cicc - commodities – still a structural story

Please read carefully the important disclosures at the end of this report

Sector Focus

September 16, 2011 Thematic COMMODITIES RESEARCH

Commodities – Still a Structural Story?The Implications of China’s 12th Five Year Plan

Janet Qingying KONG SFC CE Ref : ALV398 [email protected]

James LUKE [email protected]

Shuo ZHANG [email protected]

Zheng LIU [email protected]

Chaohui GUO [email protected]

At the beginning of the Chinese 12th Five Year Plan, two questions have been frequentlyasked regarding the impact of China’s economic transformation on the global commodity outlook: 1) Would Chinese growth decelerate and become less commodity-intensive? And, 2) Would such an economic transformation necessarily mark the end of the current structural boom? Our analysis suggests that:

Both Chinese oil and copper intensity of use (IOU) are likely to trend lower during the next five years, given policy emphasis on consumption, energy conservation and environmental protection. However, oil intensity will likely decline at a lower rate than that seen during the 11th FYP period while copper intensity will likely remain above the 2000~2010 average.

Nonetheless, we expect the structural cycle to continue and prices to remain at highlevels, on account of: 1) Global oil IOU will likely return to above trend growth as technological and political constraints on capacity expansion limit supply growth; and, 2) global copper IOU will likely stay above trend until at least 2013 given the ongoing EM urbanization, and the structural strength could last beyond this point if supply growth disappoints.

The main risk to our view is a sharp slowdown of the global economy. A significant slowdown in global commodity demand will postpone the resumption of the structural oil cycle and bring forward the end of the copper cycle earlier than expected. However, as long as EM economic growth continues to be robust and DM economies avoid a recession, the current strength in commodities will likely be sustained.

渐飞研究报告 - http://bg.panlv.net

CICC Research: September 16, 2011

Please read carefully the important disclosures at the end of this report 2

Contents

The commodity structural cycle is set to continue.................................................................................... 3 The driver of the structural cycle................................................................................................................. 6 Chinese commodity intensity of use during the 12th FYP ......................................................................... 9 Global commodity trends in the next five years....................................................................................... 12 Appendix: The 12th Five Year Plan for commodities ................................................................................ 15

Figures

Figure 1: Oil prices since 1960 ...................................................................................................................................3 Figure 2: Copper prices since 1960............................................................................................................................3 Figure 3: Chinese oil IOU is likely to decline at a lower rate than that during the 11th FYP period….........................4 Figure 4: …while copper’s IOU is likely to fall, but remain above the 2000~2010 average.......................................4 Figure 5: Global oil IOU will likely return to above trend growth in 2012…. ...............................................................4 Figure 6: …while global copper IOU will not fall below the trend growth until 2013...................................................4 Figure 7: Global oil IOU rises at the early stage of a country’s industrialization….....................................................6 Figure 8: …as does that of copper .............................................................................................................................6 Figure 9: China’s oil consumption has increased significantly since 2000… .............................................................7 Figure 10: …while China’s copper consumption grew even faster ............................................................................7 Figure 11: Oil IOU and commodity cycles...................................................................................................................7 Figure 12: Copper IOU and commodity cycles...........................................................................................................7 Figure 13: The share of investment in Chinese GDP has increased significantly since 2000…................................8 Figure 14: …driving Chinese copper IOU higher........................................................................................................8 Figure 15: Primary energy intensity is expected to decline… ....................................................................................9 Figure 16: Chinese primary energy consumption in the next five years (base case).............................................. 10 Figure 17: Chinese copper consumption in the next five years (base case)............................................................11 Figure 18: Global Oil demand/IOU in the next five years ........................................................................................ 12 Figure 19: Copper consumption of Western countries will likely continue to decline… .......................................... 13 Figure 20: …while copper consumption of developing markets will likely grow robust........................................... 13 Figure 21: Ore grade has declined significantly ...................................................................................................... 14 Figure 22: On paper, >60% of mine supply increments are expected to come from new projects ......................... 14 Figure 23: Urbanization rate is currently at 49.7%... ............................................................................................... 16 Figure 24: …but still low compared to other countries, meaning great potential for further improvements ............ 16 Figure 25: China will make use of the increasing competitiveness of Inland regions ............................................. 16 Figure 26: lower capital stocks of inland regions means more investment is needed ............................................ 16 Figure 27: Energy consumption during the 11th FYP period.................................................................................... 16 Figure 28: Working population is still high, indicating investment and saving will stay high ................................... 16 Figure 29: Planned policy housing starts are concentrated in 2011 and 2012........................................................ 17 Figure 30: Public rental and low rental housing will the main form ......................................................................... 17 Figure 31: Total new housing starts of 5% since 2013 currently expected.............................................................. 18 Figure 32: CICC’s property team expects nominal investment growth to remain at high levels ............................. 18 Figure 33: Grid investment lagged behind power generation investment in the 2000s .......................................... 19 Figure 34: Grid investment could total at Rmb2.2trn during the 12th FYP period.................................................... 19 Figure 35: Rural white goods ownership maintains fast growth .............................................................................. 19 Figure 36: Rural consumption has much upside potential....................................................................................... 19 Figure 37: CICC’s forecast of white goods sales growth in real terms.................................................................... 20 Figure 38: Chinese automobile ownership is still low… .......................................................................................... 20 Figure 39: Western regions have greater potential ................................................................................................. 20




The commodity structural cycle is set to continue

Commodities have been in a structural boom market since early last decade. From January 2003 to July 2008, both Brent oil and LME copper prices rose at an average annual rate of 32%, even though the global financial crisis briefly interrupted their upwards momentum. Since January 2009, oil prices have increased cumulatively by 150% from the bottom, and copper prices by 190% as global demand has recovered and investors have remained enthusiastic about the prospects of commodities as an asset class (Figures 1 & 2).

Figure 1: Oil prices since 1960 Figure 2: Copper prices since 1960

Source: Bloomberg, BP, CICC Research Source: Bloomberg, Brook Hunt, CICC Research

The outlook for the cycle depends largely on China – the world’s largest commodity consumer and main demand driver of the recent structural cycle. At the beginning of China’s 12th FYP, in which economic transition from investment to consumption was highlighted, two questions are important to determine if the current structural strength could continue:

1) Would China’s growth decelerate and become less commodity-intensive?

2) Would such an economic transformation necessarily mark the end of the structural boom?

Our analysis suggests that under the 12th FYP, Chinese commodity consumption growth will likely decelerate and Chinese commodity intensity of usage (IOU) will also trend lower. However, oil intensity will decline at a lower rate than that seen during the 11th FYP period, while copper intensity will remain above the 2000~2010 average, supported by continued infrastructure investments in rural and inland regions and rising personal consumption, e.g., in auto and white goods (Figures 3 & 4).

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

60 64 68 72 76 80 84 88 92 96 00 04 08

$/tInvestment

phaseInvest-mentphase

0

20

40

60

80

100

120

60 64 68 72 76 80 84 88 92 96 00 04 08

$/bbl

Investmentphase

Invest-mentphase




Figure 3: Chinese oil IOU is likely to decline at a lower rate than that during the 11th FYP period…

Figure 4: …while copper’s IOU is likely to fall, but remain above the 2000~2010 average

Source: CEIC, IEA, CICC Research Source: Brook Hunt, CEIC, CICC Research

While significant increases in the IOU of major consuming economies, such as China, could intensify a structural cycle, the peaking of the IOU alone does not necessarily mean an end to the cycle. Instead, the change of the IOU relative to its trend is more important in pinning down the cycle.

We expect the structural cycle to continue and prices to remain at high levels, on account of: 1) Global oil IOU will likely return to above trend growth as technological and political constraints on capacity expansion limit supply growth (Figure 5); and, 2) global copper IOU will likely stay above trend until at least 2013 given the ongoing EM urbanization, and the structural strength could last beyond this point if supply growth disappoints (Figure 6).

Figure 5: Global oil IOU will likely return to above trend growth in 2012….

Figure 6: …while global copper IOU will not fall below the trend growth until 2013

Source: BP, Global Insight, IEA, IMF, United Nations, CICC Research Source: Brook Hunt, Global Insight, IMF, United Nations, CICC Research

Risks to this view are that commodity markets manage to reach a new equilibrium sooner than expected. This could be achieved via demand or supply adjustments that can quickly bring demand down to trend or lift production above trend. Demand side adjustments could include: 1) Technological improvements leading to permanent substitution and efficiency gains; 2) completion of a major country’s industrialization/urbanization that significantly reduces its commodity consumption; and, 3) a sharp slowdown of the global economy. While a supply side solution could come from breakthroughs on lower cost technologies, such as shale oil.

Chinese Crude Oil Intensity of Use

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1990 1995 2000 2005 2010 2015E

kbd per bn2010$

2011-2015:-3.8% CAGR

expected

2006-2010:-4.2% CAGR

Chinese Refined Copper Intensity of Use

0.4

0.6

0.8

1.0

1.2

1.4

1990 1995 2000 2005 2010 2015E

kt per bn2010$

Chinese IOUto trend low er

2000-2010average

Global Copper Consumption vs. GDP

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

3.0 5.0 7.0 9.0 11.0GDP per Capita (bn 2010$ / mil person)

Cop

per C

onsu

mpt

ion

per C

apita

(kt /

mil p

erso

n)

the 1970sbull cycle

the 2000sbull cycle

Forecast

Global Oil Consumption vs. GDP

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

3.0 5.0 7.0 9.0 11.0GDP per Capita (bn 2010$ / mil person)

Oil C

onsu

mpt

ion

per C

apita

(kbd

/ m

il per

son)

the 1970sbull cycle

the 2000sbull cycle

Forecast




On the demand side, a sharp economic slowdown would be the biggest near term risk. A significant slowdown in global commodity demand will postpone the structural oil cycle and bring forward the end of the copper cycle earlier than expected. However, as long as EM economic growth continues to be robust and DM economies avoid a recession, the current strength in commodities will likely be sustained.

On the supply side, oil’s dynamic appears more robust than that of copper. For oil, the supply constraint has already resulted in lower trend demand growth in the past few years, and the constraint could continue as major oil supply increments would still come from high cost projects. For copper, the key risk to our view is a larger than anticipated increase in mine supply over the coming 2~3 years, leading the copper cycle to end earlier than that of oil.

The rest of our report proceeds as follows: In the next section, ‘The Driver of the Structural Cycle’, we analyze the cause of a structural cycle from both a theoretical and a historical perspective. In the third section, ‘Chinese Commodity Intensity of Use during the 12th FYP’, we analyze the impact of the 12th FYP on future Chinese commodity IOU. And, in the last section, ‘Global Commodity Trends in the Next Five Years’ we evaluate China’s impact on the current commodity cycle. In the appendix, we present a summary of government policies in the 12th FYP that are relevant to commodities.




The driver of the structural cycle

In the past fifty years, commodity markets have experienced two structural cycles characterized by long-lasting elevated prices, separated by periods of relative price stability. The first cycle was from 1970 to the early 1980s, while the second started from 2003 and is still ongoing.

How did the cycle come about? A structural surge in commodity demand is usually a driver of the structural cycle, and the result of a major country’s industrialization (Figures 7 & 8). Before the onset of a structural cycle, commodity demand and supply are in equilibrium, meaning supply can keep up with demand without significant new capacity investment. When demand surges above its historical trend, existing production capacity cannot meet demand growth. Consequently, spare capacities are exhausted and higher prices are needed to balance the market by rationing demand and motivating investments. In the more recent cycle, this demand supply imbalance is further exacerbated by technological and political constraints that hinder rapid supply-side responses.

Furthermore, analysis of the two cycles points to the following common factors: 1) IOU of a few main commodity consumers usually rises in the early stage of the cycle; 2) peaking of IOU does not necessarily mean an end to the structural cycle as long as it is still above trend; and, 3) the cycle tends to end when IOU falls below the long-run trend.

Figure 7: Global oil IOU rises at the early stage of a country’s industrialization…

Figure 8: …as does that of copper

Source: BP, Global Insight, IEA, IMF, United Nations, CICC Research Source: Brook Hunt, Global Insight, IMF, United Nations, CICC Research

A historical perspective

From a demand perspective, the 1970s cycle was mainly driven by Japanese economic growth. As the world’s new manufacturing center, Japanese copper consumption increased from 0.8Mt in 1970 to 1.3Mt in 1979, driving global consumption to grow at a CAGR of 3.4%. Meanwhile, Japanese oil consumption increased from 3.9 mb/d in 1970 to 5.5mb/d in 1979, driving global consumption to grow at a CAGR of 3.8%.

More recently, the cycle was driven by the industrialization of EMs, in particular that of China. For copper, Chinese consumption averaged at 1.1Mt during the 1990s. But starting

Copper Consumption vs. GDP

0

5

10

15

20

25

0 10 20 30 40 50 60GDP per Capita (bn 2010$ / mil person)

Cop

per c

onsu

mpt

ion

per C

apita

(kt /

mil p

erso

n)

Japan US Korea & Taiw an China

Oil Consumption vs. GDP

0

10

20

30

40

50

60

70

80

90

0 10 20 30 40 50 60GDP per Capita (bn 2010$ / mil person)

Oil c

onsu

mpt

ion

per C

apita

(kbd

/mil p

erso

n)

Japan US Korea & Taiw an China




from 2000, it had been growing at an annual rate of 15.5% CAGR and reached 7.8Mt in 2010. Thanks to this, global copper consumption saw a 2.5% CAGR during the same period, even with a slowdown of DMs’ consumption. By the end of 2010, China’s share of global consumption had increased from 11% to 40%. For oil, Chinese consumption grew at 7.6% CAGR, from 4.6mb/d in 2000 to 9.5mb/d in 2010. China’s share of the global market increased from 6% to >10% (Figures 9 & 10).

Figure 9: China’s oil consumption has increased significantly since 2000…

Figure 10: …while China’s copper consumption grew even faster

Source: IEA, CEIC, CICC Research Source: Brook Hunt, CICC Research

The IOU of a booming country usually increases at the beginning of a structural cycle. For oil, Japan’s IOU increased in the 1960s and early 1970s, and China’s IOU increased before 2005 (Figure 11). For copper, Japan’s IOU also rose at the beginning of the 1970’s cycle, while China’s IOU rose from 0.85 in 2000 to 1.33 in 2010, driven by heavy investment in infrastructure and construction (Figures 12, 13 & 14).

However, the peaking of IOU does not necessarily mean an end to the structural cycle. Taking oil for example, Japan’s IOU peaked in the cycle at 1973 but oil prices kept rising until early 1980s, while China’s IOU has been steadily declining since 2005 due to the government’s policy of energy conservation, yet the oil cycle is still ongoing.

Figure 11: Oil IOU and commodity cycles Figure 12: Copper IOU and commodity cycles

Source: BP, IEA, IMF, World Bank, CICC Research Source: Brook Hunt, IMF, World Bank, CICC Research

Global Oil Consumption

01

23

456

78

910

1986 1991 1996 2001 2006

mbpd

35

37

39

41

43

45

47

49

51mbpd

China (LHS) OECD (RHS)

2000-2010annual grow th:8% CAGR

2000-2010annual grow th:-0.5% CAGR

Copper Intensity of Use

0.00

0.10

0.20

0.30

0.40

0.50

0.60

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

kt per bn2010$

0.40

0.60

0.80

1.00

1.20

1.40

1.60Japan China

Oil Intensity of Use

0.00

0.50

1.00

1.50

2.00

2.50

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

kbd per bn2010$

0.40

1.40

2.40

3.40

4.40

5.40

6.40

7.40Japan China

Global Copper Consumption

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

1986 1991 1996 2001 2006

Mt

US, Europe & Japan China

2000-2010annual grow th:16% CAGR

2000-2010annual grow th:-4% CAGR




Figure 13: The share of investment in Chinese GDP has increased significantly since 2000…

Figure 14: …driving Chinese copper IOU higher

Source: CEIC, CICC Research Source: Brook Hunt, CEIC, CICC Research

Instead, we note that comparing IOU to its historical trend could explain the dynamics of the 1970s as well as the current cycle. For example, the 1970s energy cycle started when global oil IOU rose above trend growth and continued even after the 1973 Arab embargo that led to a decline in demand growth. The cycle ended only after IOU fell back to its trend. A similar example was seen during the recent boom (Figures 5 & 6).

In this respect, global commodity IOU converging to trend growth could mark a potential end of the current cycle, at which time a new equilibrium could be reached and prices stabilized. The new equilibrium could come about in two ways: 1) Declining IOU to bring demand back to trend growth; and, 2) sufficient upstream investment to lift up the trend supply growth to meet growing demand.

Given the difficulties of bringing new supply online, we think restoration of equilibrium is more likely to come from the demand side. Our analysis below therefore focuses on demand analysis by extrapolating Chinese growth during the next FYP and evaluating its impact on the structural cycle.

20%

30%

40%

50%

60%

70%

80%

1978 1982 1986 1990 1994 1998 2002 2006 2010

% The share of consumption in GDPThe share of investment in GDP

20%

25%

30%

35%

40%

45%

50%

55%

1978 1982 1986 1990 1994 1998 2002 2006 20100.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4% The share of investment in GDP (LHS)

Copper intensity (RHS)




Chinese commodity intensity of use during the 12th FYP

Based on our estimates, the growth rate of Chinese oil and copper consumption will be lower during 12th FYP period than they were during 11th FYP period. With estimated over 8% GDP growth, Chinese commodity IOU is expected to fall. That said, oil intensity will decline at a lower rate than that recorded during the 11th FYP period, and copper intensity will remain above the 2000~2010 average.

Energy

According to the 12th FYP, primary energy consumption is likely to reach 4,140mn tonnes of standard coal equivalent (TCE) by 2015, implying a 4.9% CAGR growth rate. Driving this is government’s effort to enhance energy efficiency and conservation during the 12th FYP, which should be seen as a continuation of previous policies (Figure 15). Furthermore, the government plans to reduce the share of crude oil and coal in primary energy consumption while increase the share of non-fossil fuel and natural gas to 11.4% and 8.5% respectively by 2015.

Figure 15: Primary energy intensity is expected to decline…

Source: CEIC, CICC Research

Specifically, China’s oil demand is expected to grow at 4.5% during 12th FYP, lower than the 8% growth recorded during the 11th FYP (for example, the government aims to keep total refining capacity below 650 Mt/annum by 2015). The ‘green economy’ policy will continue, possibly driving higher levels of innovation. For example, natural gas and methanol blended gasoline are likely to be further promoted, potentially dampening oil consumption in the transportation sector. In addition, we expect China’s coal consumption to reach 2,465mn tonnes, implying a lower growth rate than that recorded during 10th FYP and 11th FYP. China’s natural gas consumption and non-fossil fuel consumption will increase significantly to 297bn CBM and 1,168bn kWh respectively (Figure 16).

As a result, the IOU of primary energy is expected to decline 16% from 2010 to 2015, at -3.4% CAGR. Looking into specific fuels, the IOU of oil is estimated to decline at -3.8% CAGR, but the declining rate is lower than that of 11th FYP (Figure 3). In addition, the IOU of coal is also likely to fall, while that of non-fossil fuel and natural gas is likely to keep rising.

Primary Energy Intensity

0.4

0.5

0.6

0.7

0.80.9

1.0

1.1

1.2

1.3

1990 1995 2000 2005 2010 2015E

tonnes of standardcoal per th 2010$

Targeted16%

declineover the

12th FYP.

Targeted20% dropand actual19% fallduring

11th FYP.




Figure 16: Chinese primary energy consumption in the next five years (base case)

Source: CICC Research

Base metals

The 12th FYP implies lower fixed asset investment growth and a rebalancing towards the consumption and service industries. While the share of investment in GDP may decline over time, the current economic model means a dramatic shift to a consumption-driven economy is not possible in the short run. Continued infrastructure investment in rural and inland regions will become an increasingly important driver of commodity demand. Also, rising personal consumption (such as auto and white goods) will play a role.

Our copper consumption forecasts are based on a bottom-up analysis of the main copper-using sub-sectors according to the policy outlined in the 12th FYP as well as our sector analysts’ expectation1.

As shown in Figure 17, total copper consumption is expected to grow by 7.4% in 2011 and 2012 and moderate afterwards. The main drivers are: 1) Growth in building and construction at a rate >10% until 2013, due to strong housing starts as well as high level of floor space under construction. Recent news suggests that policy housing starts may be cut by 20% in 2012. But if that happens, according to our sector analysts’ view, commercial housing investment is likely to catch up given the pent-up housing demand; 2) investment in power utilities at an annual average rate of ~5%; and, 3) increased living standards, as well as western and rural reforms will imply that consumption on automobiles and white goods remain robust.

1 Also see our report Dissecting China’s Copper Demand, published on July 11, 2011

Total Energy Consumption 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Crude oil (kb/d) 7679 8478 9515 10178 10735 11164 11499 11844

Coal (mn tonnes) 2036 2105 2164 2233 2293 2352 2412 2465

Natural gas (bn CBM) 89 98 115 139 168 203 245 297

Non-fossil (bn Kwh) 555 592 668 747 835 934 1044 1168

Primary Energy (mn TCE) 2914 3066 3250 3427 3598 3770 3950 4140

Consumption Growth 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Crude oil (% YoY) 10.4% 12.2% 7.0% 5.5% 4.0% 3.0% 3.0%

Coal (% YoY) 3.4% 2.8% 3.2% 2.7% 2.6% 2.6% 2.2%

Natural gas (% YoY) 10.9% 16.9% 20.8% 20.8% 20.8% 20.8% 20.8%

Non-fossil (% YoY) 6.6% 12.8% 11.8% 11.8% 11.8% 11.8% 11.8%

Primary Energy (% YoY) 5.2% 6.0% 5.5% 5.0% 4.8% 4.8% 4.8%

Incremental Growth 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Crude oil (kb/d) 800 1036 663 557 429 335 345

Coal (mn tonnes) 69 59 69 60 59 60 52

Natural gas (bn CBM) 10 17 24 29 35 42 51

Non-fossil (bn Kwh) 37 76 79 88 99 111 124

Primary Energy (mn TCE) 152 184 177 171 172 180 190




However, refined copper consumption growth could be lower after taking into account direct scrap usage. According to the 12th FYP for the recycling industry, copper scrap is targeted to account for 40% of total production in 2015, up from ~35% in 2011 and 30% in 20102. With the obvious cost and environmental advantages of recycled copper, we expect that by 2015 direct scrap usage could reach 2.3Mt.

Overall, we expect Chinese refined copper consumption to grow >5% in 2011 and 2012, and 4% thereafter. By 2015, Chinese refined copper consumption could reach 9.9Mt. With >8% potential GDP growth, the consumption path implies that Chinese copper IOU is expected to decline, yet it will still be higher than the 2000~2010 average (Figure 4). Specifically, copper IOU will decline by 14% from 2010 to 2015, or -3% CAGR. By 2015, Chinese copper IOU is expected to reach 1.11 (kt copper consumption per billion dollars of 2010 GDP).

Figure 17: Chinese copper consumption in the next five years (base case)


2 Also see our report Focusing in on Scrap, published on April 15, 2011.

Total Copper Consumption (kt) 2008 2009 2010 2011E 2012E 2013E 2014E 2015EPower generation/transmission/distribution 952 1,386 1,475 1,582 1,689 1,772 1,851 1,920 Telecommunication 317 231 206 193 181 170 160 151 Industrial electrical and equipment 1,587 2,079 2,503 2,740 2,932 3,108 3,294 3,492 Auto 317 539 626 676 743 795 851 911 Building construction 1,206 1,463 1,609 1,833 2,032 2,246 2,403 2,520 Appliance and accessories 889 1,155 1,430 1,637 1,827 1,919 2,072 2,238 Others 1,079 847 1,090 1,121 1,152 1,187 1,222 1,259 Total 6,346 7,701 8,938 9,782 10,558 11,197 11,854 12,490 - Net Substitution 183 250 266 281 296 Total Copper Consumption 6,346 7,701 8,938 9,599 10,308 10,931 11,573 12,194 - Direct Scrap 738 952 1,120 1,347 1,611 1,840 2,095 2,312 Refined Metal Consumption 5,609 6,749 7,817 8,251 8,699 9,092 9,478 9,883 Consumption Growth (% YoY)Power generation/transmission/distribution 46% 6% 7% 7% 5% 4% 4%Telecommunication -27% -11% -6% -6% -6% -6% -6%Industrial electrical and equipment 31% 20% 10% 7% 6% 6% 6%Auto 70% 16% 8% 10% 7% 7% 7%Building construction 21% 10% 14% 11% 10% 7% 5%Appliance and accessories 30% 24% 15% 12% 5% 8% 8%Others -21% 29% 3% 3% 3% 3% 3%Total 21% 16% 9.5% 7.9% 6.1% 5.9% 5.4%Total Copper Consumption (Net substitution) 21% 16% 7.4% 7.4% 6.1% 5.9% 5.4%- Direct Scrap 29% 18% 20% 20% 14% 14% 10%Refined Metal Consumption 20.3% 15.8% 5.5% 5.4% 4.5% 4.3% 4.3%Overall Share of Demand (%)Power generation/transmission/distribution 15% 18% 17% 16% 16% 16% 16% 15%Telecommunication 5% 3% 2% 2% 2% 2% 1% 1%Industrial electric and equipment 25% 27% 28% 28% 28% 28% 28% 28%Auto 5% 7% 7% 7% 7% 7% 7% 7%Building construction 19% 19% 18% 19% 19% 20% 20% 20%Appliance and accessories 14% 15% 16% 17% 17% 17% 17% 18%Others 17% 11% 12% 11% 11% 11% 10% 10%




Global commodity trends in the next five years

With China’s commodity IOU expected to decline and no other country to pick up the slack, we expect global IOU to decline as well. However, IOU of both oil and copper will likely be higher than trend growth in the next few years suggesting the structural cycle will likely to continue and prices will likely to remain high.

The main risk to our view is a sharp slowdown of the global economy, and this risk has increased especially for developed markets. A significant slowdown in global commodity demand will postpone the resumption of the structural cycle of oil and bring forward the end of the copper cycle earlier than expected. However, as long as the economic growth of EMs continues to be robust and DM economies avoid a recession, we believe the structural cycle is likely to continue.

Furthermore, it is interesting to note the difference between oil and copper. Oil’s supply-side dynamic appears more robust than that of copper. The supply constraints have already resulted in lower trend demand growth of oil than that of copper. In the next few years, major oil supply increments will continue to come from high cost projects. Therefore, as long as global economic growth remains robust, we expect the oil cycle to last longer than the copper cycle.

Energy

Global oil IOU is expected to decline by 2.0% CAGR in the next five years, but it will likely return to above trend growth in 2012 suggesting the cycle will continue (Figure 5). Due to the continuous improvement of energy efficiency, global oil demand will grow at a lower rate than that during the previous five years (at 1.7% CAGR or up 7.4mb/d during 2010~2015), reaching 95.03mb/d by 2015. IOU in different regions will show a similar pattern (Figure 18).

Figure 18: Global Oil demand/IOU in the next five years


On the supply side, global oil capacity is expected to reach 98.1mb/d by 2015 (up 7.8mb/d during 2010~2015). Non-OPEC supply is expected to grow 3mb/d from 2010 to 2015. The main drivers of this are increasing shale oil production in the US, oil sands projects in Canada, deepwater projects in Brazil, heavy oil projects in Colombia and global bio-fuel production. Also, OPEC crude capacity is likely to be boosted 2.9mb/d in 2015, due to growth in Iraq output and new projects in the UAE, Angola and Saudi. In addition, OPEC NGL is expected to grow at 1.9mb/d from 2010 to 2015.

0.3%

3.1%

1.7%

3.7%

-2.0%-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

OECD demand NonOECD demand Global demand Global GDP Global intensity

2010-2015 CAGR




Although supply capacity growth will outstrip demand growth at the first glance, the market will remain relatively tight until 2015 for two reasons: 1) Actual production growth will be lower than that of capacity growth as a large proportion of incremental capacity from OPEC projects is aimed to replenish the spare capacity; and, 2) although spare capacity is expected to increase from the current level of 1.7mb/d to 3.07mb/d by 2015, it will still be lower than what the normal level suggests. Normally, spare capacity covers ~4% of global consumption. In surplus markets like 2002 and 2009, spare capacity can cover ~5%~7% of global consumption, while the expected spare capacity in 2015 only covers 3% of global consumption.

Equally important, as we are approaching the end of the “easy oil” era, high oil prices are needed to motivate investments. Incremental supply is expected to come from oil fields either with high marginal costs (e.g. deepwater, oil sands) or high political risks (e.g. Iraq). Therefore, from a supply perspective, the oil cycle is likely to continue, unless a breakthrough technology emerges.

Base metals

Global refined copper IOU is expected to decline, but it is likely to stay above the trend growth until 2013, also suggesting the copper cycle has yet come to an end (Figure 6). We assume copper demand for countries outside China will follow their respective 10-year trend growth for the next five years. As a result, global consumption is expected to grow at 2.6% per annum, reaching 23Mt by the end of 2015. Consistent with their stage of economic development, developed countries will likely see continued declines in copper usage. In contrast, the ongoing industrialization of emerging markets means copper consumption is likely to remain strong (Figures 19 & 20).

Figure 19: Copper consumption of Western countries will likely continue to decline…

Figure 20: …while copper consumption of developing markets will likely grow robust

Source: Brook Hunt, CICC Research Source: Brook Hunt, CICC Research

This view has embedded relatively aggressive supply increases based on estimates from industry consultants that put mine production growth at >8% in 2012 and 7% in 2013. However, while likely recording some improvements3, mine supply has been disappointing since 2005 and supply forecasts are likely to be revised downwards as we move forwards, pushing supply back into later years.

3 Also see our report Digging into 2010 Copper Supply, published on September 8, 2011.

0500

100015002000250030003500400045005000

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

E

ktJapan US W.Europe

2000:2010: -2.4% CAGR

2000:2010: -5.2% CAGR

2000:2010:-2.9% CAGR

0100200300400500600700800900

1000

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

E

kt India Brazil

2000:20102.2% CAGR

2000:2010 7.9% CAGR




If production were to fall short of expectations, the end of the structural cycle is likely to be further pushed back. Indeed, producers are facing increasing challenges in meeting production targets. For existing projects, supply shortfall will mainly come from declining ore grades and high (often labor related) disruption (Figure 21). For greenfield projects, which are expected to account for >60% of supply increments over the next five years, the need to move into less developed regions such as Africa means political and other operational risks may prevent new projects from coming online in time (Figure 22).

As a result of the demand and supply factors discussed, we expect prices to remain well above historic averages. From an industry perspective this drives our belief that producer margins are also likely to remain super-normal for some time to come.

Figure 21: Ore grade has declined significantly

Figure 22: On paper, >60% of mine supply increments are expected to come from new projects

Source: Brook Hunt, CICC Research Source: Brook Hunt, CICC Research

Copper Mine Supply Increments by Mine Type

-0.20.3

-0.1-0.4 -0.2

0.7

0.9

0.40.1

0.2

0.6

0.70.7

0.3

-0.5

0.0

0.5

1.0

1.5

2.0

2011 2012 2013 2014 2015

Mt

Existing projects Expansion New projects

Copper Ore Grade (Avg by Paid Metal)

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1980 1985 1990 1995 2000 2005 2010 2015E

%




Appendix: The 12th Five Year Plan for commodities

Below we list out the key macro as well as sector implications that mostly relate to commodities:

Key macro implications

► Setting a lower growth target. The government targets an average annual growth rate of 7% over the 12th FYP. With stricter resource and environmental constraints and its population aging, China’s potential economic growth could decline in the future. However, our Macro economic team believes this should be a long process and a sharp decline in the short-term is unlikely. The GDP growth target will be more likely the government’s minimal goal. Looking backwards, the actual annual GDP growth rate reached 9.8% in the 10th FYP and 11.2% in the 11th FYP, though the government’s target was only 7% and 7.5% respectively. Our economist forecasts GDP to grow by 9.2% and 8.4% in 2011 and 2012, and a trend growth of 8%~9% thereafter.

► Rural and inland reform will continue. The planned urbanization rate is targeted to increase by 4%, to 51.5% in 2015 (Figure 23). With the rate having reached 49.7% in 2010 (according to the 6th National Census), our economist believes the policy target could be met earlier than expected. However, Chinese urbanization is still far below that of developed countries, and the widening urban-rural income gap means great potential for further improvements (Figure 24). In addition, due to the increasing competitiveness of inland regions, industrial reallocation is expected to continue. As capital stocks of inland provinces are still scant, local governments will have to invest in infrastructure to attract capital inflows (Figures 25 & 26).

► Increasing the share of consumption in economic growth. For the first time in a FYP the government links income growth to economic growth, targeting an average annual rate of 7% in urban and rural disposable income growth. The service industry will be accelerated to favor consumption upgrading. Value added of the service industry as a percentage of GDP will increase by 4% over 12th FYP period, 1.5ppt points higher than the actual increase during the 11th FYP. A successful carryout of such a plan means the share of investment in GDP will decline.

► Energy conservation and environmental protection will continue to be emphasized. The government targets a 16% decline in primary energy intensity over the 12th FYP period, smaller than the targeted 19% during the 11th FYP period (Figure 27). Looking into specific categories, the IOU of oil and coal is expected to decline. In contrast, the IOU of natural gas and non-fossil fuel is expected to rise under government supports.

Overall, a lower economic growth rate, structural adjustment to favor consumption, and energy saving & emission reduction will lead to lower use of industrial commodities. That said, our economists have emphasized that achieving the goals would be a long-term and gradual process. The current demographic structure (higher working population than net consumers) and high return to capital means the economy would still be characterized by high investment and saving (Figure 28). The share of consumption in GDP is unlikely to increase significantly any time soon and the service sector’s value added as a percentage of GDP will likely remain below the world average.




Figure 23: Urbanization rate is currently at 49.7%...

Figure 24: …but still low compared to other countries, meaning great potential for further improvements

Source: CEIC, CICC Research Source: Global Insight, CICC Research

Figure 25: China will make use of the increasing competitiveness of Inland regions

Figure 26: lower capital stocks of inland regions means more investment is needed

Source: CEIC, Global Insight, CICC Research Source: United Nations, CICC Research

Figure 27: Energy consumption during the 11th FYP period

Figure 28: Working population is still high, indicating investment and saving will stay high

Source: CEIC, Wind, CICC Research Source: United Nations, CICC Research

Urbanization Rate Across Countries

30

40

50

60

70

80

90

100

UK

Braz

il

US

Kore

a

Can

ada

Japa

n

Fran

ce

Ger

man

Mal

aysi

a

Indo

nesi

a

Chi

na

%Chinese Urbanization Rate

20%

25%

30%

35%

40%

45%

50%

55%

1985 1990 1995 2000 2005 2010

49.7% in 2010

Ratio of Producer to Net Consumer

0

20

40

60

80

100

120

140

160

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

%

Working population maypeak in f ive years

GDP Comparison

0

1000

2000

3000

4000

5000

1989 1992 1995 1998 2001 2004 2007

$/capitaChina w estern and central provincesChina coastal provincesAsia emerging countries

Capital Stock/Capita

010

203040

5060

7080

Shan

ghai

Beijin

gTi

anjin

Jian

gsu

Zhej

iang

Fujia

nG

uang

dong

Xinj

iang

Heb

eiSi

chua

nSh

aanx

iSh

anxi

Hen

anJi

angx

iAn

hui

Hun

anYu

nan

Gua

ngxi

Gui

zhou

Capital stock of Anhui w asonly 35% that for Zhejiang in2008

th Rmb/capita

1.281.18

1.12 1.081.03 1.00

1.24

-5.0-5.2

-3.7-4.0

-3.5

-2.7

0.50.60.70.80.91.01.11.21.31.41.5

2005

2006

2007

2008

2009

2010

2011

-5.5

-5.0

-4.5

-4.0

-3.5

-3.0

-2.5

-2.0

Energy consumption per unit GDP

Grow th(RHS)

Ton standard coal/10 thousand Rmb

%




Key sector implications

Construction

Policy housing construction has for the first time been included in a FYP. Totally 36 million units of policy housing will be started in the coming years, most of which will be public rental and low rental housing (Figure 29 & 30). While tightening measures on commercial housing has been applied in the government’s attempt to control surging prices and contain the real estate bubble, policy housing will help to maintain residential construction growth, especially in 2011 and 2012.

However, policy housing is expected to slow down in 2013 and commercial housing has to catch up in order to maintain robust construction growth. Our economists believe that construction will be supported by a high level of rigid housing demand.

On one hand, continued urbanization means increasing housing demand will be transferred from rural to urban areas. According to the United Nations, China’s population is expected to reach 1.37 billion by the end of 2015. Assuming living space per capita is 30sqm (the national average by 2010 according to government statistics), every 1% increase of urban population will bring 410mn sqm of housing demand.

On the other hand, the need for housing upgrading is high. Our estimates on housing stocks suggest that nearly a quarter of current urban houses were built before 1995, meaning 70mn urban families (three persons per family) lived in low quality houses with living space of only ~15sqm per capita. From 1999 to 2009, the completion of commercial housing totaled at 38.7mn units. Even assuming all of the houses were bought by these families (although in reality the wealthier could have bought more), there are still 30mn families waiting for housing upgrading.

Overall, our sector analysts forecast that new housing starts will be sustained at 5% growth in the long run and total housing investments will likely maintain at high levels (Figures 31 & 32).

Figure 29: Planned policy housing starts are concentrated in 2011 and 2012

Figure 30: Public rental and low rental housing will the main form

Source: CICC Research Source: CICC Research

Planned Policy Housing Starts

0

2

4

6

8

10

12

2011E 2012E 2013E 2014E 2015E

Mn Units Structure of Policy Housing

16% 16% 15% 20% 20%

15% 10% 6%4%

4%

22%30% 35%

60% 60%

40% 40% 40%20% 20%

7%

0%10%20%30%40%50%60%70%80%90%

100%

2011E 2012E 2013E 2014E 2015E

Shantytow nupgrading

Public rent housing

Economicalhousing

Capped-pricehousingLow rent housing




Figure 31: Total new housing starts of 5% since 2013 currently expected

Figure 32: CICC’s property team expects nominal investment growth to remain at high levels

Source: CICC Research Source: CICC Research

Power utilities

The composition of power investment might shift with more emphasis on grids. During the 10th and 11th FYP periods, grid investment has lagged behind generation investment, meaning that the bottleneck is now at the grid stage (Figure 33). According to State Grid, Rmb1.7trn will be invested during the 12th FYP, up 40% (nominal) from the Rmb1.2trn invested during the 11th FYP. In addition, Southern Grid plans to invest >Rmb0.5trn in fixed asset investment Therefore, total grid investment is expected to total Rmb2.2trn during the 12th FYP period (Figure 34).

Digging into the grid’s investment plan shows ultra high voltage (UHV) networks will be used in long distance distribution cabling, aiming to increasingly utilize aluminum and steel. Besides, rural electrification, consistent with government’s goal to improve rural living standards, this means copper usage in transformers will remain very high. State Grid plans to invest Rmb420bn in rural grid upgrades over the 12th FYP, an average of Rmb85bn per year, up from an average of Rmb60bn since 2003.

On power generation, CICC’s power team expects that investment in generation will show moderate growth as a result of lowering external demand and the comparatively higher leverage ratio of power generators vs. that of distributors. Annual investment is expected to grow 8%. However, the importance of thermal power will decline while the percentage of nuclear and wind power will rise. On the whole, investment in power utilities (grid and generation) is expected to reach Rmb4.5trn during the 12th FYP period, representing an 8% CAGR in nominal terms and a 5% CAGR in real terms.

New Start Floor Space

41%

21%

13%

5% 5% 5%0

500

1000

1500

2000

2500

3000

2010 2011E 2012E 2013E 2014E 2015E

Mn sqm

0%5%10%15%20%25%30%35%40%45%50%Non-policy housing (LHS)

Policy housing (LHS)Total new starts Grow th % (RHS)

Real Estate Investment

33%

26%

16%12%

16%

6%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2010 2011E 2012E 2013E 2014E 2015E

Trillion RMB

0%

5%

10%

15%

20%

25%

30%

35%

40%Non-policy housing (LHS)Policy housing (LHS)Total investment Grow th % (RHS)




Figure 33: Grid investment lagged behind power generation investment in the 2000s

Figure 34: Grid investment could total at Rmb2.2trn during the 12th FYP period

Source: China Electricity Council, CICC Research Source: China Electricity Council, News Search, CICC Research

White goods

Two key elements in the 12th FYP will support the growth of white goods consumption: 1) Increasing rural consumption; and, 2) the high level of residential housing completion. Rural consumption has much more upside potential than unban areas. Starting from 2000, rural per capita ownership of white goods has increased significantly, with air conditioners up by a 28% CAGR and refrigerators by a 14% CAGR. However, rural ownership levels are still much lower than those in urban areas, indicating greater potential for improvement (Figures 35 & 36). The CICC appliance team expects rural consumption will maintain fast growth over the next few years on the back of increasing rural income and continued urbanization. In addition, the completion of residential housing is expected to grow at an annual rate of 15%~20%, also playing an important role in boosting white goods consumption.

Overall, the annual growth of the white goods industry is targeted at 8%~10% (in nominal terms) according to the 12th FYP for the appliance industry. By 2015, total output value is expected to reach Rmb1.1trn. Our sector team sales growth estimates are shown in Figure 37.

Figure 35: Rural white goods ownership maintains fast growth

Figure 36: Rural consumption has much upside potential

Source: CEIC, CICC Research Source: CEIC, CICC Research

Investments in Power Sector

0

50

100150

200

250

300350

400

450

2003 2005 2007 2009 2011E

Pow er grid Pow er generation

Planed Grid Investment during 12th FYP

0

100

200

300

400

500

600

2009 2010 2011E 2012E 2013E 2014E 2015E

RMB bn

Southern Grid State Grid

Rural White Goods Ownership per 100 Households

0

20

40

60

80

100

120

1985 1988 1991 1994 1997 2000 2003 2006 2009

Washing machine RefrigeratorAir conditioner TV

White Goods Ownership in 2009(per 100 Households)

0

20

40

60

80

100

120

140

160

Washingmachine

Refrigerator Air conditioner TV

Urban Rural




Figure 37: CICC’s forecast of white goods sales growth in real terms


Automobiles

The sector experienced fast growth in the past two years due to strong policy support, especially the purchase tax reduction and rural subsidies. However, sales slipped much in 2011 due to policy exits (January 2011 saw the end of purchase tax reduction, rural subsidies and trade in policy), controls on auto purchases (limited to Beijing) while the Japanese earthquake also reduced parts supply, impacting production at the margin. Subsidy related pull-forward consumption in 2010 may also have contributed to both higher growth last year and lower this year.

Looking forwards, there is no growth target specified in the 12th FYP, but our sector analyst believes that a 7%~8% annual sales growth could be reached in the coming years. Globally, Chinese vehicle ownership (58 units per 1,000 people) is lower than that of other developing countries (such as Brazil) and much lower than the world average (183 units per 1,000 people) (Figure 38). Within the country, automobile ownership in Western provinces is much lower than that in Eastern provinces, indicating sales growth in Western regions could be even larger (Figure 39).

Figure 38: Chinese automobile ownership is still low… Figure 39: Western regions have greater potential

Source: CEIC, World Bank, CICC Research Source: CEIC, CICC Research

Automobile Ownership per 100 Households

05

10152025303540

Beijin

g

Gua

ngdo

ng

Zhej

iang

Shan

ghai

Jian

gsu

Xinj

iang

Sich

uan

Nin

gxia

Gui

zhou

Qin

ghai

Gan

su

EasternProvinces

WesternProvinces

-10%

-5%

0%

5%

10%

15%

20%

25%

2011E 2012E 2013E 2014E

Air conditioner Refrigerator

Washing machine TV

Automobile Ownership per 1,000 Persons

0100200300400500600700800900

US

Italy

Japa

n

Spai

n

Fran

ce

Ger

man

y

UK

Kore

a

Mex

ico

Braz

il

Chi

na

Wor

ld



21

Important legal disclosures General Disclosures

This report has been produced by China International Capital Corporation Hong Kong Securities Limited (CICCHKS). This report is based on information available to the public that we consider reliable, but CICCHKS and its associated company(ies)(collectively, hereinafter “CICC”) do not represent that it is accurate or complete. The information and opinions contained herein are for investors’ reference only and do not take into account the particular investment objectives, financial situation or needs of any client, and are not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. Under no circumstances shall the information contained herein or the opinions expressed herein constitute a personal recommendation to anyone. Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in this report. Neither CICC nor its related persons shall be liable in any manner whatsoever for any consequences of any reliance thereon or usage thereof.

The performance information (including any expression of opinion or forecast) herein reflect the most up-to-date opinions, speculations and forecasts at the time of the report’s production and publication. Such opinions, speculations and forecasts are subject to change and may be amended without any notification. Past performance is not a reliable indicator of future performance. At different periods, CICC may release reports which are inconsistent with the opinions, speculations and forecasts contained herein.

CICC’s salespeople, traders, and other professionals may provide oral or written market commentary or trading ideas that may be inconsistent with, and reach different conclusions from, the recommendations and opinions presented in this report. Such ideas or recommendations reflect the different assumptions, views and analytical methods of the persons who prepared them, and CICC is under no obligation to ensure that such other trading ideas or recommendations are brought to the attention of any recipient of this report. CICC’s asset management area, proprietary trading desks and other investing businesses may make investment decisions that are inconsistent with the recommendations or opinions expressed in this report.

This report is distributed in Hong Kong by CICCHKS, which is regulated by the Securities and Futures Commission.

This report is distributed in Singapore only to accredited investors and/or institutional investors, as defined in the Securities and Futures Act and Financial Adviser Act of Singapore, by China International Capital Corporation (Singapore) Pte. Limited (“CICCSG”), which is regulated by the Monetary Authority of Singapore. By virtue of distribution by CICCSG to these categories of investors in Singapore, disclosure under Section 36 of the Financial Adviser Act (which relates to disclosure of a financial adviser’s interest and/or its representative’s interest in securities) is not required. Recipients of this report in Singapore should contact CICCSG in respect of any matter arising from or in connection with this report.

This report is distributed in the United Kingdom by China International Capital Corporation (UK) Limited (“CICCUK”), which is authorized and regulated by the Financial Services Authority. The investments and services to which this report relates are only available to persons categorized by CICCUK as either a professional client or eligible counterparty. Any investment or investment service to which this report relates is not intended for any other persons and will not be made available to any other persons.

This report may also be made available in other jurisdictions pursuant to the applicable laws and regulations in those particular jurisdictions.

Special Disclosures CICC may have positions in, and may effect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for those companies. Investors should be aware that CICC and/or its associated person may have a conflict of interest that could affect the objectivity of this report. Investors are not advised to solely rely on the opinions contained in this research report before making any investment decision or other decision.

Distribution of ratings is available at http://www.cicc.com.cn/CICC/english/operation/page4-4.htm.

Explanation of stock ratings: “BUY” indicates analyst perceives absolute return of 20% or more within 12 months; “ACCUMULATE” 10%~20%; “HOLD” -10%~10%; “REDUCE” -20%~-10%; “SELL” -20% and below.

Copyright of this report belongs to CICC. Any form of unauthorized distribution, reproduction, publication, release or quotation is prohibited without CICC’s written permission.


Beijing Jianguomenwai Avenue Branch Shanghai Middle Huaihai Road Branch Shenzhen Fuhuayilu Branch 1st Floor, Capital Tower 6A Jianguomenwai Avenue Beijing 100022, People’s Republic of China Tel: (86-10) 8567-9238 Fax: (86-10) 8567-9235

398 Huaihai Road (M) Shanghai 200020, People’s Republic of China Tel: (86-21) 6386-1195 Fax: (86-21) 6386-1180

Rooms 107 & 201, Annex Building Shenzhen Duty Free Commercial Tower 6 Fuhua 1st Road, Futian District Shenzhen 518048, People’s Republic of China Tel: (86-755) 8832-2388 Fax: (86-755) 8254-8243

Hangzhou Jiaogong Road Branch Nanjing Zhongshan Road (North) Branch Guangzhou Tianhe Road Branch 1st Floor, Euro American Center 18 Jiaogong Road Hangzhou 310012, People’s Republic of China Tel: (86-571) 8849-8000 Fax: (86-571) 8735-7743

2nd Floor, Greenland Plaza 1 Zhongshan Road (North) Nanjing 210008, People’s Republic of China Tel: (86-25) 8316-8988 Fax: (86-25) 8316-8397

40th Floor, Teemtower 208 Tianhe Road Guangzhou 510620, People’s Republic of ChinaTel: (86-20) 8396-3968 Fax: (86-20) 8516-8198

Chengdu Binjiang Road (East) Branch Xiamen Lianyue Road Branch Qingdao Middle Hongkong Road Branch1st and 16th Floors, Shangri-La Center Block 9B, Binjiang Road (East) Chengdu 610021, People’s Republic of China Tel: (86-28) 8612-8188 Fax: (86-28) 8444-7010

4th Floor, Office Building Paragon Center 1 Lianyue Road, Siming District Xiamen 361012, People’s Republic of China Tel: (86-592) 515-7000 Fax: (86-592) 511-5527

11th Floor, Shangri-La Center Block 9, Hongkong Road (M), South District Qingdao 266071, People’s Republic of China Tel: (86-532) 6670-6789 Fax: (86-532) 6887-7018

Wuhan Jiefang Road Branch Chongqing Honghu Road (West) Branch Changsha Sanyi Avenue Branch 4th Floor, New World Centre Tower 634 Jiefang Road, Qiaokou District Wuhan 430032, People’s Republic of China Tel: (86-27) 8334-3099 Fax: (86-27) 8359-0535

1st and 10th Floors, Ourui Lanjue Center Block 9, Honghu Road (W), New North District Chongqing 401120, People’s Republic of China Tel: (86-23) 6307-7088 Fax: (86-23) 6739-6636

1st Floor, Building A6, Junhao Garden 459 Sanyi Avenue, Kaifu District Changsha 410003, People’s Republic of China Tel: (86-731) 8878-7088 Fax: (86-731) 8878-7090

Foshan Jihua 5th Road Branch Tianjin Nanjing Road Branch Dalian Jinma Road Branch 12th Floor, Building One 2 Jihua 5th Road, Chancheng District Foshan 528000, People’s Republic of China Tel: (86-757) 8290-3588 Fax: (86-757) 8303-6299

10th Floor, Tianjin Global Trading Center 219 Nanjing Road, Heping District Tianjin 300051, People’s Republic of China Tel: (86-22) 2317-6188 Fax: (86-22) 2321-5079

128B Jinma Road Economic-Technological Development Area Dalian 116000, People’s Republic of China Tel: (86-411) 8755-5088 Fax: (86-411) 8801-7568

Beijing Shanghai Hong Kong China International Capital Corporation Limited 28th Floor, China World Office 2 1 Jianguomenwai Avenue Beijing 100004, People’s Republic of China Tel: (86-10) 6505-1166 Fax: (86-10) 6505-1156

China International Capital Corporation Limited – Shanghai Branch32nd Floor, Azia Center 1233 Lujiazui Ring Road Shanghai 200120, People’s Republic of China Tel: (86-21) 5879-6226 Fax: (86-21) 5888-8976

China International Capital Corporation (Hong Kong) Limited 29th Floor, One International Finance Centre 1 Harbour View Street Central, Hong Kong Tel: (852) 2872-2000 Fax: (852) 2872-2100

Singapore United Kingdom China International Capital Corporation (Singapore) Pte. Limited #39-04, 6 Battery Road Singapore 049909 Tel: (65) 6572-1999 Fax: (65) 6327-1278

China International Capital Corporation (UK) Limited Level 25, 125 Old Broad Street London EC2N 1AR, United Kingdom Tel: (44-20) 7367-5718 Fax: (44-20) 7367-5719


cicc - commodities – still a structural story

Documents