JPMorgan Metals
JPMorgan Metals
07 May 2010
The Lodestone
Non-exchange traded commodities out-perform
exchange traded
• Equity correction sharply higher than under lying commodities: Metal & Mining
Commodity equities across the region declined by 10-15%, sharply ahead of AC
Pinakin Parekh, CFA
the underlying commodites. Our conversations with investors indicate no rush (91-22) 6157-3588
to get back as of now, with most worried on the degree of FAI slowdown in [email protected]
China over the next 2-4 quarters.
Neha Manpuria
• Non-exchange traded commodities out-perform exchange traded: While (91-22) 6157-3589
base metals across the LME complex declined between 4-13% (Nickel saw [email protected]
the biggest decline), non-exchange traded commodites like steel, iron ore and J.P. Morgan India Private Limited
coal had more muted price declines. Spot iron ore has inched down 1%, but so
far there has been no material impact from the easing of transportation in J.P. Morgan Metal Index
Orissa. Spot steel export prices out of both Ukraine and China have seen
450%
modest declines of $20/MT for commercial grade HRC, slipping below the
$700/MT mark, but importantly traded scrap prices have been stable 350%
(reflecting more the lack of volumes?). We believe Indian import HRC prices 250%
have also declined and expect domestic integrated steel companies to offer 150%
discounts/rebates on flat steel over the course of the month. Spot steel prices 50%
(flat products) in China have moved up. Jan-06 Apr-07 Jul-08 Oct-09
• Xstrata highlights continued tight coking coal market with contracts in
the $200-270/MT range: J.P. Morgan Cazenove mining analyst Amos Source: Bloomberg. Prices as of May 07, 2010.
Fletcher in his update on Xstrata (dated 4th May 2010) highlighted that
Xstrata has secured Q2 coking coal contracts prices at the upper end of a Summary of Metal Coverage
$200-270/MT range, achieving a premium to BHPB. Spot coking coal (an Rs/share Rating TP Price
illiquid market) has moved up to $250/MT. J.P. Morgan global coal team SAIL N 215 211
Tata Steel N 605 576
expects Q2 coking coal settlement at $240/MT with prices falling to $220/MT JSW Steel UW 880 1155
in Q4 CY10E (driven more by seasonal weakness). Sterlite OW 840 740
Hindalco UW 138 164
• Vale gives a peak into the quaterly iron ore settlement dynamics: J.P. Nalco UW 260 402
Morgan Latam analyst Rodolfo De Angele in the update on Vale (dated 5th Source: Bloomberg and J.P. Morgan estimates. Price is
May, 2010) highligted Vale’s new pricing mechanism. As per Rodolfo, all of as of 6 May 2010.
its (Vale) clients have agreed on a permanent or provisional basis to move
from contract to index-based pricing. Prices will be based on a three-month
average of index prices for the period ending one month before the new
quarter. This should translate into a hike of ~90% in prices compared to last
year’s contract and ~65% to 1Q10 realized prices.
• Domestic demand in India going through a soft patch: Cement sales
numbers for the month of April have showed a higher than normal m/m
decline. This ties in what we have been hearing from our channel checks of
some slowdown seen across steel and cement since April (and has continued
so far into May). We believe steel is also seeing some de-stocking in the
domestic markets, as apparent demand was very strong in Feb-March (buyers
likely rushed before the new raw material contracts came into force) and with
spot steel prices softening we see buyers possibly staying away from large
ordering.
See page 23 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
% Change WoW
Slabs 0.0%
Hot Rolled Coil 0.0% 2.1% -3.4% 0.0% 4.6% 0.0%
Cold Rolled Coil 0.0% 0.7% 0.0% 1.7% -2.9% 0.0%
Heavy Plates 0.0% 0.0% 0.8% 2.3% 6.1% 7.0%
Billets -6.3% 0.0%
Rebars -7.0% -1.8% 0.0% -0.4% 5.7% 0.0%
% Change MoM
Slabs 7.4%
Hot Rolled Coil 9.9% 12.3% 11.8% 9.1% 3.4% 10.8%
Cold Rolled Coil 10.1% 8.3% 0.0% 6.1% -4.2% 10.9%
Heavy Plates 10.1% 6.5% 13.0% 7.3% 6.5% 12.0%
Billets -4.1% 7.7%
Rebars 11.9% 3.7% 0.0% 5.3% 7.7% 9.0%
% Change YoY
Slabs 98.5%
Hot Rolled Coil 97.3% 64.7% 62.9% 84.6% 34.6% 38.5%
Cold Rolled Coil 95.2% 58.3% 61.9% 61.7% 41.7% 50.5%
Heavy Plates 61.4% 65.0% 17.2% 16.9% 48.5% 43.1%
Billets 59.5% 27.5%
Rebars 50.0% 47.4% 50.0% 37.2% 34.8% 33.0%
% Change YTD
Slabs 56.0%
Hot Rolled Coil 34.6% 50.8% 67.6% 30.9% 18.8% 28.6%
Cold Rolled Coil 30.2% 48.4% 41.7% 37.3% 2.6% 26.4%
Heavy Plates 49.5% 61.0% 55.6% 33.2% 26.6% 40.3%
Billets 37.2% 22.4%
Rebars 43.5% 51.4% 54.3% 41.8% 19.0% 18.8%
Source: Bloomberg, Metal Bulletin, J.P. Morgan.
900
768
784 792792 758
800 720 720 720 720 749724 736
Steel prices saw increases in some
markets during the last week. 700 637 667
590 590
Export prices in most regions 600
remained unchanged during the
500
week after touching the recent high
in mid-Apr. 400
CIS Ex port China China EU EU Import US Turkish Japan HRC
Ex port Domestic Domestic Domestic Ex port
2
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Table 2: Key raw material prices and percentage change (Weekly, monthly and annually)
Costs 06-May-10 % WoW % MoM % YoY
China Iron Ore Fines ($/MT) - CFR 185 -1.1% 8.8% 189.1%
Iron ore prices declined during the
China Domestic Iron Ore (Rmb/MT) 1202 -3.1% 23.1% 122.6%
week after the recent high of $192.
China Iron Ore Inventories 6807 -0.9% -4.9% -1.1%
Coal price remained above the China Steel Inventories 795 0.0% -7.2% 64.0%
$100 levels, increasing nearly 1.5%
w/w. Ferro-Chrome China Spot (Rmb/MT) 9700 0.0% 7.8% 56.5%
Ferro-Chrome 1.5% Si European Destination ($/LB) 1.40 0.0% 7.7% 100.0%
Scrap prices declined in the last
week in most regions. The BDI Newcastle (6700kcal) Thermal Coal ($/MT) 108 1.5% 10.7% 56.7%
index also increased 3% from last Richards Bay (6000kcal) Coal Price ($/MT) 96 5.5% 14.2% 63.7%
week. Qinhuangdao (6800kcal) Coal Price ($/MT) 108 2.1% 3.2% 17.0%
China Coke Export Prices ($/MT) 360 0.0% 2.9% 63.6%
China Domestic Coking Coal 1610 -4.7% -4.7% 49.8%
40
Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10
3
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 3: Implied Iron Ore Prices for Chinese Import From Various Regions ($/MT)
190.0
140.0
Iron ore imports from India
continued to increase despite tight
supply in the eastern and southern 90.0
mining regions.
40.0
Jan-04 Aug-04 Mar-05 Oct-05 May -06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov -09
five detained rakes have been released and left for West Bengal and Paradip port.
The illegally mined mineral has been seized by the mines department, he said,
adding, permissions are being given for the remaining 1.98 lakh tonne for
transporation by railway rakes. The state government and railways have recently
arrived at an agreement to go in for joint verification of ore transportation from
railway sidings. As per the new mechanism, the railway rakes would be allotted to
the consignee only on the recommendation of the DDM. Moreover, the railway
authorities would receive the minerals at the sidings only after verification of the
transit permit. (Financial Express)
Base Metal
Physical aluminium premiums pick up a touch in Asia
Platts reports that the Korean Public Procurement Service has issued a tender seeking
to buy non-Western grade primary aluminium Thursday and awarded it to MetalPark
which had offered $123/mt plus London Metal Exchange cash CIF Incheon, the
agency said. The premiums were higher than the recent PPS tender for non-Western
aluminium on March 4 that settled at $94/mt plus LME cash CIF. (Platts)
Table 5: China's Iron Ore and Coal Production and Trade Summary (in Mn tonne)
Mar-09 Mar-10 % change YTD 2009 YTD 2010 % change
Iron Ore
Import 52.1 59.0 13.3% 131.6 155.0 17.8%
Export 0.0 0.0 -86.1% 0.0 0.0 -75.1%
Production 61.7 61.5 -0.3% 167.1 185.9 11.2%
Coal
Import 3.0 16.1 437.9% 40.8 126.6 210.1%
Export 3.7 1.8 -50.4% 45.4 22.4 -50.7%
Production 172.3 256.1 48.6% 2,585.7 2,984.0 15.4%
Source: Bloomberg.
5
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 4: Gap between LME and SFE prices—Premium/(discount) of LME over SHFE (US$/MT)
Aluminum Copper Zinc
600 500 200
400 - -
200 (200)
(500)
- (400)
(1,000)
(200) (600)
(1,500)
(400) (800)
(600) (2,000) (1,000)
(800) (2,500) (1,200)
Jan-05 Mar-06 May -07 Jul-08 Sep-09 Jan-05 Apr-06 Jul-07 Oct-08 Jan-10 Mar-07 Nov -07 Jul-08 Mar-09 Nov -09
Source: Bloomberg.
6
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 5: LME—Aluminum inventories and prices Figure 6: LME—Zinc inventories and prices
$/MT, ‘000MT $/MT, ‘000MT
Inventories
Prices (($/MT)
2,500 400
Inventories
2,900
2,000 2,300 2,900 300
1,700 200
1,500 1,900
1,100 100
1,000 500 900 0
Jan-06 Oct-06 Aug-07 Jun-08 Apr-09 Feb-10 Jan-06 Oct-06 Aug-07 Jun-08 Apr-09 Feb-10
Aluminium Inventories ('000) Aluminium Prices Zinc Inventories ('000) Zinc Prices
Total World 92.1 108.2 120.2 11.1% 30.5% 263.0 341.9 30.0%
ME BRIC 57.7 64.5 70.4 9.2% 22.0% 162.1 202.3 24.9%
Apparent Steel Consumption 2003 2004 2005 2006 2007 2008 2009 % y/y
UK 12.3 13.2 11.4 12.9 12.7 11.8 7.0 -40.7%
EU-27 (ex. UK) 147.8 159.2 154.1 175.7 185.4 170.9 111.4 -34.8%
Other Europe 19.9 22.6 25.1 28.9 31.6 27.3 23.9 -12.5%
C.I.S. 37.0 38.1 41.5 48.9 56.6 49.9 35.8 -28.2%
N.A.F.T.A. 131.3 150.8 138.3 155.7 141.3 129.2 80.9 -37.4%
Central & South America 27.6 33.0 32.5 36.4 41.9 44.3 33.6 -24.1%
Africa & Middle East 47.2 49.7 55.0 57.8 65.4 68.3 67.1 -1.8%
China 240.5 275.8 340.2 369.8 413.7 434.6 542.4 24.8%
Asia (ex China), Australia & New Zealand 221.2 235.2 241.8 248.2 266.2 265.9 219.1 -17.6%
Total World 884.7 977.6 1040.0 1134.4 1214.8 1201.7 1121.2 -6.7%
ME BRIC 343.8 385.5 459.7 503.7 566.0 589.7 681.6 15.6%
Source: IISI.
7
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
8
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
45%
-35%
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Global China
Source: IISI.
9
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
10
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Tata Steel
Sterlite
Arcelor Mittal
SAIL
Hindalco
Voestalpine
Baosteel
China Steel
US Steel
JSW
Alumi Co of
Banpu
MMK
NALCO
Nippon
Angang
Shenhua
JFE
Maanshan
Nucor
Hyundai
Severstal
Usiminas
CSN
Thyssenkrup
Evraz
Bumi
% M/M change
20%
4% 2% 0%
0%
-1% -1%
-6% -6%
-20% -9% -10% -11% -12% -12%
-14% -15% -15% -17%
-17% -17% -17% -18% -19% -20% -20%
-21% -22% -24%
-25%
-40%
Sterlite
Tata Steel
Arcelor Mittal
SAIL
China Steel
Hindalco
Voestalpine
Baosteel
US Steel
JSW
Alumi Co of
Banpu
MMK
NALCO
Hyundai
Nucor
Shenhua
Nippon
Maanshan
JFE
Severstal
Angang
Usiminas
CSN
Thyssenkrup
Evraz
Bumi
% Y/Y change
200% 189% 187%181% 163%
127%
150% 112% 101%
78% 73% 70%
100% 56% 56% 55% 51%
40% 36% 34% 28% 26%
50% 24% 14%
7% 7% 2% 0% -2%
0%
-50% -7%
Sterlite
Arcelor Mittal
Tata Steel
Hindalco
SAIL
Voestalpine
US Steel
China Steel
Baosteel
JSW
Alumi Co of
Nucor
Banpu
Shenhua
Nippon
MMK
NALCO
JFE
Angang
Maanshan
Severstal
Hyundai
Usiminas
CSN
Thyssenkrup
Evraz
Bumi
Source: Bloomberg.
11
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Americas
Arcelor Mittal MT US 34 -14.1% -25.4% 23.5%
US Steel X US 52 -8.5% -24.2% 69.8%
Nucor NUE US 45 -2.1% -6.0% 1.7%
CSN CSNA3 BS 29 -12.1% -21.1% 35.6%
Usiminas USIM5 BZ 51 -11.3% -18.4% 51.2%
Europe
Thyssenkrup TKA GR 23 -7.2% -10.6% 34.2%
Voestalpine VOE AV 25 -12.1% -16.9% 56.0%
Russia
Evraz EVR LI 32 -15.7% -19.3% 111.6%
MMK MAGN RU 1.0 0.0% 0.0% 187.1%
Severstal SVST LI 12 -12.6% -19.8% 181.1%
Source: Bloomberg.
12
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 9: Long (rebar) steel prices in key regions Figure 10: Flat (HRC) steel prices in key regions
US$/MT, Euro/MT for Europe US$/MT, Euro/MT for Europe
1500 1300
1300 1100
1100
900
900
700
700
500 500
300 300
Jan-08 Jun-08 Nov -08 Apr-09 Sep-09 Feb-10 Jan-08 Jun-08 Nov -08 Apr-09 Sep-09 Feb-10
CIS Export Europe
CIS Europe Turkey Export N. America China Export
Figure 11: Domestic prices to landed price—Steel Figure 12 Domestic prices to landed price—Aluminum
Rs/MT Rs/MT
36,000 145,000
33,000
30,000 120,000
27,000
24,000 95,000
21,000
Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb- Apr- 70,000
08 09 09 09 09 09 09 10 10 Jan-07 Sep-07 May -08 Jan-09 Sep-09 May -10
Landed Price-CIS Domestic Price
Landed Price-China HRC Landed Price (Rs/MT) Domestic Price (Rs/MT)
30%
25%
20%
15%
10%
5%
0%
Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09
Source: Bloomberg.
13
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
60 3500
Apr-07 Aug-07 Nov -07 Mar-08 Jul-08 Oct-08 Feb-09 May -09 Sep-09 Dec-09 Apr-10
14
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
85
80
75
70
Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10
Source: Bloomberg.
Table 18: J.P Morgan estimates for Real GDP growth data for major countries/regions
2008 2009E 2010E 2011E
China 9.0% 8.6% 10.8% 9.4%
India 6.7% 7.2% 8.0% 8.3%
Japan -1.2% -5.2% 3.2% 2.2%
UK 0.6% -4.8% 1.4% 3.2%
Euro Area 0.6% -4.0% 1.5% 2.1%
US 0.4% -2.4% 3.5% 3.1%
Source: J.P. Morgan estimates. Note: For India, the data is for fiscal year ended Mar. Therefore CY2008 corresponds to FY09, CY2009 to FY10 and CY2010 to FY11.
15
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 17: Cumulative Inflow by Year Figure 18: Cumulative Inflow by Commodity Sector
US$ billion US$ billion
Source: J.P. Morgan and Bloomberg. Source: J.P. Morgan and Bloomberg.
16
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
14.0 23.0
12.0
18.0
10.0
8.0 13.0
6.0
4.0 8.0
2.0
3.0
0.0
-2.0 -2.0
Jan-04 Nov -04 Sep-05 Jul-06 May -07 Mar-08 Jan-09 Nov -09 Jan-05 Oct-05 Jul-06 Apr-07 Jan-08 Oct-08 Jul-09
10
8 21.0
6 16.0
4
11.0
2
6.0
0
-2 1.0
-4 -4.0
Jan-05 Nov -05 Sep-06 Jul-07 May -08 Mar-09 Jan-10 Jan-05 Nov -05 Sep-06 Jul-07 May -08 Mar-09 Jan-10
-10%
-15%
-20%
Jan-03 Sep-03 May -04 Jan-05 Sep-05 May -06 Jan-07 Sep-07 May -08 Jan-09 Sep-09
17
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Aluminium 2,624 1,696 2,150 2,400 2,200 2,100 2,213 2,050 2,050 2,000 2,000 2,025 2,150 2,250
Copper 6,902 5,157 7,250 8,000 7,150 6,750 7,288 6,500 6,500 6,750 7,000 6,688 7,250 7,750
Nickel 21,327 15,363 19,930 26,500 24,000 21,000 22,858 19,000 18,000 18,000 18,000 18,250 19,000 19,500
Zinc 1,908 1,669 2,300 2,500 2,400 2,350 2,388 2,200 2,100 2,100 2,100 2,125 2,100 2,400
Lead 2,105 1,729 2,250 2,350 2,250 2,200 2,263 2,100 2,000 2,000 1,950 2,013 1,850 2,000
Tin 18,395 13,314 17,220 18,500 18,000 16,000 17,430 17,000 18,000 18,000 18,000 17,750 18,000 18,500
Gold 872 976 1,110 1,150 1,250 1,200 1,178 1,175 1,175 1,175 1,175 1,175 1,100 1,000
Platinum 1,575 1,205 1,550 1,675 1,675 1,700 1,650 1,750 1,800 1,800 1,800 1,788 1,800 1,800
Palladium 349 262 440 500 550 600 523 650 675 675 700 675 742 775
Silver 15.0 14.7 17.1 17.7 19.2 18.5 18.1 18.1 18.1 18.1 18.1 18.1 16.9 15.4
Source: J.P. Morgan Metals Strategy.
Figure 24: Implied demand growth in the base metals, basis historical IP/consumption relativities
and J.P. Morgan IP forecasts
15
10
-5
-15
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: J.P. Morgan Economics Research, Brook Hunt
18
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Figure 25: Apparent demand for copper, aluminium and zinc in China – annual percentage
change
100%
Zinc Copper Aluminium
80%
60%
40%
20%
0%
-20%
-40%
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Source: J.P. Morgan Commodities Research, WBMS
16.0
14.0
12.0
10.0
8.0
6.0
ALUMINIUM COPPER
4.0
NICKEL ZINC
2.0
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
19
Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Mine Prodn (Concentrate) 10953 11979 12298 12376 12586 12476 12653 12594 13231 13795 14315 14119 14227
Concentrate Used 11078 11387 12117 12494 12593 12477 12599 12666 13253 13817 14237 13891 13999
Concentrate Stock Change -134 581 165 -136 -26 -18 33 -72 -22 -22 78 228 228
Minus: Smelting Losses -438 -462 -510 -539 -480 -470 -446 -425 -440 -450 -460 -470 -485
Add: Scrap/Blister 1292 1552 1561 1668 1955 2188 1930 2025 2100 2145 2175 2300 2450
Smelter Production 11932 12478 13168 13622 14068 14196 14083 14266 14913 15512 15952 15721 15964
- percentage change -0.5% 4.6% 5.5% 3.4% 3.3% 0.9% -0.8% 1.3% 4.5% 4.0% 2.8% -1.4% 1.5%
Minus: Blister Resmelt/Losses/Stock Change -173 -261 -326 -364 -444 -429 -400 -365 -429 -431 -451 -421 -441
Add: Scrap into Refinery 877 1094 1102 1343 1447 1491 1331 1400 1450 1500 1525 1600 1700
Electro-Refined Copper Production 12636 13312 13944 14602 15072 15258 15014 15301 15934 16581 17026 16900 17223
Sx/Ew Production 2676 2658 2644 2763 2989 3107 3323 3318 3545 3917 4041 3901 3729
Refined Copper Production 15312 15970 16587 17365 18061 18364 18337 18619 19479 20499 21067 20802 20952
- percentage change -0.4% 4.3% 3.9% 4.7% 4.0% 1.7% -0.1% 1.5% 4.6% 5.2% 2.8% -1.3% 0.7%
Western Europe Consumption 3716 3797 3565 3923 3661 3425 2687 2768 2851 2922 2951 2981 3011
- percentage change -0.6% 2.2% -6.1% 10.0% -6.7% -6.4% -21.5% 3.0% 3.0% 2.5% 1.0% 1.0% 1.0%
Americas Consumption 2497 2712 2549 2408 2395 2156 1705 1756 1809 1845 1863 1882 1882
- percentage change -5.5% 8.6% -6.0% -5.5% -0.5% -10.0% -20.9% 3.0% 3.0% 2.0% 1.0% 1.0% 0.0%
China Consumption 3020 3565 3815 3967 4670 5100 6520 7074 7569 8099 8585 9014 9465
- percentage change 24.5% 18.0% 7.0% 4.0% 17.7% 9.2% 27.8% 8.5% 7.0% 7.0% 6.0% 5.0% 5.0%
Japan Consumption 1202 1279 1256 1307 1268 1199 885 929 957 967 976 986 996
- percentage change 3.3% 6.3% -1.8% 4.1% -3.0% -5.4% -26.2% 5.0% 3.0% 1.0% 1.0% 1.0% 1.0%
Other Consumption 10435 11352 11185 11605 11994 11880 11797 12528 13186 13833 14376 14864 15354
- percentage change 4.6% 8.8% -1.5% 3.8% 3.4% -1.0% -0.7% 6.2% 5.3% 4.9% 3.9% 3.4% 3.3%
Refined Copper Consumption 15579 17029 16959 17500 18047 18019 17302 18332 19208 20079 20855 21534 22222
- percentage change 4.6% 9.3% -0.4% 3.2% 3.1% -0.2% -4.0% 6.0% 4.8% 4.5% 3.9% 3.3% 3.2%
Refined Metal Balance -268 -1059 -372 -135 14 345 1035 287 271 420 212 -732 -1269
Total Stock 3559 2500 2128 1993 2007 2352 3388 3675 3946 4366 4578 3846 2577
- Exchange 806 124 156 253 237 390 689
- Market 2753 2376 1972 1740 1770 1962 2699
In weeks of consumption 11.9 7.6 6.5 5.9 5.8 6.8 10.2 10.4 10.7 11.3 11.4 9.3 6.0
Source: J.P. Morgan, Brook Hunt.
Aluminium Production 28034 29878 31948 33873 38118 39604 37055 40321 42407 44547 46852 47835 50194
- of which China 5547 6689 7806 9349 12588 13177 12965 16551 18558 19457 19817 19977 20382
Aluminium Smelting Capacity 30691 34126 36904 38595 42375 45820 47078 48800 51150 53250 55600 58500 59000
- Capacity Utilisation 91% 88% 87% 88% 90% 86% 79% 83% 83% 84% 84% 82% 85%
Global Supply 28034 29878 31948 33873 38118 39604 37055 40321 42407 44547 46852 47835 50194
- percentage change 6.6% 6.9% 6.0% 12.5% 3.9% -6.4% 8.8% 5.2% 5.0% 5.2% 2.1% 4.9%
Western Europe Demand 6506 6614 6512 6796 7159 6882 5560 5838 6071 6193 6317 6380 6444
- percentage change 1.7% -1.5% 4.4% 5.3% -3.9% -19.2% 5.0% 4.0% 2.0% 2.0% 1.0% 1.0%
North America Demand 6535 7011 7175 7219 6698 6049 4705 5035 5286 5392 5500 5610 5722
- percentage change 7.3% 2.3% 0.6% -7.2% -9.7% -22.2% 7.0% 5.0% 2.0% 2.0% 2.0% 2.0%
China Demand 4994 5886 7083 8790 12347 12560 13879 16099 18031 19834 21620 22917 24292
- percentage change 17.9% 20.3% 24.1% 40.5% 1.7% 10.5% 16.0% 12.0% 10.0% 9.0% 6.0% 6.0%
Japan Demand 2235 2139 2276 2323 2197 2250 1669 1870 1926 1945 1964 1984 2004
- percentage change -4.3% 6.4% 2.1% -5.4% 2.4% -25.8% 12.0% 3.0% 1.0% 1.0% 1.0% 1.0%
Global Consumption 27839 29968 31905 34349 38056 37853 35170 38643 41546 43995 46452 48386 50424
- percentage change 7.6% 6.5% 7.7% 10.8% -0.5% -7.1% 9.9% 7.5% 5.9% 5.6% 4.2% 4.2%
Global Balance 195 -90 43 -477 63 1752 1885 1678 862 552 399 -550 -230
China Balance 553 803 723 559 241 617 -914 452 526 -378 -1803 -2940 -3910
Stocks
- Total 5986 5934 5997 5555 5626 7355 9191 10869 11731 12284 12683 12133 11902
- LME 1632 752 803 820 969 2373 4624
- Producer (non-China) 1628 1786 1798 1621 1553 1676 1203
- Other 2726 3396 3395 3113 3103 3306 3364
Total in Weeks of Consumption 11.2 10.3 9.8 8.4 7.7 10.1 13.6 14.6 14.7 14.5 14.2 13.0 12.3
Source: J.P. Morgan, Brook Hunt.
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Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Western Europe Demand 2316 2344 2234 2323 2345 2153 1677 1727 1779 1815 1842 1861 1879
- percentage change 1.2% -4.7% 4.0% 1.0% -8.2% -22.1% 3.0% 3.0% 2.0% 1.5% 1.0% 1.0%
North America Demand 1337 1434 1365 1409 1276 1131 1028 1048 1069 1080 1091 1102 1113
- percentage change 7.2% -4.8% 3.2% -9.5% -11.3% -9.2% 2.0% 2.0% 1.0% 1.0% 1.0% 1.0%
China Demand 1982 2417 2853 3166 3531 3795 4061 4528 4936 5330 5757 6102 6407
- percentage change 22.0% 18.0% 11.0% 11.5% 7.5% 7.0% 11.5% 9.0% 8.0% 8.0% 6.0% 5.0%
Japan Demand 622 635 627 628 598 562 422 443 452 461 466 466 466
- percentage change 2.1% -1.3% 0.1% -4.8% -6.0% -24.9% 5.0% 2.0% 2.0% 1.0% 0.0% 0.0%
Global Consumption 9634 10289 10611 11159 11436 11209 10183 10916 11547 12146 12772 13310 13787
- percentage change 6.8% 3.1% 5.2% 2.5% -2.0% -9.1% 7.2% 5.8% 5.2% 5.1% 4.2% 3.6%
Global Balance 277 -114 -483 -659 -254 282 982 601 504 254 -72 -210 -187
Stocks
- Total 2663 2548 2066 1407 1152 1434 2416 3017 3522 3775 3704 3493 3307
- LME 740 629 394 90 88 253 489
Total in Weeks of Consumption 14.4 12.9 10.1 6.6 5.2 6.7 12.3 14.4 15.9 16.2 15.1 13.6 12.5
Source: J.P. Morgan, Brook Hunt.
Western Europe Demand 1632 1693 1630 1652 1623 1505 1266 1266 1260 1247 1235 1223 1210
- percentage change -4.7% 3.7% -3.7% 1.3% -1.8% -7.3% -15.9% 0.0% -0.5% -1.0% -1.0% -1.0% -1.0%
North American Demand 1561 1556 1640 1646 1569 1551 1462 1434 1448 1449 1450 1436 1423
- percentage change -2.1% -0.3% 5.4% 0.4% -4.7% -1.2% -5.7% -2.0% 1.0% 0.0% 0.1% -0.9% -0.9%
China Demand 1175 1401 1850 2269 2650 3053 3501 4026 4509 5005 5456 5892 6305
- percentage change 32.0% 19.2% 32.0% 22.6% 16.8% 15.2% 14.7% 15.0% 12.0% 11.0% 9.0% 8.0% 7.0%
Other Demand 2468 2511 2505 2489 2382 2326 2105 2175 2238 2295 2345 2393 2437
- percentage change 3.6% 1.7% -0.2% -0.6% -4.3% -2.4% -9.5% 3.3% 2.9% 2.5% 2.2% 2.0% 1.8%
Total Refined Demand 6836 7161 7625 8056 8224 8435 8335 8901 9456 9996 10486 10944 11375
- percentage change 3.9% 4.7% 6.5% 5.7% 2.1% 2.6% -1.2% 6.8% 6.2% 5.7% 4.9% 4.4% 3.9%
Market Balance -13 -131 -50 -90 -89 8 225 149 44 105 60 -93 -249
Stocks
- Concentrate 263 262 303 283 300 222 282 329 415 681 608 599 474
- Refined 1169 1039 988 898 809 818 1042 1191 1235 1340 1400 1307 1058
- in weeks of Consumption 8.9 7.5 6.7 5.8 5.1 5.0 6.5 7.0 6.8 7.0 6.9 6.2 4.8
Source: J.P. Morgan, Brook Hunt.
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Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
Mine Production 1314 1353 1422 1529 1654 1596 1426 1537 1673 1747 1804 1791 1790
Refinery Capacity 1540 1597 1603 1679 1787 2013 2078 2104 2107 2160 2160 2160 2160
- Capacity utilisation 79.1% 79.5% 80.3% 81.2% 79.3% 68.7% 64.1% 67.9% 72.3% 73.6% 76.0% 75.4% 75.4%
Nickel in pig iron/Chinese FeNi output 0 0 3 33 71 70 97 120 120 95 75 70 70
Refined Nickel Supply 1218 1270 1286 1363 1418 1384 1331 1429 1522 1590 1641 1629 1629
- percentage change 4.2% 1.3% 6.0% 4.0% -2.4% -3.8% 7.4% 6.5% 4.5% 3.2% -0.7% 0.0%
Europe consumption 456 466 435 474 430 413 356 388 400 412 416 420 424
- percentage change 2.2% -6.6% 8.9% -9.1% -3.9% -13.9% 9.0% 3.0% 3.0% 1.0% 1.0% 1.0%
USA Consumption 116 129 135 151 148 142 131 140 149 153 155 156 158
- percentage change 11.6% 4.8% 12.1% -2.4% -3.7% -7.9% 7.0% 6.0% 3.0% 1.0% 1.0% 1.0%
China Consumption 136 161 195 243 318 286 393 440 480 518 555 588 623
- percentage change 18.5% 21.0% 24.7% 30.8% -10.0% 37.4% 12.0% 9.0% 8.0% 7.0% 6.0% 6.0%
Japan Consumption 197 194 185 201 189 179 155 166 171 176 179 183 187
- percentage change -1.6% -4.8% 8.8% -5.8% -5.7% -13.3% 7.0% 3.0% 3.0% 2.0% 2.0% 2.0%
Other Consumption 324 329 308 323 291 264 266 287 295 305 314 324 334
- percentage change 1.3% -6.2% 4.6% -9.8% -9.1% 0.8% 7.6% 3.1% 3.1% 3.1% 3.1% 3.1%
Refined Nickel Consumption 1229 1279 1258 1392 1377 1285 1302 1421 1495 1564 1619 1671 1726
- percentage change 4.1% -1.6% 10.6% -1.1% -6.6% 1.3% 9.2% 5.2% 4.6% 3.5% 3.2% 3.3%
Total Stock 243 234 263 236 277 376 405 414 441 468 491 449 353
- Exchange 24 21 36 7 48 78 158
- Non-exchange reported stocks 91 92 65 64 62 60 53
- Other 128 121 162 165 167 237 194
In weeks of consumption 10.3 9.5 10.8 8.8 10.5 15.2 16.2 15.1 15.4 15.6 15.8 14.0 10.6
Source: J.P. Morgan, Brook Hunt.
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Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
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Coverage Universe: Pinakin Parekh, CFA: ACC Limited (ACC.BO), Ambuja Cements Limited (ABUJ.BO), Grasim
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Cement Ltd (ULTC.BO)
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Pinakin Parekh, CFA Asia Pacific Equity Research
(91-22) 6157-3588 07 May 2010
[email protected]
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Pinakin Parekh, CFA Asia Pacific Equity Research
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