, extending a run of deficits going back to at least 2004. Global steel output expanded about 50 percent since then, according to MEPS (International) Ltd., an industry consultant.

Lowest Level

Steel production in China, equal to 47 percent of world output in the first 11 months, will expand another 6 percent in 2013, Credit Suisse Group AG estimates. Ore inventories at Chinese ports dropped 19 percent since the end of October to 71.32 million tons, the lowest level in more than two years, according to Beijing Antaike Information Development Co., a state-backed research company. That may spur imports as steel plants restock, says UBS AG.

China’s manufacturing may expand at a faster pace in December, according to a preliminary reading on Dec. 14 by HSBC Holdings Plc and Markit Economics, adding to signs the economy is strengthening as a new leadership takes power. The government has approved projects for the construction of about 2,000 kilometers (1,250 miles) of roads, subways in 18 cities and extra spending on railways.

Steel Association

While China is rebounding, the 17-nation euro area and Japan have slipped back into recessions. They represent a combined 16 percent of global steel output, according to the Brussels-based World Steel Association. Steel production in the 27-nation European Union retreated 5.3 percent in November from a year earlier and in Japan fell 2.3 percent, the WSA estimates.

Demand also may weaken in the U.S., the third-largest steelmaker, should lawmakers fail to reach an agreement on more than $600 billion of tax increases and spending cuts that start automatically next month. The Congressional Budget Office says the lack of an accord risks sending the world’s biggest economy back into a recession. President Barack Obama is due back in Washington from vacation today, according to a White House aide, as Congress returns to continue talks on a budget agreement.

Current ore prices are more than double the average cost of production in Australia and Brazil, the two biggest exporters, and above the $100 that Chinese mining companies pay to extract every ton, according to estimates from Credit Suisse and Australia & New Zealand Banking Group Ltd. That may spur Chinese miners to raise supply, diminishing demand for imports.

Capacity Glut

Rising prices and seaborne trade won’t be enough to return ship owners to profit because of a glut of capacity. Rates for Capesizes, which carry more iron ore than any other class of vessel, slumped 82 percent this year, according to the Baltic Exchange in London, which publishes prices for 61 maritime routes. Earnings will average $12,250 a day in 2013, below the $15,500 that Pareto Securities AS says they need to break even, the mean of nine analyst estimates shows.

Chinese steel production rose 14 percent to 57.47 million tons in November from a year earlier, while the price of reinforcement bars used in construction climbed about 11 percent this month to the highest level since July on the Shanghai Futures Exchange. Ore imports were the second-highest ever in November at 65.78 million tons, customs data show.

Shares of Rio de Janeiro-based Vale rose 8.3 percent this year to 40.97 reais and will gain 20 percent to 49.02 reais in the next 12 months, according to the average of 12 analyst estimates. Net income will climb to 28.92 billion reais ($13.9 billion) next year, from 23.92 billion reais in 2012, the mean of seven analyst predictions shows.

Ore Exports

Profit at Rio Tinto Group, the second-largest exporter, will rise to $10.85 billion from $10.07 billion, according to the mean of 20 analyst estimates. Shares of the London-based company jumped 14 percent to 3,574 pence this year and will reach 3,868 in 12 months, the forecasts show.

Brazil’s ore exports fell 0.9 percent to 294.3 million tons in the first 11 months as rain curbed output, government data show. Vale plans to invest the least in three years in 2013 and will cut production to 306 million tons from 312 million tons this year, the company said Dec. 3.

India’s shipments may slump 25 percent to 38 million tons in 2013, Australia’s Bureau of Resources and Energy Economics said Dec. 12. The state of Goa, which exports more than half the country’s ore, banned all mining in September after a panel said the province lost money because of illegal work.

China’s miners may struggle to make up for any shortage in seaborne supply because they produce ore that contains about 20 percent iron, compared with 62 percent internationally, according to HSBC estimates and data compiled by Bloomberg Industries. Domestic ore output dropped 3.4 percent in the past two months, National Bureau of Statistics data show.

“It’s not a screaming bull year, it’s just a modestly bullish year,” said Tom Price, a commodities analyst at UBS in Sydney. “The next six months will be fairly active and positive for iron ore trade.”

Source:Mineweb

Monday, December 10, 2012

Vale eyeing new iron ore distribution center in China

Brazilian mining giant Vale (NYSE: VALE) is looking to build a new iron ore distribution center in mainland China as part of the company's efforts to deliver its products to the Asian country, according to Vale's director of iron ore and strategy, José Carlos Martins.

"There are at least six ports in China capable to receive one of Vale's distribution centers in its area," Martins told the international press during a conference call at the company's annual Vale Day meeting with investors, held in London.

Vale is currently losing US$2.00 to US$3.00 per ton of iron ore shipped to Chine due to the Asian country's restrictions for its very large ore carriers (VLOCs), the executive said.

According to Martins, Vale is waiting for the Chinese government's authorization to allow VLOCs in the country in 2013, adding that "the current situation is not ideal, as we have to transfer the ore to smaller vessels at sea."

In early-February China's transport ministry announced a ruling that restricts port rights to accept many of these vessels, prompting analysts to speculate that Vale would no longer be able to make full use of its VLOCs.

Although Vale has said its Asia shipments will not be affected by the ruling, the company is also reportedly in talks with Chinese authorities to obtain access for its VLOCs at the Asian country's ports.

LOGISTICS

Vale's whole logistics solution, which includes encompassing vessels, floating transfer stations and distribution centers, is expected to be in place in early 2014.

Each vessel is capable of transporting 400,000t of iron ore and could reduce carbon emissions by 35%, according to the company. VLOCs are considered eco-friendly as their fuel consumption and carbon dioxide emissions are smaller than those of conventional ships with around 200,000t capacity, due to the use of more modern equipment.

Vale has stated that the vessels were commissioned at a total cost of US$2.35bn in an effort to lower international freight costs, which had been weighing on margins.

Rio de Janeiro-based Vale is the world's largest iron ore producer and exporter.

China lifts outlook for mining sector in 2013 with accelerated infrastructure spending

A leading expert on China's economy says the country will push infrastructure investment next year in order to foster GDP growth, lifting the outlook for the global resources sector.

The Australian reports that Wang Tao, UBS's head of China economic research, predicts that the country's economic growth rate will rise to 8% next year from 7.6% this year.

According to Wang the two key drivers of the output gains will be infrastructure and property, both of which will raise demand for commodities such as iron ore and copper:

We are looking for the growth to be led by stronger infrastructure investment but also a modest recovery in property. So that means that even though total fixed investment is not much stronger than this year, they are going to be slightly more commodity intensive.

Beijing has already increased infrastructure spending over the past several months, while a rebound in the property market should foster an increased number of project starts.

Wang expects exports to remain stable and for China to enjoy a soft landing as it returns to a "modest recovery path."

Despite the salutary effects of increased spending on infrastructure and property in the short-term, such measures fly directly in the face of the conventional wisdom concerning the current state of the Chinese economy, which experts say suffers from insufficient consumer spending, wasteful spending on superfluous infrastructure projects and a looming real-estate bubble.

Sunday, December 9, 2012

Coal prices to rise on increased Chinese, US demand - Deutsche

Rising coal prices are restoring profitability to high-cost Australian mines that were making a loss due to an oversupplied global market earlier this year, and prices are set to rise further in 2013, Deutsche Bank said on Friday.

Healthy coal exports from major producers such as Australia, Indonesia, South Africa and Colombia have been met with poor demand in key markets such as Europe and China.

This caused a decline in coal prices this year that led expensive mines to produce at a loss, but prices have been recovering since the end of the summer.

"The rise in spot prices since October will have restored profitability to marginal Australian mines, relieving the pressure on producers to moderate short-term volumes, and improving the outlook for the March contract negotiation," Deutsche Bank said in a research note.

European physical spot coal prices dropped from around $130/t at the beginning of 2011 to below $83/t last October, but prices have picked up to over $90/t since then.

"According to our estimates, the rise in prices since late October has restored profitability to as much as 42-million tons of Australian export thermal coal production, and seven-million tons of Russian export thermal coal production," the bank said.

Deutsche Bank said that high Chinese coal inventories and mines returning to production would be headwinds for further price rises in the short-term, but added that it expected coal prices to rise over the course of next year.

"We believe that fundamental drivers will improve over the course of 2013 as US gas prices stabilise at a higher level and Chinese economic activity accelerates towards the trend rate of growth in the second half of the year."

A sharp drop in US gas prices on the back of the North American shale gas production boom has made natural gas more attractive for power generators in the US, leading to American miners to export their coal to European users, adding to an already oversupplied market.

But Deutsche Bank said that higher gas demand in the US would push American gas prices up, leading to a reduction of US coal exports, while Chinese demand for coal imports would rise, further supporting coal prices.

"Therefore, while the outlook in the next month is ambiguous, the second half of 2013 provides clearer signals for an improvement in thermal coal fundamentals next year," the bank said.

Edited by: Creamer Media Reporter

Friday, December 7, 2012

Iron ore at 2 week high on Chinese demand hopes

Expectations that demand from China will rise ahead of the Lunar New Year break in February, traders are buying up cargoes of the metal.

Iron ore rose to two-week highs, on course to end the week with its biggest gain in more than a month, as traders snapped up forward cargoes hoping demand from top buyer China will perk up ahead of the Lunar New Year break in February.

Higher domestic steel prices are also spurring interest in iron ore, backed by a decline in inventories and optimism that the Chinese economy is on the road to recovery after a seven-quarter slowdown.

Benchmark iron ore with 62 percent iron content <.IO62-CNI=SI> gained 0.4 percent to $118.40 a tonne on Thursday, according to Steel Index, the highest since Nov. 23.

Rising for a third straight day, iron ore is up more than 2percent for the week, its best performance in six weeks.

"People are buying forward cargoes, those arriving from January onwards. The market is looking at mills stocking up for the Chinese New Year in February," said a physical iron ore

trader based in Shanghai.

Price offers for imported iron ore cargoes in China rose by a dollar per tonne on Friday, Chinese consultancy Umetal said.

Chinese steel mills typically boost iron ore inventories ahead of the week-long Lunar New Year break that falls in February next year, and buying usually extends past the holiday.

That anticipated demand spike is accompanied by hopes for China's economy to stay in recovery mode in the early part of 2013.

FALLING STEEL STOCKS

Communist Party chief Xi Jinping, who replaces Hu Jintao as head of state in March, said on Tuesday the government would fine-tune policies to revive the economy.

The most active rebar contract for May delivery on the Shanghai Futures Exchange touched a three-week high of 3,658 yuan ($590) a tonne on Friday.

It closed up 1.7 percent at 3,656 yuan, rising 5.1 percent for the week in its biggest gain since mid-September.

"Steel prices will continue to be supported in anticipation of policy support on the part of the government and low inventories," said Helen Lau, a senior commodity analyst at UOB-Kay Hian in Hong Kong.

Beijing's stronger efforts to consolidate legions of steelmakers may help the sector finally deal with the overcapacity that consistently eats into steelmakers' margins.

Falling steel product inventories also point to firm consumption in China, said Lau. She expects China's steel demand to grow about 4 percent to 710 million tonnes in 2013 from a forecast rise this year of 5 percent to 681 million tonnes.

Chinese traders' inventory of five major steel products, including rebar and flat products, dropped to 12 million tonnes by the end of November from a February peak of 19 million, Lau

said.

That has kept China's steel production plants turning out an average of 1.9599 million tonnes of steel a day from Nov. 21 to 30, 0.4 percent higher than the previous 10 days, the China Iron and Steel Association said on Friday.

($1=6.2282 Chinese yuan)

(Editing by Miral Fahmy)

Chinese steel price likely to fall: observer

China's steel price will probably fall slightly in December over waning demand, predicted Lgmi.com, a steel industry observing website on Wednesday.

Lgmi.com released its November "Steel PMI", the Purchasing Managers' Index for the steel sector. The reading was 45.2 percent, down 5.1 percentage points month on month.

A Steel PMI reading above 50 percent indicates expansion from the previous month, while readings below indicates contraction.

The weak Steel PMI in November means that steel prices are likely to fall in December.

The website said steel demand in December is usually weak, and steelmakers may face a strained money chain towards the end of the year. So they may choose to destock in order to cash in.

Contracted demand and increased supply will probably drag down steel prices, said Lgmi.com

The website surveyed some 1,000 purchasing managers from enterprises buying or selling steel products from 57 cities to calculate the Steel PMI.

CHINA ALUMINUM: Domestic, export ADC12 prices edge higher as costs rise

The Chinese domestic price of aluminum alloy ADC12 was assessed marginally higher at Yuan 16,000-16,300 ($2,544-2,592)/mt ex-works Tuesday, compared with Yuan 16,000-16,200/mt a week ago, amid higher offers heard in the market.

Traders said the higher prices were due to a recent increase in aluminum scrap prices, which led to higher production costs.

Leading China producer Sigma Metals raised its offer price to Yuan 17,200/mt on November 30, compared with Yuan 17,100/mt previously, while most non-Sigma offers were at Yuan 16,000-16,400/mt ex-works this week, up from Yuan 15,900-16,200/mt a week ago.

A North China-based trader said he sold ADC12 in the domestic market at Yuan 16,200-16,300/mt ex-works this week.

"Aluminum scrap prices are going up in the US and there have been reduced scrap imports to China as the US consumes more of those raw material at home," he said, adding that the price direction of ADC12 would depend largely on the price of aluminum scrap, which is a major raw material for the aluminum alloy.

But a Guangzhou-based trader said most of his deals were done at Yuan 16,000/mt this week. "Chinese prices failed to move up much due to oversupply in the market," he said.

A third trader said he heard offers at around Yuan 16,400/mt. "But despite higher offer prices, domestic demand has been stable in China," he noted.

Meanwhile, in the export market, the first trader some small quantities of material at $2,170-2,180/mt CFR Japan. "Firmer aluminum scrap prices have raised export offers from China. The price rise, however, has been capped by prolonged weak demand from Japan," he said.

Another trader echoed his view, adding that recent spot deals were settled at $2,130/mt CFR Japan, up $20-30/mt from a week ago. "More traders are raising their offer prices but there has been a lack of deals reported," he said. "It's difficult to find overseas buyers for the Chinese material," he added.

The Japanese buyers said Chinese offer prices were in a wide range of $2,130-2,180/mt CFR Japan, reflecting Chinese producers' different purchasing cost of scrap aluminum imported from the US.

One Japanese trader reported buying less than 500 mt at $2,130/mt CFR Japan, for loading in January.

Platts assessed ADC12 at $2,110-2,150/mt FOB China Tuesday, compared with $2,110-2,140/mt a week ago.

Wednesday, December 5, 2012

Trade volume on China's iron ore platform CBMX to hit 10 mil mt in 2013: CISA

The volume of iron ore traded on the China Beijing International Mining Exchange, or CBMX, is expected to reach 10 million mt in 2013 as more Chinese steelmakers are planning to trade cargoes on the electronic platform, China Steel Industry Association said Friday.

CBMX, backed by CISA, was launched May 8 in a bid to assert China's say in determining pricing. The country is the world's largest buyer of iron ore, importing 56.43 million mt in October, up 13% year on year.

Forty two iron ore cargoes were traded on the CBMX over May 8-November 20, with a total volume of 5.29 million mt.

CISA said that as the CBMX platform gains momentum, more member mills were planning to scale back back their long term contractual volumes with miners and instead trade more on the CBMX platform next year.

"Baosteel has taken the lead by stating it is planning to put 10-15% of its trading ore volume on the CBMX platform next year," said CISA vice president Wang Xiaoqi.

The most recent trade settled on CBMX Friday was a 170,000 mt parcel of 57.5%-Fe Australian Special fines at $110/dmt CFR China, according to a trader with access to the platform.

The platform currently has 191 registered members.

Chinese copper smelters lower expectations on 2013 term TC/RC

China's copper smelters are lowering expectations for 2013 term treatment and refining charges from global miners after getting a flat offer from BHP Billiton , for concentrates from the world's top mine, industry sources said on Tuesday.

The smelters have yet to strike deals on 2013 treatment and refining charges (TC/RC) after meetings with global miner BHP Billiton , the majority owner of Escondida in Chile, and Freeport-McMoRan Copper & Gold in China and London in recent weeks.

Smelters are seen to have a stronger upper hand in deal-making this year, as improving mine supply, matched with a global slowdown in economic growth, is set to swing the world market for refined copper into a small surplus next year.

Global miners pay TC/RC to smelters to convert concentrate into refined metal and the charges are deducted from the sale price based on LME copper prices. Higher charges are typically seen when concentrate supply rises.

In October, Chinese smelters were seeking an increase of about a quarter in 2013 term TC/RCs from this year to $80 a tonne and 8 cents a pound.

Now they are eyeing $70 to $75 and 7 to 7.5 cents after BHP offered $60 and 6 cents in recent meetings and Freeport did not put a figure on the table.

"Now, we think $70 to $75 is more reasonable," said a manager at a large copper smelter in China, who did not want to be named as he was not authorised to talk to media.

The manager has lowered his expectations even though Chinese smelters had still bid around $80 and 8 cents for 2013 term TC/RC in recent meetings with BHP.

China's smelters received term 2012 TC/RC at $60 and 6 cents from BHP for Escondida concentrates and $63.5 and 6.35 cents from Freeport, both seen as benchmarks in Asia.

"Japanese smelters are asking high TC/RCs...they may accept $75 or above," a manager at another large smelter in China said.

Smelters' higher requirements are encouraged by spot imports, which traded in a range from the mid-$70s and 7 cents to near $80 and 8 cents TC/RC for clean, standard concentrates to China, up around 55 percent from August.

TC/RC are a profit indicator for copper smelters. Higher TC/RC point to a rise in supply of refined metal because smelters are willing to produce more.

MINERS

But global miners were unwilling to accept a hike in charges because new smelting capacity is set to come on stream in China next year, demanding more concentrate imports, the sources said.

China and global miners are most likely to settle 2013 term TC/RC at $65 to $75 and 6.5 cents to 7.5 cents, depending on grades, sources at mining companies and international trading firms said.

BHP, in particular, is pushing for lower TC/RC to reflect its cleaner, high grade copper concentrate, several sources said, a move that may prompt development of two benchmarks.

"The smelters are looking at higher prices in the spot market and talking about higher fees, but that is related to tidying books ahead of year-end. If anything, we're just moving further apart," a source at a mining company said.

"December is a shortened month but I expect deals will be made because miners tend to lose leverage once the new year has begun," he added.

A trader at an international trading house in Europe said, "I think most likely it is something like $68/6.8 cents and I think a deal will get done in the next 2 weeks or so."

The International Wrought Copper Council expects global mine supply to expand 6.5 percent to more than 17.7 million tonnes, in 2013 from 3 percent growth this year.

Jiangxi Copper , China's top producer, estimates global mine production will rise more than one million tonnes next year, Deputy General Manager Wu Yuneng has said.

Chinese copper smelters lower expectations on 2013 term TC/RC

China's copper smelters are lowering expectations for 2013 term treatment and refining charges from global miners after getting a flat offer from BHP Billiton , for concentrates from the world's top mine, industry sources said on Tuesday.

The smelters have yet to strike deals on 2013 treatment and refining charges (TC/RC) after meetings with global miner BHP Billiton , the majority owner of Escondida in Chile, and Freeport-McMoRan Copper & Gold in China and London in recent weeks.

Smelters are seen to have a stronger upper hand in deal-making this year, as improving mine supply, matched with a global slowdown in economic growth, is set to swing the world market for refined copper into a small surplus next year.

Global miners pay TC/RC to smelters to convert concentrate into refined metal and the charges are deducted from the sale price based on LME copper prices. Higher charges are typically seen when concentrate supply rises.

In October, Chinese smelters were seeking an increase of about a quarter in 2013 term TC/RCs from this year to $80 a tonne and 8 cents a pound.

Now they are eyeing $70 to $75 and 7 to 7.5 cents after BHP offered $60 and 6 cents in recent meetings and Freeport did not put a figure on the table.

"Now, we think $70 to $75 is more reasonable," said a manager at a large copper smelter in China, who did not want to be named as he was not authorised to talk to media.

The manager has lowered his expectations even though Chinese smelters had still bid around $80 and 8 cents for 2013 term TC/RC in recent meetings with BHP.

China's smelters received term 2012 TC/RC at $60 and 6 cents from BHP for Escondida concentrates and $63.5 and 6.35 cents from Freeport, both seen as benchmarks in Asia.

"Japanese smelters are asking high TC/RCs...they may accept $75 or above," a manager at another large smelter in China said.

Smelters' higher requirements are encouraged by spot imports, which traded in a range from the mid-$70s and 7 cents to near $80 and 8 cents TC/RC for clean, standard concentrates to China, up around 55 percent from August.

TC/RC are a profit indicator for copper smelters. Higher TC/RC point to a rise in supply of refined metal because smelters are willing to produce more.

MINERS

But global miners were unwilling to accept a hike in charges because new smelting capacity is set to come on stream in China next year, demanding more concentrate imports, the sources said.

China and global miners are most likely to settle 2013 term TC/RC at $65 to $75 and 6.5 cents to 7.5 cents, depending on grades, sources at mining companies and international trading firms said.

BHP, in particular, is pushing for lower TC/RC to reflect its cleaner, high grade copper concentrate, several sources said, a move that may prompt development of two benchmarks.

"The smelters are looking at higher prices in the spot market and talking about higher fees, but that is related to tidying books ahead of year-end. If anything, we're just moving further apart," a source at a mining company said.

"December is a shortened month but I expect deals will be made because miners tend to lose leverage once the new year has begun," he added.

A trader at an international trading house in Europe said, "I think most likely it is something like $68/6.8 cents and I think a deal will get done in the next 2 weeks or so."

The International Wrought Copper Council expects global mine supply to expand 6.5 percent to more than 17.7 million tonnes, in 2013 from 3 percent growth this year.

Jiangxi Copper , China's top producer, estimates global mine production will rise more than one million tonnes next year, Deputy General Manager Wu Yuneng has said.

Bullion trading may spark gold demand

GOLD demand in China may sparkle as an initial batch of 20 banks participated in trading bullion via the Shanghai Gold Exchange's newly-launched interbank platform yesterday.

The banks were allowed by the Shanghai bourse, China's biggest spot gold market, to trade bullion among themselves from yesterday.

The transactions involving bilateral price inquiry are performed on the China Foreign Exchange Trade System, and cleared and settled through the gold exchange. The gold bourse charges both parties 0.04 percent of the traded amount, said a statement on its website.

One of the first banks to trade yesterday was the Bank of Communications, China's fifth-biggest lender, when it completed a spot transaction worth a principal amount of 20 million yuan (US$3.2 million) with the Industrial and Commercial Bank of China, the biggest bank in the world.

"Interbank gold trading will promote the development of the domestic gold market, and gradually form a multi-layer gold market trading system," Tu Hong, general manager of the financial markets department at BoCom, said yesterday.

"We hope the alliance between the Shanghai Gold Exchange and the China Foreign Exchange Trading Center will promote a diversified product line that covers gold forwards and swaps in the future," Tu said.

Aside from the major Chinese banks, the other participants mentioned in the bourse?s statement include four subsidiaries of foreign banks ? HSBC Bank, Standard Chartered Bank, ANZ Bank and United Overseas Bank.

CHINA ALUMINUM: Domestic, export ADC12 prices edge higher as costs rise

The Chinese domestic price of aluminum alloy ADC12 was assessed marginally higher at Yuan 16,000-16,300 ($2,544-2,592)/mt ex-works Tuesday, compared with Yuan 16,000-16,200/mt a week ago, amid higher offers heard in the market.

Traders said the higher prices were due to a recent increase in aluminum scrap prices, which led to higher production costs.

Leading China producer Sigma Metals raised its offer price to Yuan 17,200/mt on November 30, compared with Yuan 17,100/mt previously, while most non-Sigma offers were at Yuan 16,000-16,400/mt ex-works this week, up from Yuan 15,900-16,200/mt a week ago.

A North China-based trader said he sold ADC12 in the domestic market at Yuan 16,200-16,300/mt ex-works this week.

"Aluminum scrap prices are going up in the US and there have been reduced scrap imports to China as the US consumes more of those raw material at home," he said, adding that the price direction of ADC12 would depend largely on the price of aluminum scrap, which is a major raw material for the aluminum alloy.

But a Guangzhou-based trader said most of his deals were done at Yuan 16,000/mt this week. "Chinese prices failed to move up much due to oversupply in the market," he said.

A third trader said he heard offers at around Yuan 16,400/mt. "But despite higher offer prices, domestic demand has been stable in China," he noted.

Meanwhile, in the export market, the first trader some small quantities of material at $2,170-2,180/mt CFR Japan. "Firmer aluminum scrap prices have raised export offers from China. The price rise, however, has been capped by prolonged weak demand from Japan," he said.

Another trader echoed his view, adding that recent spot deals were settled at $2,130/mt CFR Japan, up $20-30/mt from a week ago. "More traders are raising their offer prices but there has been a lack of deals reported," he said. "It's difficult to find overseas buyers for the Chinese material," he added.

The Japanese buyers said Chinese offer prices were in a wide range of $2,130-2,180/mt CFR Japan, reflecting Chinese producers' different purchasing cost of scrap aluminum imported from the US.

One Japanese trader reported buying less than 500 mt at $2,130/mt CFR Japan, for loading in January.

Platts assessed ADC12 at $2,110-2,150/mt FOB China Tuesday, compared with $2,110-2,140/mt a week ago.

Sunday, November 25, 2012

China's Oct iron ore 13% on month as colder weather dampens demand

China imported 56.43 million mt of iron ore in October, down 13% month on month but up 13% year on year, data released Friday by the General Administration of Customs of China showed.

With the onset of colder weather halting construction projects in China in October, demand for steel and correspondingly, steelmaking raw material iron ore, weakened considerably from September.

"It's hard for construction projects to take off in the north now due to the snow, and it's also difficult in the south because of the rain. Steel demand is really weak now," a Jiangsu-based mill source said.

Australia remained the largest supplier of iron ore to China, selling 27.33 million mt in October, down 21% month on month but up 20% year on year. Contributing to the month-on-month decrease in Australian ore imports was the trend of mills in China to procure more port stocks and non-mainstream material in a bid to lower production costs and remain competitive in a depressed market. The price difference between port stocks of

Australian material and seaborne imports widened significantly in October, making dockside cargoes more popular.

Brazil was the second largest supplier to China in October, delivering 14.68 mil mt, up almost 7% from September and up 22% year on year, and South Africa third.

Imports from India, the fourth largest supplier, totaled 270,000 mt in October, 65% down from the previous month and down 87% year on year. Imports have been declining since India hiked export duties to 30% from 20% on December 30, 2011.

Imports from the southwestern Indian state of Goa have plummeted further since September after environmental clearance was suspended at 93 mining leases, mostly for iron ore.

China's Oct moly ores, concentrate imports plunge 73.6% to 377 mt

China's October imports of molybdenum ores and concentrates plunged 73.6% on year to 377 mt, the latest figures from the General Administration of Customs of China showed Friday.

Of the total imported, 307 mt consisted of roasted moly ores and concentrates, and 70 mt were those other than roasted.

China also exported a total 692 mt of moly ores and concentrates in October, down 25.4% year on year. All were roasted ores.

There were no non-roasted ores exported for the month.

In January-October, imports of molybdenum ores and concentrates totaled 8,121 mt, down 38.3% from a year ago, while total moly ores and concentrates exports amounted to 10,412 mt, down 36.9% from last year.

Meanwhile, China recorded no imports of ferromolybdenum in October.

Imports stood at 10,000 kg in the same month last year, and at 20,001 kg in September 2012.

Ferromoly exports in October reached 20,000 kg. There were no exports of ferromoly recorded for the same month last year. Exports in the previous month of September was 14,000 kg.

Imports of ferromoly in the first 10 months of 2012 totaled 188,346 kg, down 27.6% year on year, while exports stood at 216,000 kg, down 15.2% from 2011.

China's tax cut plan for iron-ore miners unlikely to slash imports

A proposed tax cut by China for its iron-ore miners could lead to lower prices of the raw material, but it is unlikely to reduce imports by the world's top buyer as it does little to improve the competitiveness of domestic producers.

China may also face strong opposition to the plan to drop the total tax rate for local iron-ore miners to 10% to 15% from 25% because of the potential revenue loss for local governments, industry officials and analysts say.

China is the world's biggest producer of the raw material, with an annual output of more than one-billion tons. But the low quality of its iron-ore means it relies heavily on imports.

It buys about two-thirds of globally traded iron-ore, with this year's imports of the steelmaking raw material expected to top last year's record 686-million tons.

The proposed tax cut will "not make one iota of difference" in China's iron-ore imports, said Rory MacDonald, an iron-ore broker at Freight Investor Services (FIS).

Other analysts agreed, saying the move to cut taxes would also not change China's status as one of the world's most expensive iron-ore producers.

"Given China's place at the top of the global cost curve, reducing cost support through lower taxes will only mean that prices fall, leaving the domestic producers in the same position as before the tax cuts," said Graeme Train, commodity analyst with Macquarie in Shanghai.

Production cost will be cut by $12 per ton at the top of the curve if the overall tax rate is chopped to 10%, Train said.

Chinese miners, whose margins have been squeezed by higher energy, labour and environmental costs, spend between $90 to $130 to produce a ton of iron-ore, compared to $30 $50 per ton for big producers in Australia and Brazil.

"It's just a retrospective nod by the government to lighten their load a bit after what's been a tough year and a half. I don't see them passing it on to pricing, they'll embrace it potentially to widen profit margins," FIS' MacDonald said.

MORE VULNERABLE TO PRICE VOLATILITIES

A forecast drop in global iron ore prices over the next three years as top overseas miners ramp up output while Beijing's steel output growth slows will also negate any benefit from China's planned tax cut.

Even with iron ore prices unlikely to return to record levels of near $200 per ton reached last year, the still big margins enjoyed by low-cost producers Vale, Rio Tinto and BHP Billiton mean they can go ahead with plans to boost output, although they are holding off on longer-term strategies.

"I don't think China can cut reliance on seaborne supplies priced off spot indices by growing its domestic iron ore industry. It only can really achieve a decrease in reliance on seaborne supplies by purchasing mining assets overseas and shipping the material back home," said FIS' MacDonald.

With thinner margins, Chinese miners are also more vulnerable to price volatilities than their overseas rivals. Some of them have been forced to shut in recent months when prices slumped to three-year lows below $87 a ton. Prices have since rebounded to around $120.

Still, with local governments already struggling with falling revenues on a slower economy, there are doubts on whether the tax cuts could be rolled out.

"There are various taxes and many parties are involved. It's still hard to predict which tax could be cut, which not," said an official from industry group China Iron and Steel Association who declined to be named as he was not authorised to speak to media.

"However, they may have to make compromises eventually if local mines are not able to maintain business."

Edited by: Reuters

Friday, November 16, 2012

Increased iron ore demand from china in the fourth quarter to help ease shipping industry's oversupply

Five Star Equities Provides Stock Research on Genco Shipping & Trading and Eagle Bulk Shipping

NEW YORK, NY–(Marketwire – Nov 16, 2012) – Shipping stocks have struggled as oversupply and global economic uncertainties have continued to plague the industry. The Baltic Dry Index, a measure of costs to ship dry-bulk commodities such as grain, coal and iron ore, has dropped as much as 50 percent in 2012. Five Star Equities examines the outlook for companies in the Shipping Industry and provides equity research on Genco Shipping & Trading Limited (NYSE: GNK) and Eagle Bulk Shipping Inc. (NASDAQ: EGLE).

Access to the full company reports can be found at:

www.FiveStarEquities.com/GNK

www.FiveStarEquities.com/EGLE

Things may be turning around for the industry as stimulus measures announced by the Chinese government in September have seen demand for iron ore spike. China, who is the largest importer of iron ore, plans to purchase record amounts of the commodity in the fourth quarter, which will help ease the current glut in shipping.

"We're finally getting back into a period when the market isn't so oversupplied," said Jeffrey Landsberg, managing director of Commodore Research & Consultancy. "When we do have sharp increases in demand, Capesize rates can rise significantly."

Five Star Equities releases regular market updates on the Shipping Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.FiveStarEquities.com and get exclusive access to our numerous stock reports and industry newsletters.

Genco Shipping & Trading transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Excluding Baltic Trading Ltd.'s fleet, the company's owns a fleet of 53 dry-bulk vessels with an aggregate carrying capacity of approximately 3,810,000 deadweight tons. The company reported a net loss of $38.4 million in the third quarter of 2012, compared to a net income of $1.6 million in the third quarter of 2011.

Eagle Bulk Shipping is the largest U.S.-based owner of Handymax dry bulk vessels. This modern fleet is comprised principally of Supramax class vessels, a larger and more efficient Handymax design that enjoys strong demand from customers around the world. The company reported net loss widened to $29.8 million in the third quarter of 2012, compared to $5.9 million in the year-ago quarter.

Five Star Equities provides Market Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. Five Star Equities has not been compensated by any of the above-mentioned companies. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at:

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