china resources quarterly · 2016-02-11 · platinum and palladium 56 mineral sands 57 ... industry...

China Resources Quarterly Southern sum

mer ~

Northern w

inter 2016

China Resources QuarterlySouthern summer ~ Northern winter 2016

China Resources Quarterly

Southern summer ~ Northern winter 2016

ii China Resources Quarterly • Southern summer ~ Northern winter

© Commonwealth of Australia 2016

Creative Commons licence With the exception of the Coat of Arms, this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence. Creative Commons Attribution 3.0 Australia Licence is a standard form license agreement that allows you to copy, distribute, transmit and adapt this publication provided that you attribute the work.

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ISSN 978-1-921516-05-4 [Print]

ISSN 978-1-921516-07-8 [PDF]

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced or altered by any process without prior written permission from the Australian Government. Requests and inquiries concerning reproduction and rights should be addressed to:

Department of Industry, Innovation and ScienceGPO Box 9839Canberra ACT 2601

or by emailing [email protected]

China Resources Quarterly • Southern summer ~ Northern winter iii

AcknowledgementsThis publication was jointly undertaken by the Westpac Institutional Bank, a division of the Westpac Group, and the Australian Government Department of Industry, Innovation and Science. The relationship is non–commercial. The report was previously published under the title of the Westpac–BREE China Resources Quarterly.

Editors

Westpac: Elliot Clarke and Justin Smirk. Department of Industry, Innovation and Science: Kate Penney, Marco Hatt and Monica Philalay.

Design and production

Julie Doel

Cover image

Shutterstock

This report was finalised on 5 February 2016.

iv China Resources Quarterly • Southern summer ~ Northern winter

Acknowledgements iii

Contents iv

Acronyms and abbreviations v

Foreword vi

Executive summary 1

Recent developments in the Chinese economy

2

General macroeconomic indicators 6

Resource related macroeconomic indicators

8

Steel 10

Iron ore 13

Metallurgical coal 17

Energy overview 18

Thermal coal 21

Oil 23

Gas 27

Uranium 29

Gold 31

Silver 33

Copper 34

Aluminium 37

Alumina 39

Bauxite 41

Nickel 42

Zinc 45

Lead 49

Tin 50

Molybdenum 54

Tungsten 52

Cobalt 53

Antimony 55

Platinum and Palladium 56

Mineral sands 57

Rare earth oxides 58

Manganese and Cadmium 59

Diamonds and Magnesium 60

Mineral and energy import summary 61

Provincial distribution of energy and resource related activity

Electricity output & consumption 62

Coal and gas 63

Ferrous metals 64

Alumina and aluminium 65

Copper and gold 66

Nickel and zinc 67

Contents

China Resources Quarterly • Southern summer ~ Northern winter v

Acronyms and abbreviations

ABS Australian Bureau of Statistics

ASEAN Association of Southeast Asian Nations

AUD, $A Australian dollar

bcm billion cubic metres

CEIC Chinese Economic Information Company

CFR Cost including freight

CNY, CNH Chinese yuan (onshore & offshore)

cm cubic metres

dltu dry long tonne unit

FDI foreign direct investment

FOB free on board

FX Foreign exchange

G3 United States, Europe and Japan

GDP gross domestic product

GFC global financial crisis

GFCF gross fixed capital formation

GCF gross capital formation

IEA International Energy Agency

IMF International Monetary Fund

koe, mtoe kilogram of oil equivalent, million tonnes of oil equivalent

kgpp kilograms per person

kWh kilowatt hour

LNG liquefied natural gas

Mt million tonnes

na not available

NAR net as received

NIEs Newly Industrialised Economies (Singapore, Taiwan, Hong Kong, South Korea)

ODI outward direct investment

OECD Organisation for Economic Cooperation and Development

OPEC Organisation of Petroleum Exporting Countries

PMI Purchasing Managers Index

PPP purchasing–power parity

ppt percentage point

RMB Chinese Renminbi

SHIBOR Shanghai Interbank Offered Rate

sqkm square kilometres

USD, US$ United States dollar

Growth rate conventions and abbreviations.

“Year–ended growth”, abbreviated %yr, is the level of an indicator in a single period (a month or quarter) versus the corresponding period in the prior year, expressed as a percentage.

The term “smoothed growth” should be understood to represent a 3 month moving average (3mma) of the year– ended growth rate.

“Year–to–date growth”, abbreviated %ytd, is the accumulated level of an indicator at a point in the calendar year (for example year–to–June, year–to–Sep) versus the corresponding point in the prior year, expressed as a percentage.

“Annual average growth”, abbreviated %ann, is the level of an indicator over four quarters, versus the previous four quarter period, expressed as a percentage.

“Month–on–month and quarter–on–quarter growth”, abbreviated %mth or %qtr, is the level of an indicator in one period, versus the immediately prior period, expressed as a percentage.

“Annualised growth or annualised rate”, is the change in an indicator in a single period grossed up to a year, expressed as a percentage. If seasonally adjusted, this may be rendered as %saar.

vi China Resources Quarterly • Southern summer ~ Northern winter

ForewordWelcome to the Southern summer ~ Northern winter edition of the China Resources Quarterly – hereafter the CRQ. The CRQ is a collaborative research venture between the Westpac Institutional Bank (hereafter Westpac) and the Australian Government Department of Industry, Innovation and Science.

The CRQ is the primary reference point for public and private sector decision makers seeking to understand developments in the Chinese economy, with special reference to its demand for resources.

This edition has been compiled against a discouraging economic backdrop. China’s domestic demand profile remains fragile and exports are falling. As a result, nominal activity growth is extremely subdued vis-a-vis the double-digit percentage growth rates that were de rigeur for much of the last decade.

In the resources sphere, the intersection of increasing Australian supply potential and the fact that it is the most resource and energy intensive parts of the Chinese economy that have slowed the most has produced steep declines in the prices of a number of important commodities.

With China’s development model in the midst of a major structural inflection point, and Australia’s own commodity cycle having shifted decisively into the supply phase, it is more vital than ever to trade in fact rather than rumour. The CRQ aims to do its part in this regard by making available rigorous and empirically grounded analysis of macroeconomic and resource industry trends.

China is now the world’s largest national economy in purchasing power parity (internationally comparable volume) terms and the largest producer of industrial value added, however measured. And it is now a free-trade agreement partner of Australia. These observations underscore the value of continuing to deepen our collective understanding of the ever-evolving Chinese economy.

Bill Evans Mark Cully

Chief Economist Chief Economist

Westpac Department of Industry, Innovation & Science

China Resources Quarterly • Southern summer ~ Northern winter 1

Executive summary

The Chinese economy continued to lose momentum through 2015, consistently registering sub-par outcomes over the year. Since the previous edition of the CRQ, aggregate demand moderated further in the December quarter. The principal sources of weakness remain building activity and heavy industry on the domestic front, in addition to soft external demand for Chinese produced goods. Against these negatives however, the services sector remains a key positive, experiencing robust growth in 2015.

Growth in heavy industrial capacity and in mining investment both slowed significantly during 2015, with coal mining and ferrous metals smelting among the weakest segments. Outlays on utilities capex have grown at a healthy pace, while investment in transport infrastructure continues to run at a relatively high level. Public sector capex stabilized in 2015, having experienced steep declines in 2014; that said, overall support for demand from this quarter has been extremely modest.

Real estate construction activity remains weak, and from the point of view of sales turnover, the housing market may be at an important inflection point. In recent months, there has been evidence of dwelling price gains fading before an aggregate spill-over from the early respondents to policy easing to the smaller, less wealthy, non-coastal cities has been achieved. This earlier than anticipated levelling out in the sales rebound will delay any recovery in building activity until deep into 2016.

The heavy industrial sector continues to struggle. The proportion of industrial firms making losses remains historically high; and demand for basic inputs consumed by construction has deteriorated. As a result, excess capacity is looking increasingly pronounced in some sub-sectors; and producer prices continue to decline, as they have done since early 2012.

China’s exports fell in 2015, with the deterioration evident across the G3, in intra–Asian trade and in shipments to extra-regional emerging markets. Demand for imported raw materials has been reasonable (albeit volatile) in volume terms, but the overall import bill has declined due to steep falls in metals, energy and certain food prices.

An unexpected shift in exchange rate policy sparked global comment in the second half of 2015 (and again in early 2016). Yet, with respect to capital flows, the reduction in FX reserves associated with intervention is only part of the story. China’s ongoing development and first steps toward financial liberalisation have seen robust growth in service imports; Chinese bank loans to foreign entities; and outward foreign direct investment.

Commodity prices followed the declines of 2014 and the first half of 2015 with yet further declines through late-2015 and early-2016. Lower prices have been driven largely by increased supply, although as noted above and throughout the CRQ, growth in demand has, in the main, been considerably lower than the norms established in the 2000s.

The global supply trend has been exemplified by Australia’s bulk commodity export volumes, which have continued to increase despite substantially lower prices. Even so, as the period of time that commodity prices spend around their current levels extends, the more pressure will be brought to bear on those mines, in Australia, China and elsewhere, that are operating in the upper quartile of their respective industry cost curves.

2 China Resources Quarterly • Southern summer ~ Northern winter

The Chinese economy had a sub-par year in 2015, with an already weak first six months followed by a distinct loss of momentum in the second half. Since the previous edition of the CRQ, the overarching narrative has changed little. Heavy industry and construction remain the principal sources of weakness domestically; while modest global growth is a major impediment for external demand. Against this weakness, offsetting positives include the structural rise of the Chinese consumer and infrastructure capex associated with China’s continued urbanisation.

Real GDP expanded by 6.8%yr in Q4 2015. That compares to 6.9%yr in Q3; 7.0%yr in Q1 & Q2; 7.2%yr for Q4 2014 and 7.6%yr in Q4 2013.

While not the focus of market participants, nominal GDP has historically given a better guide on current momentum, exhibiting significantly more cyclical amplitude than the volume measure. In the December quarter, it decelerated further to 5.8%yr. Compare this to 7.1%yr just six months prior; 7.4%yr in Q4 2014; and 10.4%yr in Q4 2013. With the exception of the GFC period, the recent phase has produced the slowest nominal growth since the deflationary late 1990s. The change in the GDP deflator, a derived estimate of economy-wide prices, was –1.0%yr in Q4, versus +0.2%yr a year ago and +2.8%yr in 2013.

Looking at the breakdown of (nominal) activity from the production side of the accounts highlights the key tension in the China growth narrative. Whereas momentum in the secondary sector has moderated to just 0.2%yr as at Q4 2015, growth in the tertiary sector (i.e. services production) remains a resoundingly healthy 12%yr, in part due to stronger demand from consumers. The rise of the consumer is made clear in the expenditure detail: two years ago, fixed capital formation and final consumption contributed 4.2ppts and 3.7ppts respectively. At end-2015, the relevant contributions for investment and consumption are 2.5ppts and 4.6ppts.

By sector, nominal investment growth in heavy industrial and extractive industries remains weak, so too for housing and non–residential building (see page 4). Utilities and transport capex however remain at elevated levels. State-owned enterprises continue to contribute a little over a third of the growth in fixed investment.

-10

0

10

20

30

40

50

-10

0

10

20

30

40

50

Mar-93 Sep-97 Mar-02 Sep-06 Mar-11 Sep-15

%yr%yrTotal

Secondary

Tertiary

Sources: Westpac Economics, CEIC

Nominal GDP: total & by broad sector

Various elements of China’s national accounts

-2

-1

0

1

2

3

4

5

6

Investmentppt cont

Consumptionppt cont

Net exportsppt cont

GDP deflator%ytd

%ytd or ppt

Q3 '13 Q4 '13

Q1 '14 Q2 '14

Q3'14 Q4'14

Q1'15 Q2'15

Q3 '15 Q4'15

Sources: CEIC, Westpac Economics.Dec-13 GDP deflator interpolated.

The development of the investment cycle

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

Real estate Manuf Transport Utilities Total

%ytd%ytd

Dec-11 Dec-12 Dec-13

Dec-14 Dec-15

Sources: CEIC, Westpac Economics

Figure 1: Nominal GDP: total & broad sectors

Figure 2: Various elements of the national accounts

Figure 3: The investment cycle: a sectoral view

Recent developments in the Chinese economy


It is constructive to complement the national accounts with a range of alternative indicators which also correlate with overall activity. Doing so provides a richer and more complete picture of key macroeconomic trends.

Beginning with the People’s Bank of China’s corporate survey, we see that the largest firms across the nation believe conditions deteriorated further in the final quarter of 2015 – consistent with the national accounts.

The survey’s ‘business situation’ measure has now been below its long-run average for eight consecutive months – and ten of the past eleven. Weakness in domestic orders is a key factor; though, as per this survey and recent PMI results, external demand is also unsupportive, with foreign orders contracting.

Other measures of aggregate activity highlight the impact that weak conditions in the old bellwether sectors of manufacturing and construction have had on raw material demand. Growth in steel demand remains in trend decline, from 12%yr at end 2013 to –0.7%yr at the close of 2015; likewise, though it bounced in 2015, demand for cement is continuing to fall, currently –4.3%yr. Reduced activity in manufacturing has also seen growth in electricity consumption abate.

As noted in our discussion of GDP, in stark contrast to the ongoing deterioration in secondary sector growth, and consequently raw material demand, is robust momentum in services.

This sector is job intensive. And given the stage of development China currently finds itself in, is the key to continued, sustainable wage gains for the urbanising population.

Buoyed by rapidly growing interest in the stock market and wealth management products in 2014/15, the financial sector experienced particularly rapid growth of 23%yr to end-2015.

For real estate services, growth of near 10%yr is modest historically, but still provides solid support for the aggregate pulse. A strengthening trend for the wholesale & retail sectors is to be expected as more jobs are created and a greater share of income is spent on discretionary consumption.

80

85

90

95

100

105

110

115

120

125

130

Dec-99 Dec-02 Dec-05 Dec-08 Dec-11 Dec-145

10

15

20

25Nominal GDP growth (lhs)Business situation* (rhs)Domestic orders* (rhs)

Sources: CEIC, Westpac Economics. * 5000 enterprise survey. Dec-13 nominal GDP growth interpolated.

% long run average%yr

China: business conditions, orders & GDP

Aggregate activity proxies

-30

-15

0

15

30

45

60

-15

0

15

30

45

Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16

Cement (lhs) Steel (lhs)

Electricity (lhs) Exports (rhs)

%yr %yr

Sources: CEIC, Westpac.3mma of year-ended rates.

-10

0

10

20

30

40

50

-10

0

10

20

30

40

50

Mar-93 Sep-97 Mar-02 Sep-06 Mar-11 Sep-15

%yr%yr

Financial services

Real estate services

Tertiary total

Wholesale and Retail

Sources: Westpac Economics, CEIC

Nominal services activity by sector

Figure 4: Business conditions, orders & GDP

Figure 5: The old model: bellwether sectors

Figure 6: The new model: bellwether sectors


The real estate sectorReal estate represents around one quarter of nominal urban fixed investment. Real estate investment itself is split roughly 70/30 between residential and non–residential. State–owned enterprises represent around 14% of the total.

In the previous edition of the CRQ, we noted that the real estate slowdown directly accounted for around 45% of the 5.8ppt deceleration in investment growth in the year-to-September 2015. Come December, the contribution to the 2015 capex slowdown increased slightly, to around 47%.

Our interpretation is that the housing market may be at an important inflection point. The cumulative evidence implies that the genuine price and turnover recovery in tier-1 and certain tier-2 cities seen earlier in 2015, responding to the shift in policy stance, strong pass through from benchmark rate cuts to mortgages and the increase in affordability brought about by the weak performance over the last year, is no longer broadening out to the smaller, less wealthy jurisdictions where developer inventories are most pronounced. In short, the impetus provided by easier housing policies is fading before an aggregate spill-over to the smaller, less wealthy, non-coastal cities has been achieved.

In terms of the pricing detail, the net balance of 70 cities seeing month-on-month price appreciation in new dwellings eased to +20.0% in December (41 rising, 27 declining) from +28.6% in September (40 rising, 20 declining); the equivalent figures for secondary markets are +14.3% in December (35 up, 25 down) and +30.0% in September (40 up, 19 down).

The volume of housing sales turnover effectively stalled at just 1.6%yr in December, down from +9.0%yr in September and 16.0%yr in June. After spiking in September to +15.3%yr, starts have consequently slumped again in the past three months, to –6.7%yr in December. On the whole, until we see a broader improvement in prices across the tier-2 and tier-3 cities, we are unlikely to see a material improvement in activity. Herein is justification for continued policy easing by authorities to stoke long-lasting confidence and demand in this key sector of China’s economy.

70 city house prices: net balance m/m chg

-100

-80

-60

-40

-20

0

20

40

60

80

100

-100

-80

-60

-40

-20

0

20

40

60

80

100

Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16

Net % of cities Net % of cities

New

Secondary market

Sources: CEIC,Westpac Economics

Housing sales, completions & land prices

90

100

110

120

130

140

150

160

170

180

75

100

125

150

175

200

225

250

275

Aug-06 Aug-08 Aug-10 Aug-12 Aug-14

indexindex

Completions (lhs)

Sales (lhs)

Residential land price (rhs)

Sources: CEIC, Westpac. Aug-2006 = 100.Underlying activity data in sqm.Land price is a spliced series of 100 and 70 city series.

Residential sales & starts: volume

-45

-30

-15

0

15

30

45

60

75

90

105

-45

-30

-15

0

15

30

45

60

75

90

105


%yr%yr

Sales

Starts

Sources: CEIC, Westpac.Underlying data in sqm.3mma of the year-ended growth rate.

Figure 8: Completions, sales & land prices

Figure 9: Housing sales and starts: volumes

Figure 7: 70 city house prices: m/m chg net balance


Monetary & financial conditionsThe monetary policy stance has had a basic tightening posture since 2011, related to the unwinding of the stimulus-era legacy, periodically interrupted by a cyclical need to underpin growth and/or accommodate smooth refinancing. The annual flow of credit to GDP peaked at 40% in late 2009; hit a local trough of 25% of GDP in early 2012; rebounded to 33% of GDP in early 2013; and then hit another low south of 23% of GDP as of Q2 2015. While traditional bank loans were a major contributor to the stimulus package, much of the cyclical amplitude since has been related to shadow finance, dominated by the off-balance sheet activity of the banks themselves (figure 10).

Last August, authorities altered the way in which the Renminbi was managed, focusing on a basket of currencies as opposed to the bilateral rate against the USD. Notwithstanding the circa 6.0% depreciation of USD/CNY since then (two-thirds of which came in the first month), the real exchange rate remains strong.

Coupled with real interest rates just a tick below average (despite a series of cuts), a strong real exchange rate means financial conditions are inappropriately restrictive, giving cause for further action from policy makers in coming months.

In aid of financial market stability and confidence in their longer-run objectives, Chinese authorities have intervened in FX markets over the past six months and also tightened capital flow rules. Markets are anxiously assessing these efforts to contain ‘speculative’ capital outflows. While we believe the authorities will prove successful, volatility seems a likely constant in the process.

It is worth highlighting that there are additional factors behind the depletion of FX reserves, namely: a rise in foreign loans made by Chinese banks and outward FDI by Chinese corporates and citizens at a time of weaker export receipts.

As internationalisation and development proceed, private flows will grow rapidly. Bank-related activity; outward direct investment; rapid growth in portfolio flows (from a very low base) and a growing services deficit will all become increasingly important avenues for goods’ surplus recycling.

Financial conditions in China

-6

-4

-2

0

2

4

6

8

-15

-10

-5

0

5

10

15

20

Mar-01 Mar-04 Mar-07 Mar-10 Mar-13 Mar-16

%yr

Real effective RMB (%yr, lhs)Real lending rate (ppt deviation from average, rhs)

Sources: CEIC, Westpac Economics.

ppt

Figure 10: Flow of credit by type, % of GDP

Figure 11: Financial conditions in China

Figure 12: FX reserves & net capital flows by type

Total credit supply – new flows, % of GDP

-10

0

10

20

30

40

50

Mar-03 Mar-06 Mar-09 Mar-12 Mar-15-10

0

10

20

30

40

50%GDP%GDP

Off balance sheet*

Loans, including FX

Other^

Total

Sources: CEIC, Westpac. *RBA definition. ^Mainly bond and equity.

4 quarter sum of new flows.

FX reserves & capital flows

-210

-180

-150

-120

-90

-60

-30

0

30

60

90

120

-210

-180

-150

-120

-90

-60

-30

0

30

60

90

120

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

USDbnUSDbn

Other

FDI inflow

Trade balance

Change in FX reserves

Sources: CEIC, Westpac.Westpac estimates for FX reserves & “other” for Apr-Jun 2015.


Qua

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Sep–

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0.1

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7.8

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2.6

2.4

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1.5

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1.5

1.8

2.1

2.8

2.8

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1.4

GD

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1.9

2.5

1.9

2.3

2.8

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1.1

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0.2

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0.1

-0.7

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Fixe

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0.3

0.2

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0.0

0.9

1.1

0.6

0.4

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-0.9

-1.2

-2.3

0.0

Land

pric

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dex

%yr

2.6

3.9

5.1

6.2

7.0

7.5

7.2

6.1

5.2

3.8

3.4

3.5

3.2

Cons

umer

pric

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2.1

2.4

2.4

2.8

2.9

2.3

2.2

2.0

1.5

1.2

1.4

1.7

1.7

Prod

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pric

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%yr

-1.7

-2.5

-2.2

-1.4

-1.7

-1.9

-1.1

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-4.1

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-5.4

-5.9

-5.9

Cent

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12.8

10.7

10.1

10.8

10.2

10.8

10.8

9.7

8.7

7.3

7.5

8.2

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511

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111

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.213

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.712

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.211

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Bank

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14.9

14.2

14.3

14.1

13.9

14.0

13.2

13.6

14.7

14.4

15.8

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29.5

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32.5

31.5

29.4

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26.0

25.9

24.0

22.4

23.2

22.8

Tabl

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Gen

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mac

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Tabl

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cont

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pag

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87.

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.0-3

.3-4

.2

to A

sia

ex Ja

pan

21.7

36.7

15.2

7.5

6.9

-10.

32.

816

.213

.39.

9-2

.6-7

.4-4

.1

to A

ustr

alia

12.4

5.7

-5.3

3.0

-1.5

1.1

4.8

4.1

5.3

14.4

4.2

1.0

2.0

to n

on–A

sian

em

ergi

ng m

arke

ts10

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4-1

.45.

9-3

.33.

914

.610

.016

.6-5

.0-1

0.0

-14.

7

Impo

rts

%yr

2.7

9.4

5.2

8.4

7.2

3.3

1.5

1.2

-1.4

-17.

9-1

3.5

-14.

2-1

2.0

from

G3

-4.3

-0.8

-0.1

4.3

8.1

11.5

7.4

4.3

2.4

-11.

8-1

0.2

-13.

0-1

1.0

from

Asi

a ex

Japa

n10

.917

.58.

17.

31.

5-4

.71.

73.

5-0

.4-1

4.1

-11.

4-1

4.5

-9.2

from

Aus

tral

ia-8

.17.

59.

119

.033

.524

.82.

4-1

.9-2

0.5

-26.

5-3

0.9

-20.

5-1

8.5

from

non

–Asi

an e

mer

ging

mar

kets

-1.7

-0.9

-6.8

4.9

6.3

2.4

4.5

0.8

-4.4

-36.

7-2

7.6

-20.

5-2

3.0

Trad

e ba

lanc

e U

SDbn

83.3

43.5

65.7

61.5

90.5

16.6

85.9

128.

114

9.5

123.

713

9.5

163.

617

4.8

Cha

nge

in F

X re

serv

es U

SDbn

2613

154

166

159

127

45-1

06-4

5-1

13-3

6-1

80-1

84

Ente

rpris

e su

rvey

– n

et b

alan

ce, 5

0 ba

se

Busi

ness

con

ditio

ns61

.862

.657

.156

.358

.155

.355

.454

.954

.552

.851

.849

.448

.4

Profi

tabi

lity

53.1

52.8

55.6

55.1

57.6

50.9

54.1

55.0

55.0

51.0

52.8

51.1

50.5

Dom

estic

ord

ers

47.7

48.8

50.3

48.2

49.4

44.4

48.5

46.9

46.5

42.5

46.3

43.3

42.5

Fore

ign

orde

rs47

.146

.649

.950

.148

.745

.449

.749

.947

.944

.248

.746

.343

.7

Bank

ing

clim

ate

– %

of a

vera

ge

Dem

and

for l

oans

90.8

98.9

92.6

95.4

95.0

99.9

91.3

85.1

82.9

87.9

77.2

72.4

72.6

Ease

of p

olic

y st

ance

81.7

91.6

91.5

72.6

73.6

68.7

74.1

84.3

90.3

96.9

118.

711

0.1

121.

0

Bank

ers’

confi

denc

e le

vel

99.7

130.

711

6.0

110.

412

9.1

122.

497

.210

7.0

95.0

86.0

78.6

73.5

68.6

Wes

tpac

MN

I Con

sum

er S

entim

ent*

– %

of a

vera

ge

Hea

dlin

e co

mpo

site

100.

410

0.4

101.

496

.110

2.8

98.6

97.3

94.6

92.6

93.9

92.7

96.7

93.2

Expe

cted

fam

ily fi

nanc

es10

1.7

101.

810

3.4

96.7

103.

997

.899

.494

.992

.394

.193

.299

.293

.5

Hou

se p

rice

expe

ctat

ions

99.6

100.

410

0.2

104.

210

2.7

106.

210

5.0

106.

210

4.9

106.

910

5.8

107.

910

4.3

Empl

oym

ent o

utlo

ok10

3.1

107.

710

6.8

96.4

109.

198

.698

.793

.792

.492

.992

.289

.889

.1

Sour

ces:

Wes

tpac

Eco

nom

ics,

CEI

C, M

NI.

Tabl

e 1:

Gen

eral

mac

roec

onom

ic d

ata

* Q

uart

erly

obs

erva

tions

are

the

3 m

onth

ave

rage

.


Mon

thly

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5

Indu

stria

l pro

duct

ion

%yr

3m

ma

7.3

7.2

6.4

6.1

5.9

6.3

6.3

6.3

5.9

5.8

5.8

5.9

Elec

tric

ity6.

03.

82.

8-0

.12.

53.

92.

62.

81.

61.

41.

41.

4

Proc

esse

d cr

ude

oil

7.5

5.4

5.5

4.8

8.2

7.2

6.2

5.6

4.7

3.3

2.2

2.8

Cem

ent*

nana

-21.

2-1

4.4

-11.

6-6

.6-5

.7-5

.1-4

.1-3

.6-4

.3-4

.3

Stee

l pro

duct

s*na

na2.

63.

42.

92.

1-0

.2-0

.9-1

.4-0

.90.

0-0

.7

Non

–fer

rous

met

als*

nana

17.3

19.9

21.1

23.5

22.6

21.2

18.4

16.1

13.6

9.9

Aut

omob

iles*

nana

3.7

-0.6

-2.6

-5.2

-8.9

-10.

6-1

2.3

-7.0

0.1

8.8

Civ

ilian

shi

ps*

nana

26.9

11.0

7.0

-1.7

-1.9

-0.7

-2.3

0.3

-9.8

-9.1

Met

al c

uttin

g to

ols*

nana

4.6

6.9

5.2

9.7

2.5

-1.7

-14.

9-1

6.4

#na

#na

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5

Fixe

d as

set i

nves

tmen

t %yr

3m

ma

13.3

13.4

13.6

12.2

10.9

10.4

10.5

10.2

8.6

8.4

9.0

9.0

Man

ufac

turin

g, o

f whi

ch13

.312

.910

.59.

99.

99.

38.

77.

76.

46.

87.

47.

4

Hea

vy in

dust

ry12

.711

.58.

77.

56.

87.

16.

25.

43.

44.

94.

95.

7

Har

d in

frast

ruct

ure,

of w

hich

17.6

19.6

22.0

20.5

18.5

17.3

17.3

18.8

16.6

15.5

16.7

15.4

Hig

hway

s21

.029

.224

.421

.920

.521

.118

.414

.912

.213

.815

.713

.4

Railw

ays

14.6

11.9

33.3

34.5

44.3

23.7

26.7

12.3

3.4

-10.

2-1

0.7

-13.

6

Util

ities

15.3

18.2

21.9

20.5

18.1

15.7

15.8

15.8

14.2

12.8

14.5

17.5

Real

est

ate,

of w

hich

5.4

6.3

9.1

5.8

3.2

2.1

2.9

1.7

-0.4

-2.2

-3.5

-3.1

Dw

ellin

gs3.

95.

26.

93.

50.

60.

72.

31.

7-0

.1-1

.8-2

.9-3

.0

Non

–res

iden

tial

8.4

8.8

14.0

10.9

8.7

5.1

4.3

1.9

-1.1

-3.0

-4.8

-3.4

Off–

mar

ket u

rban

con

stru

ctio

n-2

7.7

-18.

7-5

.5-1

0.3

-20.

9-1

3.7

-29.

8-2

7.2

-37.

5-6

.517

.033

.7

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5

Valu

e of

new

pro

ject

sta

rts

8.1

3.7

2.3

8.8

9.9

-0.2

-4.5

-3.8

1.2

-0.2

-0.2

-0.2

Num

ber o

f new

pro

ject

sta

rts

5.8

5.2

6.0

8.7

12.2

11.3

18.0

17.5

23.6

23.3

23.3

23.3

Loca

l gov

ernm

ent p

roje

cts

15.2

14.8

13.8

12.4

11.0

11.0

10.8

10.7

8.9

9.1

9.1

9.1

Cent

ral g

over

nmen

t pro

ject

s-8

.5-2

.710

.58.

37.

7-2

.92.

80.

33.

2-3

.0-3

.0-3

.0

Stat

e ow

ned

ente

rpris

e in

vest

men

t10

.612

.414

.512

.010

.110

.711

.912

.510

.210

.611

.79.

7

Tabl

e 2:

Res

ourc

e re

late

d ec

onom

ic in

dica

tors

Tabl

e 2

cont

inue

d on

pag

e 9.

* O

utpu

t for

thes

e se

ctor

s w

as n

ot re

leas

ed fo

r the

mon

ths

of Ja

nuar

y an

d Fe

brua

ry. A

s a

cons

eque

nce,

we

have

en

tere

d na

for t

hose

two

mon

ths

and

repo

rted

the

unsm

ooth

ed y

ear–

ende

d ra

te fo

r Mar

ch.


Mon

thly

%

yr 3

mm

a un

less

oth

erw

ise

spec

ified

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5

Volu

me

of h

ousi

ng s

tart

s-2

5.0

-20.

5-1

8.3

-17.

4-1

5.7

-14.

2-1

6.4

-17.

7-7

.6-8

.6-1

0.0

-17.

4

Volu

me

of h

ousi

ng s

ales

-10.

5-1

2.2

-11.

4-3

.66.

812

.716

.616

.614

.29.

77.

75.

2

Valu

e of

hou

sing

sal

es –

Nat

ionw

ide

-11.

4-1

3.8

-14.

2-9

.4-2

.15.

311

.616

.117

.918

.318

.012

.0

East

ern

prov

ince

s-1

3.6

-13.

8-1

3.0

-8.4

-0.6

8.8

17.0

22.9

25.1

25.4

24.7

16.2

Cent

ral p

rovi

nces

-9.8

-16.

8-1

9.2

-12.

3-3

.61.

75.

99.

010

.812

.013

.29.

2

Wes

tern

pro

vinc

es-6

.1-1

0.5

-12.

7-9

.5-5

.1-1

.61.

73.

94.

54.

44.

12.

7

Volu

me

of la

nd s

ales

-35.

8-2

4.4

-32.

4-4

3.5

-41.

7-4

4.5

-30.

6-3

2.6

-33.

6-3

7.1

-34.

9-3

4.9

70 c

ity n

ew d

wel

ling

pric

es n

et %

risi

ng m

–o–m

-88.

6-9

0.0

-50.

0-4

1.4

-32.

9-2

.91.

418

.628

.6-8

.611

.420

.0

70 c

ity se

cond

ary

dwel

ling

pric

es n

et %

risi

ng m

–o–m

-78.

6-7

5.7

-48.

6-7

.117

.132

.934

.334

.330

.027

.134

.314

.3

Aut

o sa

les,

of w

hich

7.6

6.8

3.6

0.9

0.8

-1.1

-3.3

-4.1

-2.7

3.6

11.3

15.8

pass

enge

r car

s10

.310

.98.

76.

54.

80.

5-2

.9-4

.4-2

.24.

413

.418

.5

Exca

vato

r sal

es-3

1.0

-43.

3-4

5.4

-49.

7-3

6.5

-33.

6-3

2.2

-32.

3-3

1.0

-31.

6-2

9.2

-28.

4

Terr

estr

ial f

reig

ht7.

39.

87.

76.

72.

11.

7-0

.5-2

.3-4

.2-6

.0-7

.2-1

2.2

Aqu

atic

frei

ght

18.2

13.0

5.2

1.2

0.8

1.6

4.1

4.1

4.6

5.3

5.9

4.7

Inte

rnat

iona

l air

freig

ht8.

013

.711

.09.

33.

75.

85.

13.

92.

62.

33.

64.

8

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5

Man

ufac

turin

g PM

I – in

dex

– of

whi

ch49

.849

.950

.150

.150

.250

.250

.049

.749

.849

.849

.649

.7

Out

put

51.7

51.4

52.1

52.6

52.9

52.9

52.4

51.7

52.3

52.2

51.9

52.2

New

ord

ers

50.2

50.4

50.2

50.2

50.6

50.1

49.9

49.7

50.2

50.3

49.8

50.2

New

exp

ort o

rder

s48

.448

.548

.348

.148

.948

.247

.947

.747

.947

.446

.447

.5

Raw

mat

eria

l inv

ento

ries

47.3

48.2

48.0

48.2

48.2

48.7

48.4

48.3

47.5

47.2

47.1

47.6

Fini

shed

goo

ds in

vent

orie

s48

.047

.048

.648

.047

.547

.747

.447

.246

.847

.246

.746

.1

Purc

hase

s of

inpu

ts49

.649

.449

.750

.151

.050

.950

.349

.448

.648

.848

.350

.3

Impo

rts

46.4

47.5

48.1

47.8

47.6

48.0

47.8

47.2

48.1

47.5

46.7

47.6

New

ord

ers

to fi

nish

ed g

oods

inve

ntor

ies

ratio

1.05

1.07

1.03

1.05

1.07

1.05

1.05

1.05

1.07

1.07

1.07

1.09

Sour

ces:

Wes

tpac

Eco

nom

ics,

CEI

C.

Tabl

e 2:

Res

ourc

e re

late

d ec

onom

ic in

dica

tors


Steel

• In Q4, Chinese steel prices continued on a downward trajectory—averaging 60 to 70% below the Q2 2008 peak. Continued weakness in crude steel consumption, largely attributable to soft demand from the construction sector, aided the fall in steel prices.

• China’s steel production fell 3.1%yr in Q4 to 194 Mt—the lowest since Q4 2012. Falls in production across most of the country—particularly in Liaoning, Xinjiang and Shanxi—more than offset a 293 kt increase in production in the key producing region of Jiangsu.

• The pace of decline in China’s crude steel production has been accelerating, with the 6.1 Mt yoy fall in Q4 the steepest since Q4 2008.

Benchmark steel prices

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

RMB/tRMB/t

hot-rolled sheetrebarplatewire rodcold-rolled sheet (rhs)

Source: Bloomberg

The rebar steel price & input costs

200

250

300

350

400

450

500

550

600

650

700

2535455565758595

105115125135145155165

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

USD/tIndex USD

Australian inputs index (lhs)

Chinese rebar (rhs)

Sources: Westpac Economics, Bloomberg

Input index based on 120kg of scrap, 770kg of met coal & 1400kg of iron ore to produce 1 tonne crude steel

*Australian spot prices for iron ore & coking coal.

China crude steel output: level & growth

-200

-150

-100

-50

0

50

100

150

200

250

-15

0

15

30

45

60

75

90

105

120

Dec-91 Dec-96 Dec-01 Dec-06 Dec-11

%yr Mt

Crude steel output (rolling 3mth sum, rhs)Growth rate (rhs)

Source: CEIC

Figure 13: Benchmark steel prices

Figure 14: Crude steel output: level & growth Figure 15: The rebar price and input costs

Table 3: Steel prices (quarterly averages).

Domestic RMB/t Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Rebar 3507 3527 3348 3258 3078 2940 2577 2435 2226 2055

Hot–rolled sheet 3609 3489 3399 3392 3272 3008 2636 2425 2071 1882

Cold–rolled sheet 4460 4342 4214 4096 4001 3898 3582 3160 2719 2423

Plate 3599 3455 3433 3448 3270 2962 2588 2404 2091 1916

Wire rod 3509 3519 3394 3347 3155 2952 2605 2471 2265 2083

Benchmarks USD/t

Rebar benchmarker 474 477 454 431 408 392 344 314 274 251

HRC benchmarker 494 480 466 454 442 410 359 325 271 245

CRC benchmarker 613 611 597 562 551 534 489 424 356 322

Source: Bloomberg.


• China’s excess capacity has contributed to a rapid increase in exports. China’s net export position of crude steel in Q4 was 26 Mt—around 6% of global production and just shy of the record high of 28 Mt recorded in Q3.

• To combat excess capacity in the steel and coal sectors, the Chinese Government announced it will spend RMB 100 billion (US$15.25 billion) every year for up to five years. Over this period it will cut 100–150 Mt of crude steel production by eliminating 90 Mt of capacity.

0

200

400

600

800

1000

1200

1400

10 20 30 40 50 60GDP per person (thousands of PPP international dollars)

China

India

Japan

South Korea

USA

Sources: World Steel Association; IMF

Consumption, kgpp

Steel demand per headFigure 19: Steel demand per head

Steel end-use by sector

Construction & others

73%

Machinery16%

Autos7%

Appliances 2%

Rail1%

Shipbuilding1%

Source: Bloomberg

Steel inventory cycle: Nov-13 to Sep-15.

-15

0

15

30

45

-3 0 3 6 9 12

inventories%yr

Sales%yr

Nov-13

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Dec-13

Jun-14

Jul-14

Sep-14

Aug-14

Oct-14

Nov-14

Jan-15Dec-14

Feb-15

Mar-15

Apr-15Oct-15

Jun-15

Nov-15

Chinese construction, steel & cement

-30

-15

0

15

30

45

-10

0

10

20

30

40

Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15

%yr 3mma%yr 3mma

Real estate plus hard infra investment (lhs)Steel product output* (rhs)Cement output* (rhs)

Sources: CEIC, Westpac Economics.*Jan-Feb interpolated in 2014 and 2015.

Figure 16: Steel end–use by sector

Figure 18: Steel inventory–to–sales scatter plot

Figure 20: Construction, cement and steel

Figure 17: Steel inventories by product typeChinese steel inventories by product

50

150

250

350

450

50

150

250

350

450Mt Mt

hot rolled long production

Sources: Westpac Economics, Bloomberg

30

40

50

60

70

50

70

90

110

130

Oct-08 Jan-10 Apr-11 Jul-12 Oct-13 Jan-15

cold rolled (rhs)

steel plate (lhs)


Table 4: Iron ore prices (USD/t, 62% ferrous metal content unless otherwise indicated).

TSI spot price, CFR Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Quarter average 133.6 134.9 120.5 103.0 90.4 74.4 62.5 58.5 54.9 46.7

Quarter end 131.4 134.7 116.6 94.0 78.1 71.3 51.4 59.4 56.3 43.6

Quarter high 144.18 140.28 135.27 119.82 98.35 84.17 71.49 65.61 59.2 56.6

Quarter low 118.28 130.35 103.99 89.48 77.97 66.8 51.4 47.1 44.6 38.3

TSI in CNY terms, CFR 818.1 821.8 735.4 642.0 557.6 457.4 389.7 362.7 345.8 298.7

IODEX Aust FOB 122.2 122.6 110.8 93.9 81.4 66.1 57.6 53.2 48.8 49.0

IODEX Brazil FOB 106.9 107.2 95.9 80.4 67.3 54.3 50.9 46.5 40.4 41.9

Sources: Bloomberg; Platts. CFR is cost including freight. FOB is free on board.

• Iron ore prices averaged US$47/t (CFR) in Q4, down 15%qtr and 37%yr. Prices slid as low as US$38/t in mid-December but rebounded to around US$41/t by early February. Increasing supply from Australia and Brazil, amid weaker demand from China’s steel industry, have contributed to downward pressure on prices.

• China’s iron ore port stocks rose 10.4%qtr, to end Q4 at 89 Mt. They were down 6%yr.

• China’s iron ore production (run of mine) was down by 8%yr in 2015. However, the rate of decline in China’s pig iron production relative to the increase in iron ore imports imply a decline in the iron content of domestic

Iron ore prices: spot and forward

20

40

60

80

100

120

140

160

180


USD/t

62% CFR Qingdao

SGX 3 month forward

SGX 12 month forward

Source: Bloomberg

Iron ore prices and rebar steel

300

350

400

450

500

550

600

650

700

20

40

60

80

100

120

140

160

180


USD/tUSD/t

Iron ore 62% CFR (lhs) rebar (rhs)

Source: Bloomberg

Figure 21: Iron ore prices: spot and forward

Figure 22: Iron ore prices and rebar steel Figure 23: Port inventories versus end demand

Iron ore

Chinese port ore inventories scaled by demand

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

ratioratio

To pig iron production

To crude steel production

Sources: CEIC, Bloomberg, Westpac Economics


production. As such, the decline in the metal content of production is likely to be steeper than reported by official statistics. This has provided additional support to demand for seaborne iron ore.

• Falling global bulk freight rates have improved the competitiveness of seaborne iron ore. In early February, the Baltic Dry Index was the lowest since records began in 1985. Reflecting this, iron ore freight rates for Capesize bulk carriers travelling from Western Australia to Qingdao declined to US$3.05/t in late January, down 31%yr and the lowest since 1999.

World trade in iron ore - seaborne

China65%

EU 11%

Japan10%

South Korea

5%other

9%

Imports

Source: World Steel Association

Australia50%

Brazil23%

South Africa

4%

Ukraine3%

Canada2%

other18%

Exports

Figure 27: World trade in iron ore – seaborne

Chinese import volumes by source

0

10

20

30

40

50

60

70

80

90

100

0

10

20

30

40

50

60

70

80

90

100

Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15

% shareMtAust (lhs) Brazil (lhs)Other (lhs) Aust market share (rhs)

Source: Bloomberg

Chinese iron ore imports

25

50

75

100

125

150

175

0

2

4

6

8

10

12

Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15

USD/tUSDbn

Aust (lhs)Brazil (lhs)Other (lhs)62% CFR Qingdao (rhs)Import unit value (rhs)

Source: Bloomberg

Shares of world iron ore output

Australia36%

Brazil20%

China10%

India6%

Russia5%

other23%

Source: World Steel Association

Figure 24: Chinese import volumes by source

Figure 26: Chinese imports, unit values & prices

Figure 28 : Shares of world iron ore output

Figure 25: Australian iron ore exports to ChinaAustralian iron ore exports to China

0

1

2

3

4

5

6

7

8

9

10

10

15

20

25

30

35

40

45

50

55

60


AUDbnMt

volume (lhs) value (rhs)

Source: ABS


Iron ore mine cost curve

0 225 450 675 900 1125 1350 1575 1800 2025

USD/t

Others

Sierra Leone

Russia

Canada

China

India

Australia

Brazil

Sources: AME, Westpac. Includes mining, royalties, freight from mine to port, administration and processing.

Cumulative export supply, mt

Chinese ferrous metal miners making losses

0

5

10

15

20

25

30

0

5

10

15

20

25

30

Jun-07 Dec-08 Jun-10 Dec-11 Jun-13 Dec-14

% share% share

Number of Chinese ferrous mining firmsmaking a loss, % of total


Figure 32: Chinese iron ore miners: loss–makers Figure 33: Seaborne iron ore cost curve

• Iron ore imports into China increased 9%yr in Q4. Australia and Brazil increased their share of the seaborne market into China in 2015. Australia’s share increased from 59% to 64% while Brazil’s share increased from 18% to 20%.

• Australia’s iron ore export volumes into China fell 0.9%qtr but increased 7%yr to 162 Mt in Q4. However, due to lower prices, values decreased 14%qtr and 18%yr to $A9 billion—the weakest result since Q1 2010.

• The first shipment from the Roy Hill project left Port Hedland on December 10, following three months of delays. The project aims to eventually produce 55 Mtpa.

Total supply of iron ore by source

0

50

100

150

200

250

0

50

100

150

200

250million tmillion t

Total

Domestic

Imports

Source: CEIC, Westpac.

0

10

20

30

40

50

60


% share

Rest of worldAustralia

Import share of total supply

Total ore supply by source

Iron ore inventories & supply growth

-40

-20

0

20

40

60

80

-40

-20

0

20

40

60

80

Jun-08 Dec-09 Jun-11 Dec-12 Jun-14 Dec-15

%yr%yr

Imports

Domestic production

Change in inventories

Sources: Westpac Economics, Bloomberg.Data smoothed.

Ferrous mining profit margins in China

450

550

650

750

850

950

1050

1150

1250

4

6

8

10

12

14

16

18

20

22

24


CNY/tmargin %

Ferrous metal mining margin (lhs)

Domestic ore prices ytd ave (rhs)


Figure 30: Chinese iron ore miners’ margins Figure 31: Chinese output, imports & stocks

Figure 29: China’s total iron ore supply


Iron

ore

unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

15D

ec-1

5

Chi

na im

port

sM

t21

6.7

219.

122

2.0

235.

324

2.1

233.

622

7.1

226.

024

6.3

253.

9

Aus

tral

iaM

t11

1.8

112.

911

8.2

138.

214

9.4

142.

714

4.4

146.

815

8.5

157.

9

Braz

ilM

t40

.544

.441

.638

.944

.745

.841

.842

.350

.157

.5

valu

eU

SDbn

26.3

28.1

28.4

25.7

21.9

18.5

15.8

13.2

14.8

14.1

Raw

pro

duct

ion

*M

t38

7.0

405.

430

4.2

393.

641

0.6

389.

328

0.6

350.

238

1.6

3 62

.6

Iron

ore

stoc

ks a

t por

ts, e

nd o

f qtr

Mt

70.1

81.3

103.

810

5.7

103.

295

.293

.374

.180

.989

.3

wee

ks o

f im

port

sw

eeks

4.1

4.8

6.1

6.2

6.1

5.6

5.5

4.4

4.8

5.3

Aus

tral

ian

expo

rts

to C

hina

Mt

113.

812

6.8

122.

214

5.8

149.

715

2.2

143.

715

4.6

163.

916

2.5

valu

eAU

Dbn

13.6

15.6

14.4

13.4

11.9

10.9

9.8

9.5

10.4

8.9

Met

allu

rgic

al c

oal

Chi

na im

port

sM

t19

.420

.713

.018

.113

.418

.010

.910

.714

.811

.6

valu

eU

SDm

n24

14.0

2418

.016

33.6

1812

.412

70.3

1736

.198

0.2

882.

611

62.8

790.

6

Aus

tral

ian

expo

rts

to C

hina

Mt

12.4

14.0

10.1

11.6

11.2

13.4

7.7

11.0

8.5

8.9

valu

eAU

Dm

n15

4718

2312

4812

3811

4415

1395

711

6093

210

96

Sour

ces:

Bloo

mbe

rg, A

BS, I

HS,

CEI

C. *

Raw

min

e ou

tput

with

a lo

w ir

on c

onte

nt.

Tabl

e 5:

Iron

ore

& m

etal

lurg

ical

coa

l sum

mar

y da

ta


Metallurgical coal

• Spot prices for metallurgical coal fell through Q4 and early 2016, weighed down by reduced import demand from China. Low volatility HCC CFR China averaged US$82 in Q4, down 33%yr and 10%qtr. Low volatility PCI CFR China averaged US$72, down 29%yr and 1%qtr, while Semi Soft CFR China averaged US$68, down 7%qtr and 24%yr.

• Australian benchmark prices for high-quality metallurgical coal delivered in Q1 2016 settled at US$81 a tonne (FOB), down from US$89 a tonne in Q4 2015.

• China imported 12 Mt of metallurgical coal in Q4, down 36%yr. China’s imports from Australia fell 41%yr to 6 Mt but remained the primary

50

70

90

110

130

150

170

190

50

70

90

110

130

150

170

190

Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15

USD/tUSD/t

Low Vol PCI Semi Soft Prem Low Vol HCC

Source: Platts

Met coal spot prices

Met coal use and supply by country

China53%

Australia17%

USA7%

Russia7%

India5%

Other11%

Production

Source: IEA.

China61%

other12%

India10%

other OECD

7%

Japan5%

Russia5%

Consumption

World trade in met coal

China21%

Japan17%

OECD Europe

19%

India17%

Other11%

South Korea12%

Ukraine3%

Imports

Source: IEA

Australia56%United

States18%

Canada10%

Russia6%

Mongolia3%

Other7%

Exports

Figure 34: Met coal spot prices

Figure 35: World trade in met coal Figure 36: Met coal use and supply by country

Table 6: Metallurgical coal prices (quarterly average spot prices).

unit Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Prem Low Vol HCC CFR China USD/t 154.7 156.3 135.0 124.3 123.3 121.8 111.8 94.5 90.8 82.0

Low Vol PCI CFR China USD/t 125.9 129.0 115.9 108.7 102.1 101.3 99.9 81.0 72.2 71.5

Semi Soft CFR China USD/t 109.1 110.9 101.1 92.8 87.7 89.7 86.6 76.9 72.5 67.8

Prem Low Vol HCC FOB Aust USD/t 140.9 140.5 120.6 111.4 110.7 110.0 104.0 86.8 82.7 75.8

Prem Low Vol HCC FOB Aust AUD/t 155.4 155.3 133.3 123.1 122.4 121.5 114.9 95.9 91.4 83.8

Source: Platts. CFR is cost including freight. FOB is free on board. HCC is hard coking coal.


source of China’s metallurgical coal imports, accounting for over 50%. China’s imports from Mongolia, China’s second largest source of imported metallurgical coal, decreased 15%yr to 3 Mt.

• Although China’s imports of metallurgical coal from Australia fell to 26 Mt in the 2015 calendar year, import volumes were still substantially above the levels recorded in the decade to 2013, which averaged around 8 Mt a year (from 2003-2013).

• Australia exported 8.9 Mt of metallurgical coal to China in Q4, a decline of 34%yr. Export values declined by 28%yr to $A1.1 billion, weighed down by falls in both price and volume.

Met coal seaborne cost curve

0 50 100 150 200 250 300

USD/t

Other Canada

United States Mongolia

Mozambique Australia

Sources: AME, Westpac. include s mining, royalties, freight from mine to port,

administration and processing.


Figure 40: Seaborne met coal cost curve

Chinese met coal import volumes

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

0

1

2

3

4

5

6

7

8

9

Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15

USDbnMtAust. (lhs) Mongolia (lhs) Canada (lhs)Russia (lhs) Other (lhs) Value (rhs)

Sources: IHS, CEIC.

Total hard met coal exports: Australia

60

70

80

90

100

110

120

130

140

150

160

170

Nov-02 Nov-04 Nov-06 Nov-08 Nov-10 Nov-12 Nov-1460

70

80

90

100

110

120

130

140

150

160

170100kt mth100kt mth

Hard met coal exports, all destinations

Source: ABS, CoalPortal.com. Seasonally adjusted by Westpac Economics.

Aust met coal exports to China

0

150

300

450

600

750

900

0

1

2

3

4

5

6

Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15

AUDmnMt

volume (lhs) value (rhs) Source: ABS

Hard coking coal seaborne cost curve

0 30 60 90 120

USD/t

Other

Canada

United States

Mongolia

Mozambique

Australia

Sources: AME, Westpac. Includes mining, royalties, freight from mine to port, administration and processing.


Figure 37: Chinese met coal import volumes

Figure 39: Australian met coal exports: total Figure 38: Aust met coal exports to China

Figure 41 : Seaborne hard coking coal cost curve


Developments in China’s energy policy

• In December, China realised its 12th Five-Year plan goal of universal electricity access when it connected residents in the remote Qinghai-Tibet Plateau to the electricity grid. This will ensure reliable electricity access to households in the region.

• China and Iraq signed a Memorandum of Understanding (MoU) in December to promote energy cooperation. The MoU covers oilfield development and refinery construction in Iraq and the use of Chinese-made equipment in oil and gas ventures.

• In December, Sinopec and Rosneft signed a MoU on oil and gas projects in eastern Siberia during the 20th China-Russia Prime Ministers’ meeting. China National Petroleum Corporation and Gazprom also agreed on the design and construction of the cross-border section of the China-Russia east-route natural gas pipeline.

• In November, the National Energy Administration (NEA) announced that the 13th Five-Year plan will include plans to upgrade its energy system through innovation. As part of these plans it will coordinate the development of smart grids and distributed energy resources and the efficient allocation of resources in coal and thermal power production and oil refining.

• In late December Pakistan and China signed a financing agreement for a coal project in Pakistan as part of the China-Pakistan Economic corridor (a 3000 km network of roads, railways and energy infrastructure between the ports of Gwadar in Pakistan and Kashgar in Xinjiang). The project will include the development of a 3.8 Mt coal mine and 660 MW co-located power station. It is expected to cost more than US$2 billion, with around US$800 million of the funding to come from China.

• As part of the China-Pakistan Economic corridor initiative, Chinese company Zonergy began construction of the second phase of the world’s largest solar farm in Pakistan’s Punjab province. Once completed it will have total capacity of 1000 MW.

• The NEA announced that more than 1000 coal mines will be closed in 2016, which will remove around 60 Mt of capacity. These closures are in addition to the 70 Mt of capacity removed in 2015.

• The NEA announced plans to cut the share of coal in total energy consumption to 62.6% in 2016, from 64.4% in 2015. It was also announced that wind and solar power capacity would be increased by more than 21% in 2016, supported by an addition of at least 20 GW of wind power capacity and 15 GW of solar power capacity.

Electricity trends

• China generated 5.6 trillion kWh of electricity in 2015, up 2.4%yr, despite slowing economic growth. The largest increases were registered in nuclear power and wind generation, which increased by 32%yr and 19%yr, respectively. Hydro electricity generation increased 4.6%yr, while thermal electricity generation declined by a modest 0.3%yr.

• Investment in new generation capacity increased 12% in 2015 to RMB 409 billion. Lower investment in nuclear and hydro capacity, down 1.6%yr and 19%yr, respectively were offset by a 47%yr increase in investment in thermal generation capacity.

• Despite slower economic growth, overall electricity consumption in China increased 0.5% in 2015 to 5.5 trillion kWh. Consumption across all sectors increased except for the secondary industry, which declined 1.5%yr as activity in energy intensive sectors continued to contract. Tertiary, residential and primary electricity use increased by 7%yr, 5%yr, and 2.7%yr, respectively.


Shares of energy output growth

-15

0

15

30

45

-15

0

15

30

45

Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15

Contribution from other sourcesContribution from thermal generationElectricity production

%yr/ppt %yr/pptSources: CEIC,

Westpac

Figure 46: Chinese electricity growth: broad source

World energy production

other non-OECD34%

China19%

other OECD12%

United States14%

Russia 10%

Saudi Arabia

4%

India4%

Indonesia3%

Source: IEA

World energy consumption

other Non-OECD25%

China23%other OECD

18%

United States17%

India6%

Russia6%

Japan3%

Germany2%

Source: IEA

Chinese electricity use by sector

0

300

600

900

1200

1500

1800

Sep-12 Sep-13 Sep-14 Sep-15

Billion kWh

secondary industry residentialtertiary industry primary industry

Source: CEIC.

Chinese electricity output by source

0

200

400

600

800

1000

1200

1400

1600

Sep-98 Sep-01 Sep-04 Sep-07 Sep-10 Sep-13

Billion kWh

thermal hydro nuclear wind

Source: CEIC

Generation capacity by source

0.0

0.2

0.4

0.6

0.8

1.0

0.0

0.2

0.4

0.6

0.8

1.0

Thermal(7%)

Hydro(8%)

Nuclear(19%)

Wind(34%)

Solar(178%)

Billion kWBillion kW

2010 2011 2012

2013 2014 2015

Sources: CEIC, Westpac Economics. Number in parenthesesare CAGRs for the period 2009 to 2014.

Figure 43: World energy productionFigure 42: World energy consumption

Figure 45: Chinese electricity use by sectorFigure 44: Chinese electricity output by source

Figure 47: China’s generating capacity by type


Thermal coal

• Lower import demand from China and a slow supply response continued to keep pressure on key thermal coal FOB prices in Q4. Newcastle spot prices fell 18%yr, Richard’s Bay fell 22%yr and Baltic decreased 30%yr.

• The National Energy Administration (NEA) announced that more than 1000 coal mines will be closed in 2016, which will remove around 60 Mt of capacity. These closures are in addition to the 70 Mt of capacity removed in 2015.

• In an effort to cut coal production capacity the NEA announced that no new coal mines will be approved between 2016 and 2018.

40

60

80

100

120

140

160

180

200

40

60

80

100

120

140

160

180

200

Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15

USD/tUSD/t

Richards Bay 6000kcal

Baltic 6000kcal

Newcastle 6000kcal

QHD 5800kcal

Source: IHS

Thermal coal prices

Thermal seaborne cost curve

0 100 200 300 400 500 600 700

USD/t

Other

Russia

United States

Indonesia

South Africa

Australia

Sources: AME, Westpac. includes mining, royalties, freight from mine to port,

administration and processing.


Thermal coal stocks: ports & generators

0

5

10

15

20

25

30

35

Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

MtQHD Caofeidian JintangTianjin Guangzhou Other

Source: Bloomberg

Figure 48: Thermal coal prices

Figure 49: Thermal coal stocks: ports & generators Figure 50: Export thermal coal cost curve

Table 7: Thermal coal prices (USD/t, NAR unless otherwise indicated).

Quarterly averages Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

QHD 5800kcal 105.8 106.1 105.8 100.3 92.8 96.1 87.4 74.9 68.4 61.0

QHD 5800kcal RMB/t 647.8 646.8 645.2 624.8 571.9 590.5 544.9 464.3 430.6 390.2

Newcastle 6000kcal 77.1 82.0 77.4 72.7 68.0 63.0 63.0 57.8 58.4 51.8

Newcastle 6000kcal AUD/t 84.3 88.6 86.5 77.9 73.5 73.7 80.1 74.4 80.4 71.9

Richards Bay 6000kcal 73.0 83.1 78.7 75.0 70.2 65.8 61.5 61.2 54.7 51.3

Baltic 6000kcal 71.4 78.2 74.3 69.4 69.7 68.7 56.9 55.2 50.6 48.0

Sources: IHS. NAR stands for net as received.


• China’s total thermal coal stocks declined 44%yr and 30%qtr to finish Q4 at 16 Mt.

• Following the implementation of the Free Trade Agreement between Australia and China, the tariff on imports of thermal coal from Australia will be eliminated on 1 January 2017.

• China’s imports of thermal coal declined 28%yr to 36 Mt in Q4 in response to relatively slower demand growth. China’s imports of thermal coal from Indonesia declined 22%yr to 17 Mt while imports from Australia fell 34%yr to 10 Mt.

• Australia’s exports to China decreased by 39%yr to 6.8 Mt in Q4 and values declined by 45%yr to $A390 million.

Thermal coal use and supply by country

China41%

USA16%

Indonesia9%

OECD Europe

7%

India8%

Aust4%

Other15%

Producers

Source: IEA.Note: Includes brown coal.

China43%

USA16%

Other non-OECD11%

Indonesia2%

India12%

Australia2%

Other OECD14%

Consumers

Figure 54: Thermal coal use and supply by country

Thermal coal imports

230

260

290

320

350

380

410

440

0

5

10

15

20

25

30

35

Apr-12 Dec-12 Aug-13 Apr-14 Dec-14 Aug-15

billion kWhMtIndonesia (lhs)Australia (lhs)Other (lhs)Thermal electricity generation (rhs)

Sources: CEIC; IHS.

Power generation & coal extraction: capex

-40

-20

0

20

40

60

80

-40

-20

0

20

40

60

80


%yr%yr

Power generation

Coal extraction

Sources: CEIC, Westpac Economics.

Aust thermal coal exports to China

0

50

100

150

200

250

300

350

400

450

500

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15

AUDmnMt

volume (lhs)

value (rhs)

Source: ABS.

World trade in thermal coal

China18%

India23%

OECD Europe

18%

Japan11%

South Korea

8%

Other 22%

Imports

Source: IEA.Note: Includes brown coal.

Indonesia46%

Australia16%

Russia11%

Colombia6%

South Africa6%

other15%

Exports

Figure 51: Thermal coal imports

Figure 53: Capex: coal mining vs power generationFigure 52: Aust thermal coal exports to China

Figure 55: World trade in thermal coal


Tabl

e 8:

The

rmal

coa

l sum

mar

y da

ta

unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

15D

ec-1

5

Chi

na im

port

sM

t60

.967

.671

.058

.149

.750

.438

.140

.141

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Indo

nesi

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t27

.832

.835

.726

.121

.422

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.017

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tral

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.915

.415

.217

.515

.110

.612

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7351

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Oil

• A mix of geopolitical factors and ongoing excess supply contributed to a rapid decline in oil prices in Q4 and early Q1 2016. In mid-January, WTI prices declined to US$26.55/bbl and Brent to US$28.26/bbl.

• WTI prices averaged US$42.02/bbl in Q4, down 10%qtr. Brent prices declined 13%qtr to average US$44.69/bbl and Tapis declined 16%qtr to US$44.24/bbl.

• China’s benchmark gasoline prices ended Q4 1.7%qtr lower than Q3 2015 while diesel prices declined 0.2%qtr.

• China’s cabinet approved the restructuring of the two biggest shipping conglomerates, the China Ocean Shipping (Group) Company

Oil prices

20

35

50

65

80

95

110

125

140

20

35

50

65

80

95

110

125

140


USD/bblUSD/bbl

Brent WTI Tapis

Source: Bloomberg.

Oil use and supply by country

other OPEC24%

other non-OPEC24%Saudi

Arabia13%

Russia13%

United States12%

China5%

Canada5%

Iran4%

Production

Source: BP.

other non-

OECD28%

other OECD24%

United States20%

China12%

Japan5%

India4%

Russia4%

Brazil3%

Consumption

Oil use by sector: China & the world

Transport51%

other21%

Industry14%

Residential6%

Services4%

Agri4%

China

Source: IEA.

Transport64%

Other17%

Industry9%

Residential5%

Services2%

Agri3%

World

Figure 56: Oil prices

Figure 57: Oil use by sector: China & the World Figure 58: Oil use and supply by country

Table 9: Crude oil spot prices (USD/bbl, quarterly).

Brent Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15Quarter average 109.7 109.4 107.9 109.8 103.5 77.1 55.1 63.5 51.3 44.7Quarter end 108.4 110.8 107.8 112.4 94.7 57.3 55.1 63.6 49.6 44.4Quarter high 116.6 112.6 111.2 115.1 112.3 94.2 62.6 67.8 62.1 53.1Quarter low 103.0 103.5 105.8 104.8 94.7 57.3 46.6 55.0 42.7 36.1TapisQuarter average 115.9 117.2 114.3 115.0 106.2 79.5 56.1 64.6 52.6 44.2Quarter end 114.5 120.7 113.2 117.0 100.2 58.6 55.9 63.3 53.0 44.8Quarter high 122.2 121.7 118.6 119.4 115.0 98.4 64.2 70.3 64.7 53.7Quarter low 109.1 110.8 111.7 110.1 98.7 58.6 47.4 56.8 43.8 35.6West Texas intermediateQuarter average 105.8 97.6 98.7 103.1 97.6 73.2 48.5 57.8 46.5 42.0Quarter end 102.3 98.4 101.6 105.4 91.2 53.3 47.6 59.5 45.4 41.9

Quarter high 110.5 104.1 104.9 107.3 107.6 91.0 53.5 61.4 57.0 49.6

Quarter low 98.0 92.3 91.7 99.4 91.2 53.3 43.5 49.1 38.1 34.7Source: Bloomberg.


0

100

200

300

400

500

600


China

India

Japan

South Korea

USA

Passenger cars per 1000 residents

Passenger cars per 1000 residentsFigure 62: Automobile penetration

Chinese oil import volumes

0

5

10

15

20

25

30

35 MtOther Saudi Arabia AngolaRussia Iran Oman

Source: CEIC.

World trade in oil

other OECD32%

other non-

OECD21%

United States15%

China10%

Japan7%

India6%

South Korea

5%

Singapore4%

Imports

other non-

OECD41%

other OECD18%

Saudi Arabia

13%

Russia10%

United States

5%

Canada5% UAE

4%

Kuwait4%

Exports

Source: IEA

Chinese imports of Australian oil

0

50

100

150

200

250

300

350

400

450

500

0

50

100

150

200

250

300

350

400

450

500


USDmnkt

Volume (lhs)

Value (rhs)

Source: CEIC.

Oil demand per capita

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5


China IndiaJapan South KoreaUSA

Consumption toe per capita

Sources: IMF, IEA.

Figure 59: Chinese oil import volumes

Figure 61: World trade in oilFigure 60: Chinese imports of Australian oil

Figure 63: Oil demand per capita

(COSCO) and the China Shipping (Group) Company (China Shipping), creating the largest oil tanker fleet in the world.

• China’s imports of crude oil increased 9%yr to a five year high of 87 Mt in Q4, supported by higher import quotas for private refineries.

• China’s imports of crude oil from Russia and Saudi Arabia, increased 28%yr and 1.8%yr in 2015 to 42 Mt and 51 Mt, respectively. Imports from Angola and Iran decreased 4.8%yr and 3.1%yr, in 2015 to 39 Mt and 27 Mt, respectively.

• In 2015 China’s crude oil imports from Australia declined 12%yr to 2.4 Mt and import values declined 52%yr to US$1 billion.


Oil

unit

Sep-

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ec-1

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ar-1

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n-14

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.9

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13.9

13.0

12.7

11.5

12.4

13.1

12.8

13.6

12.1

12.1

Ang

ola

Mt

10.5

9.4

10.7

10.2

9.5

10.4

9.9

9.2

10.2

9.5

Russ

iaM

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07.

57.

88.

09.

88.

610

.910

.912

.1

Iran

Mt

5.5

5.4

6.9

8.7

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Gas

olin

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Die

sel

Mt

42.7

44.0

42.3

42.9

43.5

46.0

43.8

45.6

44.8

45.4

Chi

nese

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Aus

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1233

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9.8

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159

4.8

342.

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7.3

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Gas

Chi

na p

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Mt

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6.0

6.2

6.7

5.7

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6.5

Chi

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4.6

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8.3

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9.4

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87.4

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11.7

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Chi

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Aus

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6.2

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0.9

433.

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5.4

444.

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Sour

ce: C

EIC

.

Tabl

e 10

: Oil

and

gas

sum

mar

y da

ta


Gas

• China’s LNG import unit values increased 7%qtr in Q4 while pipeline gas unit values declined 13%qtr.

• ENN LNG Trading Company (ENN), the first private company to be authorised to build and operate an LNG import facility in China, began construction of its Zhoushan LNG project (2 Mtpa) in Zhejiang.

• Chevron signed an agreement with China Huadian Green Energy Co. to export up to 1 Mtpa of LNG for 10 years from 2020. This is likely to be sourced from its Wheatstone and Gorgon projects in Western Australia. Chevron also announced a non-binding heads of agreement with ENN to deliver up to 500 ktpa of LNG over 10 years from late 2018.

Gas unit values in China

100

200

300

400

500

600

700

Mar-10 Jun-11 Sep-12 Dec-13 Mar-15

USD/t

LNG pipeline

Source: CEIC.

Gas use by sector: China

Industry31%

Residential30%

other17%

Transport and agriculture

13%

Services9%

Source: IEA

Gas use by sector: World

Industry37%

Residential30%

Services14%

Other11.5%

Transport7%

Agriculture0.5%

Source: IEA

Figure 64: Gas unit values in China

Figure 65: Gas use by sector: World Figure 66: Gas use by sector: China

Gas use and supply by country

other non-

OECD33%

USA21%

Russia17%

other OECD10%

Qatar5%

Iran5%

Canada5%

China4%

Production

Other Non-OECD28%

USA22%

other OECD21%

Russia12%

China6%

Iran5%

Japan3%

Saudi Arabia

3%

Consumption

Source: BP

Gas demand per capita

0.0

0.5

1.0

1.5

2.0


China IndiaJapan South KoreaUSA

Consumption toe per capita

Sources: IEA, IMF

Figure 68: Gas use and supply by countryFigure 67: Gas demand per capita


• Sinopec began shale gas production at its Fuling project (5 bcm a year), the largest shale gas project in China to date.

• China’s LNG imports declined 1.1%yr in 2015 to 19.7 Mt. LNG imports from Qatar declined 29%yr to 4.8 Mt in 2015, while imports from Malaysia and Indonesia increased by 9%yr to 3.3 Mt and 12%yr to 2.9 Mt, respectively.

• China’s LNG imports from Australia accounted for the majority of total LNG imports in 2015. Imports from Australia increased 46%yr in 2015 to 5.6 Mt. Their value increased 127%yr to US$1.6 billion.

World gas exports by country

ROW23%

Russia22%

Qatar12%

other Asia Pacific

12%

Norway10%

other Africa8%

Canada8%

Netherlands5%

Source: BP.

Figure 72: World gas exports by country

China’s gas imports by type

0.0

1.0

2.0

3.0

4.0

5.0

6.0


Mt

LNG Pipeline

Source: CEIC

Chinese LNG imports from Australia

0

30

60

90

120

150

180

210

240

270

300

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1


Mt USDmn

volume (lhs)value (rhs)

Source: CEIC.

World gas imports by country

other Europe

38%

other Asia Pacific12%

Japan11%

ROW11%

Germany9%

United States

8%

Italy6%

China5%

Source: BP

Figure 69: China’s gas imports by type

Figure 71: Chinese LNG imports from Australia

Figure 73: World gas imports by country

Figure 70: Chinese LNG imports by source

Chinese LNG imports by source

0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8


Mt

Qatar AustraliaIndonesia MalaysiaOther

Source: CEIC


UraniumUranium prices

0

100

200

300

400

500

600

700

800

0

20

40

60

80

100

120

140

160

Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Jan 15

index USD/lb

USD price (lhs)

USD price index (rhs)

RMB price index (rhs)

Sources: LME, Bloomberg

China’s uranium imports

0

3000

6000

9000

12000

15000

0

300

600

900

1200

1500


USDmn

Volume (rhs) Value (lhs)

Source: CEIC, China Petroleum and Chemical Industry Federation

Tonnes

Uranium use by country

Other32%

United States28%

France14%

China12%

Russia6%

South Korea8%

Source: World Nuclear Association.

Global uranium output &reserves

Kazakhstan37%

Other21%

Canada16%

Australia9%

Niger7%

Namibia6%

Production

Source: World Nuclear Association, OECD NEA & IAEA.

Kazakhstan12%

Other35%

Canada9%

Australia31%

Niger8%

Namibia5%

Reserves*

*Reasonably Assured and Inferred, recoverable at US$130 per tonne U3O8

Figure 74: Uranium prices

Figure 76: Global uranium output & reserves

Figure 75: China’s uranium imports

Figure 77: Uranium use by country

Table 11: Uranium summary data.

Units Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Uranium spot price U3O

8USD/lb 35 35 29 32 37 38 36 36 35

China nuclear power output bn kWh 30 27 28 38 37 35 42 50 45

Investment in nuclear RMBbn 20 11 13 14 19 10 11 13 23

China uranium imports t 6216 4045 6801 4985 9281 2041 5659 7505 7439

Value USDmn 677 396 675 482 810 210 587 721 691

Sources: CEIC, Cameco, The Ux Consulting Company, Trade Tech.


• The average spot price for uranium fell by 2%qtr and 5%yr in Q4 to US$35/lb.

• Despite a 10%qtr fall in China’s nuclear power output in Q4, nuclear generation increased by 20%yr to 45 billion kWh in 2015.

• China’s investment in new nuclear capacity increased by 19%yr to RMB 22.6 billion in Q4.

• State-owned China National Nuclear Corporation (CNNC) signed contracts for cooperation with Slovakia’s nuclear power plant research institute and Argentina’s Nucleoelectrica.

• China imported 7439 tonnes of uranium in Q4, a decrease of 20%yr. These imports were worth US$691 million, a decline of 15%yr.

China’s nuclear power construction expenditure

0

5

10

15

20

25

30

Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15

RMB bn

Source: CEIC

Figure 81: China’s nuclear construction spending

New capacity: planned & underway

0

20000

40000

60000

80000

China OtherAsia

EasternEurope

NorthAmerica

WesternEurope

Africa -Middle

East

SouthAmerica

MWe

Under Construction

Planned

Source: World Nuclear Association

Growth in world energy by source

0

1

2

3

4

Oil Gas Coal Nuclear Other Total

1990 to 2013

2013 to 2035Source: BP

Compound annual growth rate %

Figure 78: Chinese nuclear generation growth

Figure 80: Chinese nuclear generation capacity

Figure 82: Growth in world energy by source

Figure 79: New capacity: planned & underway

Chinese nuclear generation capacity

0

5

10

15

20

25

30

1999 2001 2003 2005 2007 2009 2011 2013 2015

Million kW

Source: CEIC

China’s nuclear generation growth keep

-5

0

5

10

15

20

25

30

-20

0

20

40

60

80

100

120

Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15

Nuclear generation (lhs)

Total electricity generation (rhs)

%yr* %yr*

Sources: CEIC, Westpac. * 12mma.


Gold

• LBMA gold prices fell through Q4, weighed down by an expected, and then realised, rise in the US Federal Funds rate. In December, the US Federal Reserve increased its benchmark rate by 0.25%, the first increase in almost a decade.

• LBMA gold prices declined 8%yr in Q4 to average US$1104 per ounce. Shanghai Gold Exchange prices declined 4%yr to RMB 228 a gram in Q4.

• According to the World Metal Statistics, world gold mine production fell 1.3%ytd to 2758 tonnes in the first eleven months of 2015. Production in China—the world’s largest producer—increased 1.6%ytd to 425 tonnes.

• According to the World Gold Council, world gold demand increased 8% in Q3 2015 to 1121 tonnes. The increase was supported by a rise in China’s gold demand which increased 13%yr to 240 tonnes.

• China’s gold demand was underpinned by an increase in China’s jewellery consumption, which grew 4%yr to 188 tonnes as lower prices encouraged purchases. Demand for gold bars increased 70%yr to 52 tonnes, supported by the devaluation of the yuan and the release of commemorative coins.

• The Chinese Government’s gold reserves increased by 54 tonnes to 1762 tonnes in Q4, an increase of 3%qtr and 67%yr. Despite the growth, it is reported that gold still accounts for less than 2% of China’s total reserves.

Figure 95: Gold prices, London & Shanghai

0

100

200

300

400

500

0

400

800

1200

1600

2000

Jul 06 Jul 08 Jul 10 Jul 12 Jul 14

RMB/gUSD/oz

LBMA

SGE

Sources: LBMA, Bloomberg

Figure 96: Gold imports via Hong Kong

0

75

150

225

300

375

0

50

100

150

200

250

Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15

RMB/gtonnes

Import Volume (lhs)

SGE Price (rhs)

Sources: CEIC, Bloomberg.

Figure 83: Gold prices, London & Shanghai

Figure 84: Chinese gold imports via Hong Kong

Table 12: Gold prices (USD/oz unless specified otherwise)

LBMA spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Quarter average 1330 1272 1292 1290 1282 1201 1219 1194 1125 1104

Quarter end 1329 1206 1284 1327 1208 1185 1184 1172 1115 1061

Quarter high 1418 1353 1383 1328 1339 1249 1302 1226 1170 1184

Quarter low 1223 1189 1201 1244 1208 1141 1150 1172 1085 1051

Shanghai avg RMB/g 265 251 256 259 255 238 246 239 229 228

Shanghai avg USD/g 43 41 42 41 41 39 39 38 36 36

Sources: LBMA, Bloomberg.


• China’s gold imports via Hong Kong fell 13%ytd to 841 tonnes in the first eleven months of 2015.

• ETF stockholdings closed at 1462 tonnes in December 2015, down 9%yr. The fall likely reflects the effect of a rise in the US Federal Funds rate on the interest in gold as an investment asset. ETF holdings are typically used as a hedge against a low US dollar.

• Australia’s gold export volumes to China increased 26%yr to 53 tonnes in Q4, while the value of gold exports increased 37%yr to $A2.6 billion.

Figure 100: Gold fabrication cons. by country

Other40%

India23%

China28%

USA5%

Turkey3%

Source: World Gold Council.

Figure 88: Gold fabrication cons. by country

Figure 97: Australian gold exports to China

0

5

10

15

20

25

0

250

500

750

1000

1250

Jun-12 Jan-13 Aug-13 Mar-14 Oct-14 May-15 Dec-15

tonnesAUDmn

Volume (rhs)

Value (lhs)

Source: ABS

Figure 99: Gold output by country

Other36%

Other Africa15%

China15%

Australia9%

Russia8%

USA7%

South Africa5%

Peru5%

Source: World Bureau of Metal Statistics

Figure 98: Gold exchange traded funds

-20%

-15%

-10%

-5%

0%

5%

10%

15%

-8%

-6%

-4%

-2%

0%

2%

4%

6%


PriceETF

ETF Stocks %mth (lhs)

Price %mth (rhs)

Sources: Bloomberg, LBMA

Figure 101: Gold end-use by sector

Jewellery67%

Physical bar investment

20%

Electronics8%

Official Coins

5%

Industrial and other

0.4%

Source: World Gold Council.

Figure 85: Australian gold exports to China

Figure 87: Gold output by countryFigure 86: Gold exchange traded funds

Figure 89: Gold end–use by sectorTable 12: Gold prices (USD/oz unless specified otherwise)


Quarter average 1330 1272 1292 1290 1282 1201 1219 1194 1125 1104

Quarter end 1329 1206 1284 1327 1208 1185 1184 1172 1115 1061

Quarter high 1418 1353 1383 1328 1339 1249 1302 1226 1170 1184

Quarter low 1223 1189 1201 1244 1208 1141 1150 1172 1085 1051

Shanghai avg RMB/g 265 251 256 259 255 238 246 239 229 228

Shanghai avg USD/g 43 41 42 41 41 39 39 38 36 36



Gol

dun

itSe

p-13

Dec

-13

Mar

-14

Jun-

14Se

p-14

Dec

-14

Mar

-15

Jun-

15Se

p-15

Dec

-15

Chi

na im

port

s (v

ia H

ong

Kong

)t

377.

038

1.9

333.

520

4.1

168.

838

9.1

229.

017

8.8

241.

9na

Dom

estic

pro

duct

ion

t11

5.0

120.

496

.511

4.6

140.

710

0.1

110.

711

8.0

117.

9na

Aus

tral

ian

expo

rts

to C

hina

t43

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.947

.040

.129

.742

.539

.440

.156

.453

.4

valu

eAU

Dm

n20

32.3

2254

.721

74.1

1773

.913

17.8

1899

.019

51.9

1974

.628

00.5

2607

.6

Silv

erC

hina

impo

rts

t99

.978

.167

.890

.583

.776

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7.7

217.

033

1.9

78.7

Dom

estic

pro

duct

ion

t97

797

791

891

891

891

891

891

891

8na

Sour

ces:

CEI

C, A

BS, W

orld

Met

al S

tatis

tics.

Tabl

e 13

: Gol

d an

d si

lver

sum

mar

y da

ta


Figure 103: Silver output & fabrication demand

Other35%

Mexico22%

China13%

Peru14%

Aust7%

Russia5%

Poland4%

Production

Other32%

USA12%China

24%

India20%

Japan7%

South Korea3%

Germany2%

Fabrication

Source: The Silver Institute, Thomson Reuters GFMS.

Figure 102: Silver prices, London & Changjiang

0

3

6

9

12

15

0

10

20

30

40

50

Nov 09 Jan 11 Mar 12 May 13 Jul 14 Sep 15

RMB/gUSD/oz

London Bullion Market spot

Changjiang Silver

Source: Bloomberg

Figure 105: China’s silver end-use by sector

Jewellery19%

Electronics31%

Alloys and solders

15%

Silverware2%

Coins and bars2%

Photographic use1%

Other uses30%

Source: The Silver Institute, Thomson Reuters GFMS

Figure 104: China silver import volumes: annual

0

2000

4000

6000

8000

2003 2005 2007 2009 2011 2013 2015

tonnes

Unwrought Powder Semi-manufactured Other

Source: CEIC

Figure 91: Silver output & fabrication demandFigure 90: Silver prices, London & Changjiang

Figure 92: Chinese silver import volumes: annual Figure 93: Silver end–use by sector

Silver

Table 14: Silver prices (USD/oz unless specified otherwise)


Quarter average 21.5 20.8 20.5 19.7 19.7 19.7 16.6 16.5 14.9 14.8

Quarter end 21.7 19.5 19.8 21.0 17.0 15.7 16.7 15.7 14.5 16.1

Quarter high 24.5 22.8 22.0 21.1 21.4 21.4 18.3 17.7 15.8 13.7

Quarter low 18.9 19.1 19.2 18.8 17.0 17.0 15.5 15.7 14.7 13.9

Changjiang RMB/g 4.28 4.24 4.15 4.15 4.22 3.59 3.58 3.54 3.31 3.28

Changjiang USD/g 0.70 0.70 0.68 0.67 0.68 0.59 0.57 0.57 0.53 0.54



Copper

• The average LME copper price declined by 7%qtr in Q4 to US$4892 a tonne. LME copper closed at US$4516 on 23 November—a six year low—before rising to US$4702 at the end of December. The SHFE copper price declined by 7.4%qtr in Q4 to RMB 36,954. Despite low prices, new copper capacity continues to be commissioned. The Las Bambas copper mine in Peru, developed by China’s MMG, commenced production in January with forecast output of about 200,000 tonnes in 2016.

• LME copper stocks were 236 kt at the end of Q4 2015, up 33.2%yr and down 26.4%qtr. SHFE inventories were up 68.5%yr at the end of Q4 at 178 kt.

Figure 106: Copper prices, London & Shanghai

30

35

40

45

50

55

60

65

3

4

5

6

7

8

9

10

Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15

‘000 RMB/t‘000 USD/tLME Spot (lhs)

LME 3mth forward (lhs)

SHFE spot (rhs)


Figure 108: Copper use and supply by country

Other39%

China34%

Chile12%

Japan6%

USA5%

Russia4%

Producers


China50%

Other29%

USA8%

Germany6%

Japan4%

South Korea

3%

Consumers

Figure 107: LME Prices & inventories

0

200

400

600

800

1000

4000

5000

6000

7000

8000

9000

Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15

ktUSD/t

end of month inventories (rhs)LME spot (lhs, month average)

Sources: LME, Bloomberg.

Figure 94: Copper prices, London & Shanghai

Figure 95: LME prices & inventories Figure 96: Copper use and supply by country

Table 15: Copper prices (USD/t unless specified otherwise)

LME spot prices Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Quarter average 7073 7153 7041 6787 6994 6624 5818 6043 5259 4892

Quarter end 7291 7395 6636 6955 6736 6359 6051 5721 5093 4702

Quarter high 7341 7395 7440 7035 7184 6860 6309 6448 5762 5344

Quarter low 6719 6939 6435 6600 6736 6306 5391 5646 4888 4516

3 Month forward 7096 7161 7008 6757 6976 6568 5790 6046 5261 4885

Shanghai avg RMB/t 51690 51555 49403 49328 50273 47525 42391 44074 39913 36954

Shanghai avg USD/t 8438 8468 8097 7915 8156 7729 6799 7104 6335 5779



• China’s refined copper production decreased by 5%yr to 2.2 Mt in Q4, with smelters agreeing in December to deepen production cuts in 2016 to counter lower prices. Jiangxi and Anhui were the highest producing regions in the first eleven months of 2015, producing 1243 kt and 1141 kt respectively.

• China’s total copper imports in Q4 increased 20%yr to 2324 kt. For the full year 2015 China imported 7713 kt of copper. Chile continued to be the principal source of China’s copper imports with a 31% market share. Total imports from Chile were 2425 kt in 2015, up 13%yr.

• Australia’s copper export volumes (metal content) to China decreased 15%yr to 159 kt in Q4. Export values decreased 5%yr to $A1.1 billion.

Figure 113: Copper output by Chinese province

Other Provinces

32%

Jiangxi17%Anhui

17%

Shandong14%

Gansu12%

Yunnan7%

Zhejiang2%

Source: Bloomberg

Figure 100: Copper demand per capita

Figure 109: China’s copper import volumes

0

100

200

300

400

500

600

700

800

900

1000

May 12 Jan 13 Sep 13 May 14 Jan 15 Sep 15

kt

Other Chile Peru Australia

Scaled by metal content

Sources: Bloomberg, Department of Industry, Innovation and Science.

Figure 112: Copper demand per capita

0

2

4

6

8

10

12

14

16

18

20

10 20 30 40 50GDP per person (thousands of PPP international dollars)

China India Japan South Korea USA

Consumption kgpp

Sources: IMF, World Bureau of Metal Statistics.

Figure 110: Australian copper exports to China

0

100

200

300

400

500

600

700

800

Apr-12 Dec-12 Aug-13 Apr-14 Dec-14 Aug-150

10

20

30

40

50

60

70

80 AUDmnkt

Volume (lhs)

Value (rhs)

Source: ABS

Figure 97: Chinese copper import volumes

Figure 99: Copper end–use by sectorFigure 98: Australian copper exports to China

Figure 101: Copper output by Chinese province

Figure 111: Copper end-use by sector (2015)

Building construction

43%

Electric and electronic products

19%

Transportation equipment

19%

Consumer and general

products12%

Industrial machinery and

equipment7%

Source: United States Geological Survey.


unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

15D

ec-1

5

Chi

na im

port

skt

1731

1819

1836

1699

1725

1935

1729

1774

1886

2324

Aus

tral

iakt

135

128

165

144

140

152

116

142

123

174

Chi

lekt

519

574

542

538

438

629

569

558

580

717

Peru

kt20

021

318

218

219

620

517

219

226

730

0

othe

rkt

877

904

946

834

950

949

872

883

916

1133

Refin

ed p

rodu

ctio

nkt

1715

1909

1651

1823

2027

2321

1834

1951

2009

2205

Wor

ld s

tock

skt

1110

916

909

694

700

769

1037

934

963

n.a

wee

ks o

f sto

cks

wee

ks2.

72.

12.

21.

51.

61.

72.

52.

12.

2n.

a

Aus

tral

ian

expo

rts

to C

hina

kt12

315

412

112

812

613

810

912

214

015

9

valu

eAU

Dm

n88

812

0996

288

190

210

4577

892

110

0410

97

Sour

ces:

Bloo

mbe

rg, W

orld

Met

al S

tatis

tics,

ABS

.

Tabl

e 16

: Cop

per

sum

mar

y da

ta


Aluminium

• The LME aluminium spot price averaged US$1495/t in Q4, down 6%qtr and 24%yr. The price reached a six year low of US$1424/t on 23 November. Despite declining prices, LME stocks continued to decline, reaching a seven year low of 2890 kt at the end of December.

• China’s exports of unwrought aluminium and aluminium products increased 14%qtr to 1201 kt in Q4, but remained down 8%yr despite strong growth in production and slower growth in consumption.

• China added over 5 Mt of new aluminium smelting capacity in lower-cost regions in 2015, but also shut 4.9 Mt of capacity due to low prices, excess supply and high stocks.

Aluminium prices, LME and Shanghai

10

12

14

16

18

1.0

1.5

2.0

2.5

3.0

Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15

‘000 RMB/t ‘000 USD/t

LME Spot (lhs)


SHFE spot (rhs)


Aluminium use and supply by country (2014)

Other29%

China52%

Russia7%

Canada5%

UAE4%

India3%

Producers


Other28%

China51%

USA10%

Germany4%

Japan4%India

3%

Consumers

Aluminium – LME Prices and Inventories

2000

3000

4000

5000

6000

7000

1200

1400

1600

1800

2000

2200


ktUSD/tend of month inventories (rhs)LME spot (lhs, month average)


Figure 102: Aluminium prices, LME & Shanghai

Figure 103: LME prices & inventories Figure 104: Aluminium use & supply by country

Table 17: Aluminium and Alumina prices (USD/t unless specified otherwise)


Quarter average 1781 1769 1708 1798 1987 1966 1800 1765 1591 1495

Quarter end 1803 1765 1731 1851 1935 1832 1789 1647 1562 1508

Quarter high 1877 1849 1768 1871 2114 2099 1872 1919 1693 1608

Quarter low 1730 1695 1642 1715 1838 1828 1742 1642 1486 1424

3 Month forward 1827 1815 1752 1836 2008 1974 1813 1787 1621 1509


Shanghai avg 2345 2356 2158 2107 2282 2197 2060 2090 1904 1642

Aust FOB Alumina 318 320 328 318 323 355 342 337 292 233

China Alumina RMB/t 2500 2503 2438 2353 2435 2737 2630 2442 2272 1853



• In the first 11 months of 2015, China’s aluminium production increased 32%ytd to 29 Mt. Almost all of the increased production came from the Shandong and Xinjiang provinces, where production costs are low due to low-cost energy.

• Despite increased domestic supply, China’s aluminium imports rose 104%yr in Q4 to 73 kt. Imports from Australia rose 171%yr to 15 kt in Q4, which increased Australia’s share of China’s total imports to 21%, up from 18% a year earlier.

• In Q4, Australia’s aluminium exports to China increased 78%yr to 11 kt and export earnings increased 47%yr to $27 million.

Aluminium output by province

Other30%

Shandong25%

Xinjiang19%

Henan10%

Gansu8%

Inner Mongolia

8%

Source: Bloomberg

Figure 109: Aluminium output by province

Chinese aluminium import volumes

0

15

30

45

60

75

90

Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15

ktAustralia RussiaUAE TaiwanOther

Source: Bloomberg

0

5

10

15

20

25

30


China India Japan

South Korea USA

Consumption kgpp

Sources: IMF, World Bureau of Metal Statistics

Aluminium demand per head

Figure 118: Australian aluminium exports to China

0

4

8

12

16

20

0

10

20

30

40

50


ktAUDmn

Volume (rhs)

Value (lhs)

Source: ABS

Figure 105: Chinese aluminium import volumes

Figure 108: Aluminium demand per head

Figure 106: Australian aluminium exports to China Figure 107: Aluminium end–use by sectorAluminium end-use by sector (2014)

Transportation manufacturing

38%

Packaging22%

Construction13%

Electrical9%

Machinery8%

Consumer durables

7%

Other3%

Source: United States Geological Survey


• Alumina prices continued to decline for a fourth consecutive quarter, falling 20%qtr and 34%yr to average US$233/t (FOB Australia) in Q4. In response to lower prices, Antaike, a government-backed research agency, expects China to cut 11.4 Mt of its production capacity.

• In the first 11 months of 2015, China’s alumina production increased 20%ytd to 51 Mt, supporting increased demand from aluminium smelters.

• In Q4, China’s alumina imports increased 14%qtr to 1512 kt, the highest since Q3 2010. This was supported by a 14%qtr increase in imports from Australia, which remained China’s largest source of alumina imports, at 987 kt.

China’s alumina output by province

Shandong33%

Henan24%

Shanxi19%

Guangxi15%

Other9%

Source: Bloomberg

Figure 114: China’s alumina output by province

Alumina Prices

1500

1750

2000

2250

2500

2750

3000

150

200

250

300

350

400

450

Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15

RMB/tUSD/t

AUS Fob (lhs)CHN Met grade (rhs)

Source: Bloomberg

China47%

Oceania19%

South America13%

North America6%

Africa & Asia (ex China)

6%

West Europe5%

East & Central Europe

4%

Source: International Aluminium Institute

World alumina output

World alumina trade

Australia45%

Brazil22%

Other18%

USA5%

Ireland5%

Jamaica5%

Exports


Other38%

China19%

Canada15%

Russia12%

Norway8%

UAE7%

Imports

Figure 110: Alumina prices

Figure 113: World alumina output

Figure 111: World alumina trade Figure 112: China’s alumina imports

China’s alumina imports

0

100

200

300

400

500

600

700

800


kt

Australia Brazil India Vietnam Other

Source: Bloomberg

Alumina


• China is the world’s second largest producer of bauxite, after Australia. In the 11 months to November China produced 60 Mt, unchanged from a year earlier.

• China imported 17 Mt of bauxite in Q4, up 3%qtr and 103%yr, to support increased alumina production. Growth in China’s bauxite imports was largely attributable to Malaysia (up 312%yr) and India (up 66%yr).

• Australia was the second largest source of China’s bauxite imports in Q4, with a market share of 26%, down from 50% a year earlier. While imports from Australia increased 7%yr in Q4, imports from Australia have been displaced by Malaysia, which increased its market share to 48% in Q4, up from 24% a year earlier.

• Malaysia’s government introduced a three month moratorium on bauxite mining in Pahang on 15 January to begin to address growing environmental concerns and illegal mining. Pahang is responsible for 70% of Malaysia’s bauxite production. This is likely to lead Chinese alumina producers to draw down on bauxite stocks in the short term.

• In Q4, Australia’s bauxite exports to China declined 3.5%yr to 4.8 Mt and export earnings increased 10%yr to $251 million.

Figure 118: World bauxite trade

China’s bauxite imports by source

0

1

2

3

4

5

6

7

8

9


MtIndonesia India Australia Malaysia Other

Source: Bloomberg

World bauxite output (2014)

Australia30%

China25%

Other16%

Brazil14%

India8%

Guinea7%


Figure 128: Australia’s bauxite exports to China

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0


10

20

30

40

50

60

70

80

90

100Mt AUDmn

Volume (lhs)Value (rhs)

Source: ABS

Figure 117: World bauxite output

Figure 116: Australia’s bauxite exports to China

World bauxite trade (2014)

Australia38%

Guinea22%

Brazil19%

India12%

Other9%

Exports

Source: World Bureau of Metal Statistics.

China53%

USA18%

Other12%

Ireland6%

Canada6%

Ukraine5%

Imports

Bauxite

Figure 115: China’s bauxite import by source


Alu

min

ium

unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

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Chi

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skt

137.

719

3.0

175.

596

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31.7

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18.9

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12.7

15.3

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13.1

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Russ

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28.9

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29.6

24.2

16.9

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4.3

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64.0

97.7

78.8

52.3

26.8

21.2

18.6

36.8

52.9

56.8

Refin

ed p

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ctio

nkt

5560

5837

5755

5747

6045

6393

7205

8010

8185

na

Wor

ld s

tock

skt

7089

7171

7377

7145

6738

6428

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4549

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97.

97.

36.

96.

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34.

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0.7

455.

455

4.5

869.

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6.9

Chi

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pro

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Mt

11.6

11.2

11.2

11.5

11.7

12.6

13.3

14.2

14.3

na

Baux

ite

Chi

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port

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t21

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68.

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23.

43.

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74.

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24.

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00.

00.

21.

12.

02.

55.

58.

08.

2

Aus

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ian

expo

rts

to C

hina

Mt

4.2

4.0

2.5

3.9

4.7

5.0

4.7

5.1

5.2

4.8

valu

eAU

Dm

n14

9.5

150.

687

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0.9

181.

722

7.5

234.

725

6.9

267.

725

0.6

Sour

ces:

Bloo

mbe

rg, W

orld

Met

al S

tatis

tics,

ABS

.

Tabl

e 18

: Alu

min

ium

, alu

min

a an

d ba

uxite

sum

mar

y da

ta


Nickel

• The LME nickel price averaged US$9437 in Q4, down 40%yr and 11%qtr. This is the lowest quarterly price recorded in 12 years, underpinned by persistently high stocks, low consumption growth and a lack of any significant reductions in production in response to declining prices.

• In Q4, LME stocks declined by 2%qtr to a still high 445 kt, while SHFE stocks increased 89%qtr to 48 kt. China port stocks of nickel ore are estimated to have decreased by 32%ytd to 15.8 Mt at the end of November 2015.

• China’s refined nickel production decreased by 1%ytd in the first ten months of 2015 to 297 kt. Production in Gansu increased 5%ytd

Nickel prices, London and Shanghai

40

80

120

160

200

5

10

15

20

25


‘000 RMB/t‘000 USD/t

LME Spot (lhs)LME 3mth forward (lhs)SHFE Spot (rhs)

Sources: LME; Bloomberg

Nickel end use and supply by country

China33%

Other31%

Russia12%

Japan9%

Canada8%

Australia7%

Producers


China45%

Other27%

Japan9%

USA9%

South Korea

6%

Taiwan4%

Consumers

LME prices and inventories

75

175

275

375

475

5

10

15

20

25

Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16

kt‘000 USD/t

end of month inventories (rhs)LME spot (lhs, month average)


Figure 119: Nickel prices, London & Shanghai

Figure 120: LME prices & inventories Figure 121: Nickel use and supply by country

Table 19: Nickel prices (USD/t unless specified otherwise)


Quarter average 13916 13909 14643 18465 18576 15799 14338 13008 10561 9437

Quarter end 13860 13970 15735 18715 16505 14935 12460 11680 10070 8665

Quarter high 14775 14635 16225 21200 19795 16825 15455 14415 12060 10710

Quarter low 13160 13270 13365 15780 16505 14650 12460 11680 9305 8160

3 Month forward 13996 13979 14693 18512 18669 15877 14400 13055 10611 9481





to 12.7 kt, while production in Guangxi and Jiangxi fell 71%ytd to 4.4 kt and 33%ytd to 21.6 kt respectively.

• The value of China’s nickel imports increased by 21%yr in Q4 to US$1.5 billion. China’s nickel imports from Russia increased by 342%yr to $US644 million, while China’s imports from the Philippines and Australia fell 55%yr and 33%yr respectively to US$313 million and US$48 million.

• The value of Australia’s nickel exports to China is estimated to have decreased by 22%yr in Q4 to $A741 million.

Nickel output by province

Other43%

Gansu44%

Jiangxi8%

Guangxi2% Xinjiang

3%

Source: Bloomberg

Figure 125: Nickel demand per capita

Chinese nickel import values

0

250

500

750

1000

1250

Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15

USDmn

Indonesia Russia PhilippinesAustralia Other Canada

Source: Bloomberg

Nickel end-use by sector

Stainless and alloy

steel production

45%Nonferrous alloys and

superalloys43%

Electroplating7%

Other5%


Nickel demand per capita

0.0

0.5

1.0

1.5

2.0

2.5


ChinaIndiaJapanSouth KoreaUSA

Consumption kgpp


Figure 122: Chinese nickel import values

Figure 124: Nickel end–use by sectorFigure 123: Nickel output by province

Figure 126: World trade in nickelWorld trade in nickel

Russia40%

Other18%

Australia15%

Canada13%

Norway9%

Singapore5%

Exports


Other31%

China19%

USA18%

Germany9%

Singapore15%

India8%

Imports


unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

15D

ec-1

5

Chi

na im

port

sU

SDm

n17

6620

9515

8516

2523

1412

5190

419

1819

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332

640

239

614

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633

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550

735

941

8

Refin

ed p

rodu

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n*kt

6987

7590

9910

282

9391

na

LME

stoc

kskt

248

282

284

305

358

415

433

457

453

441

wee

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f sto

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wee

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27.

68.

59.

110

.713

.814

.711

.316

.216

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to C

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kt67

.259

.248

.750

5762

5768

66na

valu

eAU

Dm

n82

173

673

192

910

0294

887

375

678

974

1

Sour

ces:

Bloo

mbe

rg, W

orld

Met

al S

tatis

tics,

Inte

rnat

iona

l Nic

kel S

tudy

Gro

up, C

EIC

.

* N

ote:

Refi

ned

prod

uctio

n da

ta s

erie

s no

long

er in

clud

es s

mel

ter o

utpu

t and

has

bee

n re

vise

d.

Tabl

e 20

: Nic

kel s

umm

ary

data


Zinc

• The LME zinc spot price averaged US$1613 in Q4, a decline of 13%qtr and 28%yr. The ongoing decline in prices has been underpinned by a fall in stainless steel production and generally pessimistic commodity market sentiment. However, towards the end of Q4, prices stabilised in response to declining stocks. World production has been affected by mine closures and reductions in production, driven by ore depletion and low prices.

• LME stocks decreased 21%qtr to end the year at 464 kt. However, stocks held at the SHFE increased 20%qtr to 200 kt.

• China’s refined zinc production increased 10%ytd to 5.2 Mt in the first 10 months of

Figure 139: Zinc prices, London and Shanghai

5

10

15

20

25

30

0.5

1.0

1.5

2.0

2.5

3.0


‘000 RMB/t ‘000 USD/t

LME Spot (lhs)


SHFE spot (rhs)


Figure 141: Zinc use and supply by country (2014)

China43%

Other36%

South Korea7%

India5%

Canada5% Japan

4%

Producers


China47%

Other32%

USA7%

South Korea

5%

India5% Japan

4%

Consumers

Figure 140: LME prices & inventories

400

600

800

1000

1200

1400

1500

1700

1900

2100

2300

2500


ktUSD/tend of month inventories (rhs)

LME spot (lhs, month average)Sources: LME, Bloomberg.

Figure 127: Zinc prices, London & Shanghai

Figure 128: LME prices & inventories Figure 129: Zinc use and supply by country

Table 21: Zinc prices (USD/t unless specified otherwise)


Quarter average 1859 1907 2029 2073 2311 2235 2080 2190 1847 1613

Quarter end 1877 2086 1981 2205 2290 2167 2076 1994 1657 1600

Quarter high 1956 2116 2156 2205 2420 2335 2184 2405 2096 1835

Quarter low 1793 1828 1942 2073 2194 2114 1985 1994 1587 1462

3 Month forward 1896 1932 2027 2079 2314 1932 2092 2192 1855 1634





2015. Growth was particularly strong in Shaanxi where production increased 17%ytd to 808 kt and Gansu where production increased 64%ytd to 336 kt.

• China’s total zinc imports (refined and ore) increased 28%ytd in the first 11 months of 2015 to 1.7 Mt as consumers took advantage of lower prices. Imports from Australia increased 39%ytd to 594 kt. Imports from Peru increased 55%ytd to 386 kt, while imports from Turkey decreased 41%ytd to 11 kt.

• Australia’s zinc exports (by metal content) to China increased 40%yr to 285 kt, with export earnings growing by 34%yr to $A469 million in Q4.

Figure 146: Zinc output by province (2014)

Other29%

Hunan20%

Yunnan20%

Shaanxi16%

Guangxi7%

Inner Mongolia

8%

Source: Bloomberg

Figure 133: Zinc demand per capita

Figure 142: China’s zinc import volumes

0

50

100

150

200

250

Jul 12 Mar 13 Nov 13 Jul 14 Mar 15 Nov 15

kt

Other Australia Kazakhstan Peru Turkey

Source: ILZSG


Figure 144: Australian zinc exports to China

0

30

60

90

120

150

180

0

20

40

60

80

100

120


AUDmnkt

Volume (lhs) Value (rhs) Source: ABS

Figure 145: Zinc demand per capita

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0


China

India

Japan

South Korea

USA

Consumption kgpp


Figure 130: Chinese zinc import volumes

Figure 132: Australian zinc exports to China

Figure 134: Zinc output by province

Figure 143: China’s zinc imports by type

0

50

100

150

200

250

Jul 12 Mar 13 Nov 13 Jul 14 Mar 15 Nov 15

kt

Ores and concentrates (metal content) Refined

Source: ILZSG


Figure 131: Chinese zinc imports by type


unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

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ec-1

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ar-1

5Ju

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Sep-

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Chi

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65.7

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117.

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16.2

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171.

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3.3

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2.8

117.

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Refin

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44.6

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05.6

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07.3

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12.7

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25.

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219

515

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Met

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tatis

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l Lea

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up, A

BS.

Tabl

e 22

: Zin

c su

mm

ary

data


LeadFigure 148: China’s lead import volumes

0

20

40

60

80

100

120

140

Apr 12 Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15

ktOther Peru USARussia Australia

Source: ILZSG

Figure 147: LME prices & inventories

100

175

250

325

400

475

1500

1800

2100

2400

2700

3000

Oct 12 Apr 13 Oct 13 Apr 14 Oct 14 Apr 15 Oct 15

ktUSD/tend of month inventories (rhs)

LME spot (lhs, month average)Sources: LME, Bloomberg

Figure 150: World trade of lead

Other49%

Australia12%

South Korea12%

Canada11%

Belgium8%

Mexico8%

Exports


Other47%

USA28%

South Korea

8%

Germany6%

India6%

Spain5%

Imports

Figure 149: Australia’s lead exports to China

0

20

40

60

80

100

120

0

5

10

15

20

25

30

35


kt AUDmn

volume (lhs) value (rhs) Source: ABS

Figure 136: Chinese lead import volumesFigure 135: LME prices & inventories

Figure 137: Australian lead exports to China Figure 138: World trade in lead

Table 23: Lead prices (USD/t unless specified otherwise).


Quarter average 2102 2111 2106 2096 2181 2000 1806 1942 1714 1681

Quarter end 2075 2206 2041 2129 2083 1853 1808 1754 1656 1802

Quarter high 2238 2259 2212 2160 2269 2095 1882 2140 1857 1817

Quarter low 2017 2027 2008 2016 2051 1814 1696 1742 1625 1555

3 Month forward 2116 2134 2127 2120 2194 2009 1817 1952 1725 1689





unit

Sep-

13D

ec-1

3M

ar-1

4Ju

n-14

Sep-

14D

ec-1

4M

ar-1

5Ju

n-15

Sep-

15D

ec-1

5

Chi

na im

port

skt

227.

924

2.5

224.

021

3.8

284.

827

3.0

220.

419

7.0

238.

3na

Aus

tral

iakt

25.7

29.6

49.6

28.8

47.8

52.0

39.1

31.6

28.9

na

Peru

kt10

.89.

017

.62.

618

.326

.118

.427

.230

.1na

Russ

iakt

30.9

40.0

23.1

25.9

14.8

34.2

23.6

19.9

21.8

na

USA

kt44

.046

.56.

126

.666

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.523

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.2na

Mex

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kt7.

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113

.1na

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rkt

111.

411

0.6

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128.

175

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0.3

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na

Refin

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nkt

1152

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40.8

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05.2

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64.7

995.

210

71.6

951.

9na

Wor

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tock

skt

603

586

562

542

577.

356

0.1

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7.6

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.451

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.8

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: Lea

d su

mm

ary

data


China’s tin output by province

Yunnan55%Hunan

24%

Jiangxi13%

Guangxi6%

Other2%

Source: Bloomberg

Figure 144: China’s tin output by province

LME prices and inventory

0

6

12

18

24

30

10

15

20

25

30

35


kt‘000 USD/t

end of month inventories (rhs)

LME spot (lhs, month average)


Tin use by sector

Cans and containers

23%

Construction18%

Transport equipment

17%

Electrical12%

Other30%


World tin producers and consumers

Other12%

China51%

Indonesia20%

Peru6%

Bolivia6%

Myanmar5%

Producers


Other26%

China50%

USA8%

Japan7%

Germany5%

South Korea

4%

Consumers

Tin prices

50

100

150

200

250

10

15

20

25

30

Aug 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Aug 15

‘000 RMB/t‘000 USD/tLME Spot (lhs)


SHFE spot (rhs)


Figure 140: LME prices and inventory

Figure 143: Tin use by sector

Figure 141: World tin producers and consumers

Figure 139: Tin prices

Figure 142: China’s tin imports by source

China Tin Imports

0.00

1.00

2.00

3.00

4.00

5.00


kt

Other Indonesia Singapore South Korea Taiwan

Source: Bloomberg

Tin


World molybdenum output

China43%

USA22%

Chile16%

Other9%

Peru6%

Mexico4%


Figure 150: World molybdenum output

China’s molybdenum ore imports

0

10

20

30

40

50

60

0.0

0.5

1.0

1.5

2.0

2.5

3.0


USDmnkt

Volume (lhs)

Value (rhs)

Source: CEIC

China’s molybdenum production

0

2

4

6

8

10

12

14

Apr 12 Dec 12 Aug 13 Apr 14 Dec 14 Aug 15

ktSources: CEIC, Department of Industry, Innovation and Science.

China’s molybdenum articles exports

0

5

10

15

20

25

30

35

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7


USDmnktVolume (lhs)Value (rhs)

Source: CEIC

Figure 146: China’s molybdenum ore imports

Figure 149: China’s molybdenum production

Figure 147: China’s molybdenum articles exports Figure 148: China’s molybdenum ore exports

China’s molybdenum ore exports

0

7

14

21

28

35

42

0.0

0.5

1.0

1.5

2.0

2.5

3.0



Source: CEIC

Molybdenum

Molybdenum prices

10

15

20

25

30

35

40

Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16

‘000 USD/t

LME Spot


Figure 145: Molybdenum prices


China’s tungsten product exports

0.0

0.5

1.0

1.5

2.0

2.5

3.0


20

40

60

80

100

120kt USDmn

Volume (rhs)Value (lhs)

Source: Bloomberg

Figure 156: China’s tungsten output (metal content)

China’s tungsten articles imports

0

3

6

9

12

15

18

21

0

10

20

30

40

50

60

70


USDmntonnes

Volume (lhs)

Value (rhs)

Source: CEIC

World tungsten output

China 87%

Russia3%

Other4%

Canada3%

Rwanda2%

Bolivia1%


China’s tungsten and articles exports

0

4

8

12

16

20

24

28

32

36

0

50

100

150

200

250

300

350

400

450


USDmntonnes

Volume (lhs)

Value (rhs) Source: CEIC

China’s tungsten ore imports

0

4

8

12

16

20

24

0.0

0.2

0.4

0.6

0.8

1.0

1.2



Source: CEIC

Figure 152: China’s tungsten articles imports

Figure 155: World tungsten output

Figure 153: China’s tungsten and articles exports

Figure 151: China’s tungsten ore imports

Figure 154: China’s tungsten products exports

China’s tungsten output (metal content)

0

2

4

6

8

10

12


kt

Sources: CEIC, Department of Industry, Innovation and Science.

Tungsten


Cobalt use by sector

Superalloys47%

Chemical applications

27%

Metallic applications

17%

Cemented carbides

9%


Figure 162: Cobalt use by sector

China’s cobalt ores imports

0

15

30

45

60

0

8

16

24

32

Jul-12 Apr-13 Jan-14 Oct-14 Jul-15

USDmnkt

Volume (lhs)

Value (rhs)

Source: CEIC

World cobalt refined output

China46%

Other24%

Finland13%

Canada 6%

Zambia5%

Australia6%

Source: World Metal Statistics

China’s cobalt and articles imports

0

25

50

75

100

125

0

5

10

15

20

25


USDmnktVolume (lhs) Value (rhs)

Source: CEIC

Figure 158: China’s cobalt ore imports

Figure 161: World cobalt refined output

Figure 159: China’s cobalt articles imports Figure 160: World cobalt mine outputWorld cobalt mine output

Congo50%

Other26%

Canada6%

China6%

Russia6%

Australia6%


Cobalt

Cobalt Prices - daily

150

200

250

300

350

400

20

25

30

35

40

45

Apr 12 Dec 12 Aug 13 Apr 14 Dec 14 Aug 15


LME Spot (lhs)


SHFE spot (rhs)


Figure 157: Cobalt prices


World antimony mine output

China78%

Other8%

Tajikistan5%

Russia4%

Bolivia4%

Myanmar1%


Figure 168: World antimony mine output

China’s antimony ore imports

0

6

12

18

24

30

0

2

4

6

8

10


USDmnkt

Volume (lhs)

Value (rhs)Source: CEIC

China’s antimony mine output

0

5

10

15

20

25

30

35

40

45


kt

Source: CEIC

China’s unwrought antimony exports

0

5

10

15

20

0.0

0.5

1.0

1.5

2.0


USDmnkt

Volume (lhs)

Value (rhs)

Source: CEIC

Antimony prices

0

20

40

60

80

100

120

0

3

6

9

12

15

18



Metal Bulletin China Free Market (lhs)

SHFE spot (rhs)

Source: Bloomberg

Figure 164: China’s antimony ores imports

Figure 167: China’s antimony mine output

Figure 165: China’s unwrought antimony exports

Figure 163: Antimony prices

Figure 166: Australian antimony exports to China

Australian antimony exports to China

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-150.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0kt AUDmn

volume(lhs)

value (rhs)

Source: ABS

Antimony


Autocatalysts37%

Jewellery31%

Glass7%

Chemical6%

Investment6%

Electrical3%Medical and

biomedical3%

Petroleum3%

Other4%


Platinum end uses by sectorFigure 174: Platinum end use by sector

Palladium prices

400

500

600

700

800

900

1000

100

120

140

160

180

200

220


RMB/gUSD/troy oz

Spot (lhs)SHFE spot (rhs)

Source: Bloomberg

World platinum output

South Africa66%

Russia17%

Zimbabwe9%

Canada4%

USA3%

Other1%


China’s platinum Imports

0

2

4

6

8

10

12

14


tonnesOther Germany JapanRussia South Africa Switzerland

Source: Bloomberg

Figure 170: Palladium prices

Figure 173: World platinum output

Figure 171: China’s platinum imports Figure 172: China’s platinum exports

China’s platinum exports

0

5

10

15

20

25

30

0

100

200

300

400

500

600


USDmnkg

Volume (lhs)

Value (rhs)

Source: Bloomberg

Platinum & Palladium

Platinum prices

800

900

1000

1100

1200

1300

1400

1500

1600

1700

1800


USD/troy oz

Source: Bloomberg

Figure 169: Platinum prices


Australian ilmenite exports to China

0

10

20

30

40

50

0

50

100

150

200

250

H209 H210 H211 H212 H213 H214 H215

%kt

Volume (lhs)Share to China (rhs) Source: Based on ABS

Figure 180: Australian ilmenite exports to China

China’s titanium dioxide exports

0

25

50

75

100

125

150

0

10

20

30

40

50

60


USDmnkt

Titanium white Value (rhs)Source: CEIC

Australian zirconium exports to China

0

10

20

30

40

50

60

70

80

0

50

100

150

200

250

300

350

400

H209 H210 H211 H212 H213 H214 H215

%ktVolume (lhs)Share to China (rhs)

Source: Based on ABS

Aust titanium dioxide exports to China

0

3

6

9

12

15

18

21

0

1

2

3

4

5

6

7


AUDmnkt

Volume (lhs)

Value (rhs)

Source: ABS

China’s titanium dioxide imports

0

18

36

54

72

90

0

5

10

15

20

25


USDmnktTitanium whiteOtherValue (rhs)

Source: CEIC

Figure 176: China’s titanium dioxide exports

Figure 179: Australian zirconium exports to China

Figure 177: Aust titanium dioxide exports to China

Figure 175: China’s titanium dioxide imports

Figure 178: Australian rutile exports to ChinaAustralian rutile exports to China

0

4

8

12

16

20

24

28

32

0

5

10

15

20

25

30

35

40

H209 H210 H211 H212 H213 H214 H215

%kt

Volume (lhs)

Share to China (rhs)

Source: Based on ABS

Mineral Sands


Yttrium oxide exports

0

2

4

6

8

10

12

14

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Sep-12 Jun-13 Mar-14 Dec-14 Sep-15

USmnKt

Volume (lhs)

Value (rhs)

Source: CEIC

Figure 186: Yttrium oxide export

Cerium oxide & hydroxide exports

0

3

6

9

12

15

18

21

24

27

30

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1


USmnKt

Volume (lhs)Value (rhs)

Source: CEIC

Europium oxide exports

0

1

2

3

4

5

6

7

8

9

10

0

0.0001

0.0002

0.0003

0.0004

0.0005

0.0006

0.0007

0.0008

0.0009

0.001


USmnKt

Volume (lhs)

Value (rhs)

Source: CEIC

Lanthanum oxide exports

0

13

25

38

50

63

75

88

100

0

0.5

1

1.5

2

2.5

3

3.5

4


USmnKt

Volume (lhs)

Value (rhs)

Source: CEIC

Figure 182: Cerium oxide & hydroxide exports

Figure 185: Europium oxide exports

Figure 183: Lanthanum oxide exports Figure 184: Neodymium oxide exports

Neodymium oxide exports

0

4

8

12

16

20

0

0.04

0.08

0.12

0.16

0.2


USmnKt

Volume (lhs)

Value (rhs)

Source: CEIC

China’s exports of rare earth oxidesChina’s total rare earth oxides exports

0

1

2

3

4

5

6

Sep-12 Sep-13 Sep-14 Sep-15

KtCerium Oxide and HydroxideLanthanum OxideYttrium OxideNeodymium OxideEuropium Oxideother

Source: CEIC

Figure 181: China’s total rare earth oxides exports


World cadmium consumption

China33%

Belgium31%

Other15%

Japan12%

Sweden6%

USA3%


Figure 192: World cadmium consumption

China’s manganese ore imports

100

150

200

250

300

350

400

600

850

1100

1350

1600

1850

2100

Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15

USDmnkt

Volume (lhs) Value (rhs)Source: Bloomberg

World cadmium production

China33%

Other30%

South Korea17%

Japan8%

Kazakhstan6%

Mexico6%


Australian manganese exports to China

0

20

40

60

80

100

120

140

160

0

100

200

300

400

500

600

700

800


AUDmnkt

Volume (lhs) Value (rhs)

Source: ABS

Manganese and Cadmium Prices

50

100

150

200

250

300

350

0

5

10

15

20

25

30


‘000 USD/t‘000 RMB/t

Maganese - Shanghai price (lhs)

Metal Bulletin Cadmium price (rhs)

Source: Bloomberg

Figure 188: China’s manganese ore imports

Figure 191: World cadmium production

Figure 189: Australian manganese exports to China

Figure 187: Manganese & cadmium prices

Figure 190: World manganese mine outputWorld Manganese mine output

China26%

South Africa26%

Other22%

Australia14%

Gabon7%

Brazil5%


Manganese & Cadmium


Shares of world magnesium output

China88%

USA4%

Russia3%

Israel3%

Kazakhstan2%


Figure 198: Shares of world magnesium output

World diamond imports

India38%

UAE17%

China4%

Israel3%

other9%

Volume

European Community

29%

India30%

UAE11%

UAE9%

Israel9%

Botswana7%

China5%

Value

European Community

28%

Source: Kimberley Process Certification Scheme

China’s magnesium exports

35

50

65

80

95

110

125

10

15

20

25

30

35

40


USDmnkt

Volume (lhs)

Value (rhs)

Source: CEIC

World diamond output

Russia41%

Other11%

Congo, Democratic Republic of

8%

Canada6%

Australia5%

Zimbabwe3%

Volume

Botswana26%

Russia34%

Canada9%

Angola9%

Other6%

South Africa

6%

Namibia5%

Value

Botswana33%


Figure 194: World diamond imports

Figure 197: China’s magnesium exports

Figure 195: World diamond output Figure 196: Magnesium pricesMagnesium Prices

5

10

15

20

25

1800

2200

2600

3000

3400


‘000 RMB/tUSD/tonne

Metal Bulletin Spot (lhs)

SHFE spot (rhs)

Source: Bloomberg

Diamonds & MagnesiumWorld diamond exports

UAE16%

India8%

Russia9%

Botswana12%

Congo, Republic

of3%

Other24%

VolumeUAE14%

Botswana16%

Russia8%

Israel7%

Switzerland5%

Other23%

ValueEuropean

Community29%

European Community

27%


Figure 193: World diamond exports


Table 25: China mineral and energy import summary

unit Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Iron ore Mt 222.0 235.3 242.1 233.6 227.1 226.0 246.3 253.9

from Australia Mt 118.2 138.2 149.4 142.7 144.4 146.8 158.5 157.9

Australian share % 53 59 61.7 61.1 63.6 65.0 64.4 62.2

Thermal coal Mt 71.0 58.1 49.7 50.4 38.1 40.1 41.7 36.2


Australian share % 22 26 35 30 28 32 29 28

Metallurgical coal Mt 13.0 18.1 13.4 18.0 10.9 10.7 14.8 11.6



Aluminium kt 175.5 96.1 51.5 30.5 34.4 45.9 70.0 73.4

from Australia kt 48.0 18.9 7.0 5.6 7.7 2.7 12.7 15.3


Alumina kt 1484 1281 1158 1354 933 880 1329 1512

from Australia kt 1184 655 523 791 455 555 869 987


Bauxite Mt 13.1 6.6 8.4 8.4 10.1 12.6 16.5 17.0



Copper kt 1836 1699 1725 1935 1729 1774 1886 2324



Table 25 continued on page 61


Table 25 continued:

unit Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Oil Mt 74.7 77.2 76.5 79.9 80.3 83.0 85.3 86.9


Australian share % 1.0 0.9 1.0 0.7 0.7 0.7 0.6 0.8

Gas (LNG) kt 5629 4297 4811 5155 5127 4392 4627 5522



Zinc kt 431.0 347.2 353.0 370.3 391.0 410.3 506.1 na

from Australia kt 138.5 119.5 111.4 125.1 116.7 141.2 165.8 na

Australian share % 32 34 32 34 30 34 33 na

Nickel USDmn 1585 1625 2314 1251 904 1918 1951 1510

from Australia USDmn 67 112 99 71 81 87 97 48


Lead kt 224.0 213.8 284.8 273.0 220.4 197.0 238.3 na

from Australia kt 49.6 28.8 47.8 52.0 39.1 31.6 28.9 na

Australian share % 22 13 17 19 18 16 12 na

Tin kt 2.0 2.0 2.3 2.5 1.6 2.9 3.0 2.9

from Australia kt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


Uranium t 4045 6801 4985 9281 2041 5659 7505 7439

Sources: CEIC, Bloomberg, IHS.


Electricity generation and consumption

Electricity consumption by region, 2014

N/A or negligible

<80 billion KWh 80–

160 billion KWh 160–

300 billion KWh >300

billion KWh Source: CEIC

Figure 200: Electricity consumption by region, 2014

Figure 199: Electricity generation by region, 2015

Electricity generation by region, 2015

N/A or negligible

<100 billion KWh

100–200 billion KWh

200–300 billion KWh

>300 billion KWh Source: CEIC


Coal and gas

Gas production by region, 2015

N/A or negligible

<0.5 Bcm

0.5–3 Bcm

3–10 Bcm

>10 Bcm Source: CEIC

Coal production by region, 2015 (estimated)

N/A or negligible

<60 Mt

60–120 Mt 121–

180 Mt

>181 Mt Source: CEIC

Figure 202: Gas production by region, 2015

Figure 201: Coal production by region, 2015 estimate


Ferrous metals

Crude steel production by region, 2015

N/A or negligible

<1.5 Mt

1.5–2.5 Mt

2.5–10 Mt

>10 Mt Source: Bloomberg

Figure 204: Crude steel production by region, 2015

Iron ore production by region, 2015

N/A or negligible

<2 Mt

2–5 Mt

5–10 Mt

>10 Mt Source: Bloomberg

Figure 203: Iron ore production by region, 2015


Alumina and aluminium

Aluminium production by region, 2014

N/A or negligible

<100 kt

100–500 kt 500–

2000 kt

>2000 kt Source: Bloomberg

Alumina production by region, 2013

N/A or negligible

<2 Mt

2–5 Mt

5–10 Mt

>10 Mt Source: CEIC

Figure 206: Aluminum production by region, 2014

Figure 205: Alumina production by region, 2014


Copper and gold

Mined gold production by region, 2014

N/A or negligible

<1.5t

1.5-2.5t

2.5-10t

>10t Source: CEIC

Figure 208: Mined gold production by region, 2014

Copper production by region, 2014

N/A or negligible

<50 kt

50–200 kt

200–500 kt


Figure 207: Copper production by region, 2014


Nickel and zinc

Zinc production by region, 2015

N/A or negligible

<100 kt

100–500 kt 500–

1000 kt


Figure 210: Zinc production by region, 2015

Nickel production by region, 2015

N/A or negligible

<3 kt

3–10 kt

10–30 kt


Figure 209: Nickel production by region, 2015


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