EMIS Insight - China Metal Processing Sector Report_0
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MetalProcessing
Sector
ChinaJune 2015
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Table of Contents
I. Sector Overview
1. Sector Highlights
2. Main Sector Indicators
3. Sector Revenues and Profits
4. Sector Costs Overview
5. Foreign Trade
6. Investments
7. Employment
8. Prices9. Government Policy
II. Ferrous Metals Smelting & Pressing
1. Subsector Highlights
2. Subsector Indicators
3. Subsector Revenues and Output
4. Iron & Steel Production5. Iron & Steel Imports and Exports
6. Subsector Forecast
III.Non-ferrous Metals Smelting & Pressing
1. Subsector Highlights
2. Subsector Indicators
4. Subsector Revenues and Costs
5. Top Ten Non-ferrous Metals
6. Aluminum Highlights
7. Aluminum Production
8. Aluminum Forecast
9. Copper Highlights
10.Copper Production
11.Lead & Zinc
12.Other Major NF Metals Production13.Precious Metals
IV.Metal Products Manufacturing
1. Subsector Indicators
2. Subsector Revenues and Output Value
3. Metal Products Output
4. Ferrous Metals Product Trade
V. Main Players
1. M&A Deals
2. M&A Activity, 2013-2014
3. Baoshan Iron & Steel Co., Ltd.
4. Baoshan Iron & Steel Co., Ltd. (contd)
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Table of Contents
5. Jiangxi Copper Company Limited
6. Jiangxi Copper Company Limited (contd)
7. Aluminum Corporation of China Limited
8. Aluminum Corporation of China Limited (contd)
9. Hebei Iron and Steel Co., Ltd
10.Hebei Iron and Steel Co., Ltd (contd)
11.Shanxi Taigang Stainless Steel Co.,Ltd
12.Shanxi Taigang Stainless Steel Co.,Ltd (contd)
VI.Regional Distribution
1. Regional Distribution
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I. Sector Overview
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Sector Highlights
China is the world's leader in both production and consumption of most major metals, including steel, aluminum, copper, lead and zinc, for each of
which it accounts for between a third and half of the world market. However the countrys shift from an investment-driven to a consumption-driven
economy has resulted in mounting pressure on the heavy industry, with the metal processing sector facing an increasing number of challenges.
Global position
Besides the countrys shift away from investment as a main growth driver, the slowdown in global demand and falling product prices
coupled with rising labour costs have eaten into the industrys profitability, further aggravated by structural overcapacity and fierce
competition between market players.
Beijing has long been trying to push forward the process of sector consolidation through mergers and acquisitions in order to tackle the overcapacity problems andachieve a better efficiency and competitive power of industry leaders. While such efforts have met much resistance in recent years, efforts by the centralgovernment have proceeded with a renewed strength. Most recently, the government has announced plans for consolidating the rare earth metal industry into sixlarge conglomerates. China has also set a goal that the top 10 steel producers control 60% of the market by 2025.
Enterprises in the sector have been facing tighter credit conditions over the last year following an alleged scam in the port of Qingdao which
resulted in claims for more than USD 1bn. As a result, leading banks have enforced stricter control, higher collateral requirements and more
stringent credit approval procedures. The new situation is expected to further push smaller players to merge with bigger companies.
In spite of the difficult times, the metal sector has retained a strong presence among China's Top 500 listed enterprises of Fortune China for 2014with 59 companies among the biggest 500, a number unchanged from 2013 and up from 57 in 2012. This is a higher number of companies thanany other industry in the country, with the machine manufacturing and real estate industries sharing the second position in 2014 with 40 companieseach.
Challenges
Consolidation
Tight Credit
Main players
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Main Sector Indicators
Chinas Metal Processing Sector in Figures
Statistics office
2010 2011 2012 2013 2014
GDP, RMB bn 40,890 48,412 53,412 58,802 63,646
Sales revenues, RMB bn 10,331 12,573 14,190 15,570 16,105
Revenues as share of GDP 25.7% 26.6% 27.3% 27.4% 25.3%
Total assets, RMB bn 7,944 9,093 10,570 11,589 12,295
Accounts receivable, RMB bn 541.7 605.7 770.9 883.1 959.3
Total liabilities, RMB bn 4,980 5,845 6,744 7,392 7,731
Product Inventories, RMB bn 352 441 519 520 563
Number of employees, average, mn 8818.6 8440.5 9411.6 n/a n/a
Number of enterprises 41,784 30,080 36,391 37,136 37,445
Number of loss making enterprises 4,494 3,449 5,206 5,217 5,305
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Comments
Source:
Sector Revenues & Profits
The metal processing sector revenues have grown for a fifth year in a row in 2014, yet the growth rate has been slowing down for a forth
consecutive year. Oversupply woes, falling prices and rising costs have weighed on the sectors overall performance. Meanwhile aggregate
profits have grown for the first time since 2011 amid a trend of major companies spinning off their losing assets and expanding into other
businesses.
Sales Revenues Profit From Sales Revenue
Statistics office
10,331
12,57314,190
15,57016,10528.5%
21.7%
12.9%
9.7%
3.4%
0%
5%
10%
15%
20%
25%
30%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2010 2011 2012 2013 2014
Revenues, RMB bn Growth, % y/y
513.4
585.3
530.2
501.9
514.2
62.5%
14.0%
-9.4%-5.3%
2.5%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
460
480
500
520
540
560
580
600
2010 2011 2012 2013 2014
Profit, RMB bn Change, % y/y
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Sector Costs Overview
Cost of Sales Other Costs
Statistics office
9,278
11,297
12,859
14,24914,751
27.8%
21.8%
13.8%
10.8%
3.5%
0%
5%
10%
15%
20%
25%
30%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2011 2012 2013 2014
Cost of sales, RMB bn Growth, % y/y
2010 2011 2012 2013 2014
Sales taxes & surcharges,
RMB bn44.3 43.1 53.4 56.7 60.4
Selling & distribution
costs, RMB bn118.2 131.4 160.2 174.6 191.1
Administration expenses,
RMB bn307.2 344.4 382.2 371.0 375.6
Financial expenses, RMB
bn112.1 150.1 191.5 189.2 216.0
Financial expenses:
interest expenses, RMB
bn
103.3 152.5 193.8 182.8 198.9
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Comments
Source:
Foreign Trade
The growth of production is steadily outperforming that of consumption thus causing a persistent accumulation of surplus in the sector, in a
trend that will hardly be reversed in the short to medium term. Therefore, producers continue seeking new channels to access foreign markets
for their production. However, when trying to expand their market abroad, Chinese companies are often accused of dumping and suffer from
import tariffs, which constitutes a serious risk as far as future exports are concerned.
The weakening of Chinas currency over 2014 is partially responsible for the accelerated exports growth throughout that year.
Exports, USD mn Imports, USD mn
General Administration of Customs
39,58355,511 53,882 54,724
72,291
17,945
23,490 21,687 22,663
25,44253,154
66,250 73,20278,358
85,960
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2010 2011 2012 2013 2014
Metalproducts
Nonferrous
metals
Iron andsteel 25,033 27,192 22,842 21,486 22,498
49,17156,230
55,07551,542 49,847
12,607
14,53414,467
14,812 16,485
0
20,000
40,000
60,000
80,000
100,000
120,000
2010 2011 2012 2013 2014
Metalproducts
Nonferrousmetals
Iron andsteel
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Comments
Investments
While investment growth has been slowing down over the last two years, it has stayed on the positive side in all three major segments of the
industry. Mills are scrapping their outdated equipment in compliance with Beijings environmental campaign, but the addition of new capacity
was put on hold, since metal giants often play a key role in local economies and regional governments often favour their development and
disregard what problems they cause.
In 2014, FAI growth has been unevenly distributed among the subsectors as metal products FAI have grown by 21.2% annually, non-ferrous
metals FAIby 5.6%, while that of the ferrous metals segment dropped by 5.4%.
Fixed Asset Investments, RMB mn
Statistics office
346,502 386,048505,548 506,049 478,939
292,404386,127
448,488 546,494 576,988362,249
504,515
595,501
711,434861,972
21.4%
27.5%
21.4%
13.8%
8.7%
0%
5%
10%
15%
20%
25%
30%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2010 2011 2012 2013 2014
etal products
Non ferrous metalsmelting & pressing
Ferrous metalsmelting & pressing
Overall growth y/y, %
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Source:
Employment
Reduction of inefficient capacity across the industry is expected to bring about some major challenges to the labour market which is a serious
concern for local governments. Falling product prices and Beijings consolidation push are likely to further aggravate the employment situation
in the industry.
The total number of employees of the top ten listed employers in the sector fell to some 413 thousand in 2014 from 424 in the previous year,
or a drop of about 2.7%. Aluminum Corporation of China Ltd. had the largest scaling down of staff with employee numbers lower by about
7,800 than 2013.
Manufacturing Industry Avg Annual Wage (RMB) Biggest Employers Among Listed Companies (2014)
Statistics office, Fortune China
24,40426,810
30,916
36,665
41,650
46,43151,369
27,80031,142
36,386
43,031
47,367
54,094
16,443 17,26020,090
24,13828,215
32,03535,653
2008 2009 2010 2011 2012 2013 2014
Urban, non-private companies State-owned companies
Private companies
Employer Number of employees
Aluminum Corporation of China Limited 90,207
Hebei Iron and Steel Co., Ltd 48,101
Maanshan Iron & Steel Company Limited 41,220
Wuhan Iron and Steel Company Limited 38,857
Baoshan Iron & Steel Co.,Ltd. 37,487
Angang Steel Company Limited 33,520Xinxing Ductile Iron Pipes Co.,Ltd. 32,635
Hunan Valin Steel Co., Ltd. 32,291
Shandong Iron and Steel Company Ltd 31,738
Shanxi Taigang Stainless Steel Co.,Ltd 26,672
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Prices
Metal Processing Industry PPI, PY = 100
Statistics office, CISA
China Steel Price Index (pts)
Comments
Tightened liquidity, high stock levels and fierce competition have been pushing down prices in the sector, especially in the steel segment. Steel
prices have been falling almost incessantly since early 2013, reaching their lowest levels for the past twelve months in December 2014. Some
upward pressure has been seen in early 2015 from rising raw material costs but no sizable recovery is expected anytime in the near future.
107.9111.1
107.1 105.8101.8
98.5 100.5102.1 100.6 99.3 99.3 99.1 97.7 96.5 94.8 96.0 94.3 93.0 91.9 90.6
86.4 87.0 85.3 83.180
100
120
Jan2013
Feb2013
Mar2013
Apr2013
May2013
Jun2013
Jul2013
Aug2013
Sep2013
Oct2013
Nov2013
Dec2013
Jan2014
Feb2014
Mar2014
Apr2014
May2014
Jun2014
Jul2014
Aug2014
Sep2014
Oct2014
Nov2014
Dec2014
8090
100110120
2008 2009 2010 2011 2012 2013 2014
Ferrous metal smelting & pressing Non ferrous metal smelting & pressing Fabricated metal product
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Government Policy
Industry
Plans
China is preparing a series of development plans for the different subsectors of the industry in the near future. A new Iron
and Steel Industry Restructuring and Development Action Plan for 2015-2017 is expected in June 2015 which is mulled toinvolve the scrapping of 80 million tonnes of outdated capacity to relieve oversupply, while the number of steel producingcompanies is to be brought down from 500 to 300.
Another similar plan, for the non-ferrous metal industry development for the 2016-2020 period is also expected to bereleased soon, but no details have been disclosed yet.
In May 2015, a plan for the rare earth metals industry was approved which aimed at consolidating the segment into 6 largestate-owned enterprises before the end of 2016, down from the current approximately 100 companies.
Going Global
The Going Global initiative which the Chinese government has been implementing since the turn of the century is headedtowards its next stage as Beijing would like to boost local companies presence in overseas markets. Steps in this direction
include the Silk Road Economic Belt and the 21st Century Maritime Silk Road, aiming to revive the ancient trading routes,
connecting Asia and Europe. These initiatives involve the construction of large-scale infrastructure projects, mostly ports
and railway facilities, with Chinese companies playing the main role in the construction process. The initiatives are
expected to open new markets for China's metal product manufacturers and help relieve the oversupply glut, experienced
by them at home.
Environment
In January 2015, a new environment protection law came into force. The law strengthened environmental legislation and
put a pressure on manufacturers in the metal processing industry to upgrade their facilities under the threat of severe
sanctions. Industry experts have estimated the cost of such upgrades at around RMB 160 per tonne of steel produced.
In March 2015, the industry ministry released a list of priorities for industrial conservation and integrated utilisation of
energies in 2015 with a special focus on industrial water conservation, a policy which is to have a major impact on metal
manufacturers in the country.
China Daily, Xinhua, CCTV
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II. Ferrous Metals Smelting and Pressing
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Subsector Highlights
Global Share
Between 2000 and 2014, China more than tripled its share of global steel output, becoming the biggest producer in
the world. The country accounted for 49.5% of total output in 2014, up from 15% at the turn of the century, although
marginally lower than the 2013 figure of 49.7%. According to OECD calculations, China is to contribute around 40%
of the global growth in the steelmaking industry in the period between 2012 and 2015.
Policy Shift
For years, China had been producing steel at levels far exceeding demand, thus creating a supply glut. Companieswere forced to export at lower prices, thus doing harm to the global competitors and reducing profitability in the
sector. Current excess capacity is estimated at around 300 million tonnes. However, in line with the current
governments course towards slower, more sustainable rates of development and bigger concern for the
environment, Beijing has started to shift away from its former policy of supporting high steel production, often by
means of generous subsidies for steelmakers. The government has recently given signals that it was aware of the
unsustainability of the current situation and was planning to reduce excess capacity while implementing more
strenuous regulations.
Going Out
While producing a significant share of global steel, the local industry has so far not been too successful in
establishing a stronger presence abroad. This, however, is probably going to start gradually changing in the near
future as a number of local companies has already begun building steel projects in countries like South Africa, Chile,
Indonesia and Thailand, among others. Projects, related to the One Belt One Road initiative are likely to support
steel exports over the next few years. At the same time, Chinese regulators are rumoured to be preparing an
amendment which would allow foreign investments in the local steel industry.
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Subsector Indicators
Chinas Ferrous Metal Processing Subsector in Figures
Statistics office
2010 2011 2012 2013 2014
Sales revenues, RMB bn 5,449 6,591 7,156 7,632 7,503
Total assets, RMB bn 4,598 5,203 5,818 6,264 6,487
Accounts receivable, RMB bn 176.59 205.46 258.13 298.75 323.11
Total liabilities, RMB bn 3,019 3,512 3,912 4,225 4,282
Product inventories, RMB bn 179.23 227.05 257.49 267.4 282.66
Number of employees, mn 3.46 3.4 4.04 n/a n/a
Number of enterprises 7,881 6,742 10,880 11,034 10,564
Number of loss making enterprises 1,155 1,131 2,064 1,946 1,921
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Comments
Source:
Subsector Revenues & Output
The 1.7% drop in revenues in 2014 was the first one since 2009 and only the second one since the beginning of the century.
Industrial output has suffered from oversupply in the recent years and has flattened out, with industry watchers expecting the trend to
continue for at least a few more years.
Costs & Revenues Steel Large & Medium Enterprise Gross Industrial Output
Statistics office, China Iron and Steel Association
5,449
6,5917,156
7,632 7,503
4,982
6,0296,599
7,069 6,945
215 224 170 170 165
24.1%
21.0%
8.6%6.6%
-1.7%
-5%
0%
5%
10%
15%
20%
25%
30%
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2010 2011 2012 2013 2014
Revenues, RMB bn Cost of sales, RMB bn
Total profit, RMB bn Revenues annual growth
2,069
2,770
3,263
3,020 3,0652,922
-11.7%
33.9%
17.8%
-7.5%
1.5%
-4.7%
-20%
-10%
0%
10%
20%
30%
40%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2009 2010 2011 2012 2013 2014
GIO, RMB bn Annual change
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Iron & Steel Production
Iron & Steel Production, thou tonnes Purchased Steel Consumption, thou tonnes
China Iron and Steel Association, Statistics office
Product 2010 2011 2012 2013 2014
Iron ore 1,080,161 1,335,025 1,327,300 1,522,129 1,514,240
Pig iron 595,601 645,429 670,102 748,084 711,599
Ferroalloy 24,355 28,005 31,567 36,122 37,860
Crude steel 638,743 701,968 731,040 822,000 822,698
46,820
58,358
50,088 49,140
181,318
2010 2011 2012 2013 (Jan-Nov) 2014
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Iron and Steel Foreign Trade
Exports, thou tonnes
Imports, thou tonnes
China Iron and Steel Association
Product 2009 2010 2011 2012 2013
Coke 159 110 116 76 35
DRI & sponge iron 1,773 1,379 1,381 1,062 606
Ferroalloy 2,566 2,030 2,054 1,894 2,128
Iron ore 627,779 618,645 686,058 743,553 819,414
Pig iron 3,617 873 971 581 298
Scrap steel 13,691 5,848 6,767 4,974 4,465
Steel billet 4,585 637 636 361 552
Steel ingot 65 41 30 41 59
Product 2009 2010 2011 2012 2013
Coke 544 3,346 3,298 1,020 4,673
DRI & sponge iron 5.3 212.7 151 111.7 224
Ferroalloy 925 1,137 935 637 482
Pig iron 237 707 872 302 265
Scrap steel 9.1 372.8 25.1 0.9 0.3
Steel billet 43 142 4.9 4.2 4.0
Steel ingot 0.4 0.9 0.1 0.1 0.3
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Comments
Subsector Forecast
Despite of the poor recent performance, a number of factors are to positively influence the industrys development, including the ongoing
urbanisation and the rising demand for machinery, appliances and automobiles, as well as a significant number of infrastructure projects which
the government has already initiated. Environmental regulations and overcapacity woes are to continue weighing on growth rates in the short
to medium term.
According to industry giant Baosteel, China's total crude steel capacity will reach 1.19 billion mt/year by end-2015, rising by 2.5% annually,
with capacity utilisation at about 71%.
Market Size
Marketline
1.9%
9.6%
11.7%
2.2%
7.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0
100
200
300
400
500
600
700
800
2014 2015 2016 2017 2018
Steel market value, USD bn Annual change
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III. Non-ferrous Metal Smelting and Pressing
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Subsector Highlights
Development
Not unlike the ferrous sector, nonferrous metal manufacturers have suffered from slower demand as the macro
economy has aligned with the new normal development course set by the government, growing at slower ratesthan the ones experienced in previous decades and real estate, infrastructure and manufacturing capacity have
stalled. The industry has received some government support by means of increased subsidies, but is still looking for
more sustainable mid- to long-term drivers.
Prices
Prices of nonferrous metals have stayed at low historical levels due to the subdued global demand and the
oversupply from Chinese producers. In 2014, spot prices of copper, aluminum and lead lost respectively 6.8%,
5.2%, 3.9% and 0.5% respectively, while zinc gained 12.8% vs. 2013.
M & A
Amid the ongoing consolidation trend, merger and acquisition deals have become increasingly frequent in the
subsector. According to Xinhua news agency, for the first three quarters of 2014, 32 out of the 93 listed nonferous
companies have resorted to M&A, either by direct participation or by taking part in different funds for this purpose.
Opening Up
The National Development and Reform Commission introduced new regulations in April 2015 which removed the
restrictions on foreign investments in copper, aluminum, lead and zinc smelting. However, restrictions on the
smelting of tungsten, molybdenum, tin, antimony and rare earths are still in place, while mining of tungsten,
molybdenum, tin, antimony and rare earths is altogether forbidden for foreign investors.
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Subsector Indicators
Chinas Nonferrous Metal Processing Subsector in Figures
Statistics office
2010 2011 2012 2013 2014
Sales revenues, RMB bn 2,918 3,687 4,127 4,654 5,075
Total assets, RMB bn 2,030 2,371 2,811 3,186 3,526
Accounts receivable, RMB bn 142 164 203 235 267
Total liabilities, RMB bn 1,236 1,476 1,769 2,024 2,256
Product inventories, RMB bn 96 129 154 139 154
Number of employees, mn 1,916 1,926 1,908 n/a n/a
Number of enterprises 8,200 6,765 6,954 7,168 7,236
Number of loss making enterprises 934 885 1,216 1,281 1,294
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Subsector Revenues & Costs
Revenues & Profit Cost of Sales
Statistics office, China Iron and Steel Association
2,918
3,687
4,127
4,654
5,075
162
207 176 145 149
38.9%
26.4%
11.9%12.8%
9.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
1000
2000
3000
4000
5000
6000
2010 2011 2012 2013 2014
Revenues, RMB bn Profit, RMB bn
Revenues annual growth
2,613
3,298
3,761
4,329
4,725
37.7%
26.2%
14.0%15.1%
9.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2010 2011 2012 2013 2014
Cost of sales, RMB bn Annual change
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Source:
Comments
Top 10 Non-ferrous Metals
The ten major non-ferrous metals include aluminum, copper, lead, zinc, nickel, tin, antimony, mercury, magnesium and titanium.
Ten Non-ferrous Metals Production
China Nonferrous Metals Industry Association
25,507 26,044
31,36034,389
36,97040,288
44,170
23,383 23,518
28,19131,001
33,58036,798
40,500
2008 2009 2010 2011 2012 2013 2014
Ten non ferrous metals, tonnes th Ten non ferrous metals: ore, tonnes th
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Aluminum Highlights
Development
The country is the global leader in both production and consumption as it currently produces about half of the total
global primary aluminum output. China accounted for 119 out of the 133 aluminum smelters built in the world
between 1985 and 2005. However, the segment has been one of the worst performers in the economy in the recent
quarters.
CapacityChinese companies have been particularly active in adding new capacitiy since the middle of 2014. According to the
Antaike network, total capacity is to reach 40 million tonnes in 2015, up from 35.64 million for 2014, the latter of
which represented an annual growth of 12.7%.
ExpansionAbout half of newly added capacity in 2014, or some 2 mn tonnes output, was built in the Xinjiang region, which
made it the fastest growing region in the country. In 2015, a smaller figure of 0.5 million tonnes of new capacity is to
be completed there.
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Source:
Aluminum Production
Aluminum Production, thou tonnes Aluminum Trade
China Nonferrous Metals Industry Association
16,244
18,135 20,251
22,046
24,38226.0%
11.6% 11.7%
8.9%
10.6%
0%
5%
10%
15%
20%
25%
30%
0
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 2012 2013 2014
Aluminium production, tonnes th Annual growth, %
9,734
10,127
11,065
11,916
12,657
13,189
11,255
8,573
5,188
9,1
83
12,296
11,403
11,895
13,613
2008 2009 2010 2011 2012 2013 2014
Aluminum imports, USD mn Aluminum exports, USD mn
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Source:
Comments
Aluminum Forecast
No drastic change is expected in the segments overcapacity situation over the next few years as rising demand for automobiles and other
aluminum-related goods is unlikely to offset the increase in supply.
A CAGR of 7.5% is expected over the forecast period.
The shift towards the western part of the country is to intensify further yet as energy, which constitutes a large proportion of aluminum
production cost, is much more affordable in the less developed regions in that part of China.
Market Size
Marketline
10.6%
9.7%
6.5%6.1%
7.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2014 2015 2016 2017 2018
Aluminum market value, USD mn Annual change
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Copper Highlights
Global Role With a 43% share, China was the worlds leading consumer of refined copper in 2013. It was also the second largest
producer of mined copper for the same year with 10% of global total, only behind Chile with 31%.
Slower
investmentsA total of 196 copper smelting facilities were under construction in China in 2014 with total investments equal to
RMB 23.2bn, down 3.6% from the previous year. Overall investments in the segment fell by 11.9% to RMB 46.3 bn.
Perspectives
BMI Research expects copper output to grow by an average rate of 2.5% annually until 2019, reaching a level of
1.84 mn tonnes. That would be comparable to an annual growth of 8.4% over the last decade. Low product prices
are expected to result in a number of closures of low-level producers, but a weaker RMB versus the USD is likely to
bring down production costs for Chinese players.
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Source:
Copper Production
Refined Copper Production Copper Trade
China Nonferrous Metals Industry Association
4,540
5,1635,879
6,839
7,959
12.1%
13.7% 13.9%
16.3% 16.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2010 2011 2012 2013 2014
Refined copper production, tonnes th Annual growth, %
35,72037,191
57,640
68,66070,339
68,828 68,332
5,033
3,168
4,194
6,024
6,515
6,451
6,127
2008 2009 2010 2011 2012 2013 2014
Copper imports, USD mn Copper exports, USD mn
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Lead & Zinc
Lead Production
Lead Trade
Zinc Production
Zinc Trade
China Nonferrous Metals Industry Association
4,158
4,6044,591 4,475
4,221
10.2% 10.7%
-0.3%-2.5%
-5.7%
-10%
-5%
0%
5%
10%
15%
0
1,000
2,000
3,000
4,000
5,000
2010 2011 2012 2013 2014
Lead product ion, tonnes th Annual growth, %
5,2095,212
4,881
5,302
5,82721.5%
0.1%
-6.4%
8.6% 9.9%
-10%
-5%
0%
5%
10%
15%
20%
25%
4,400
4,600
4,800
5,000
5,200
5,400
5,600
5,800
6,000
2010 2011 2012 2013 2014
Zinc production, tonnes th Annual growth, %
1,774
2,043
2,510
3,178 3,273
2,182 2,236
290120 169 211 56 151 156
2008 2009 2010 2011 2012 2013 2014
Lead imports, USD mn Lead exports, USD mn
2,053
3,284 3,344 3,347
2,7273,028 3,142
278 131 179 217 104 96423
2008 2009 2010 2011 2012 2013 2014
Zinc imports, USD mn Zinc exports, USD mn
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Other Major NF Metals Production
Other Major Non Ferrous Metals Production, thou tonnes
China Nonferrous Metals Industry Association
651675
698
770
874
193 200
242
312
263
159 175
197
279
354
149 156 148 159187
57 6882
106 101
2010 2011 2012 2013 2014
Magnesium Antimony Nickel Tin Titanium
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Comments
Source:
Precious Metals
China is the world leader in gold production, accounting for some 16% of global total output followed by Australia, Russia and the U.S.
The country is the worlds second largest silver producer in the world, only behind Mexico which produced 5,400 tonnes in 2013.
Exports of precious metals and precious metals jewelry have been growing at a staggering rate, from USD 1.8mn in 2004 to USD10 mn in
2011 and then 48.5 mn in 2014. In 2014 alone, exports have increased by as much as 67.9%.
Gold Production & Consumption Silver Production
China Nonferrous Metals Industry Association, Statista
341 361403 428 430
516
761832
1,176
886
8.6%
5.9%
11.7%
6.2%
0.4% 0%
2%
4%
6%
8%
10%
12%
14%
0
200
400
600
800
1000
1200
1400
2010 2011 2012 2013 2014
Gold product ion, tonnes Gold consumption, tonnes
Production annual growth, %
3,500
3,700
3,900
4,100
4,200
3000
3200
3400
3600
3800
4000
4200
4400
2010 2011 2012 2013 2014
Silver production, metric tons
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IV. Metal Products Manufacturing
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Source:
Subsector Indicators
Chinas Metal Product Manufacturing Subsector in Figures
Statistics office
2010 2011 2012 2013 2014
Sales revenues, RMB bn 1,964 2,295 2,907 3,284 3,527
Total assets, RMB bn 1,316 1,519 1,941 2,139 2,282
Accounts receivable, RMB bn 223.26 236.66 309.61 349.25 369.09
Total liabilities, RMB bn 724.96 857.73 1062.1 1,143 1,194
Product inventories, RMB bn 77 85 107 114 126
Number of employees, mn 3446.4 3115.1 3467.4 n/a n/a
Number of enterprises 25,703 16,573 18,557 18,934 19,645
Number of loss making enterprises 2,405 1,433 1,926 1,990 2,090
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Source:
Subsector Revenues & Costs
Costs and Revenues Output and Sales Value
Statistics office
1,964
2,295
2,907
3,284
3,527
136
155 184 188 201
26.7%
16.8%
26.7%
13.0%
7.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
500
1000
1500
2000
2500
3000
3500
4000
2010 2011 2012 2013 2014
Revenues, RMB bn Profit, RMB bn
Revenues annual growth
1,684
1,971
2,500
2,852
3,081
26.0%
17.1%
26.8%
14.1%
8.1%
0%
5%
10%
15%
20%
25%
30%
0
500
1000
1500
2000
2500
3000
3500
2010 2011 2012 2013 2014
Cost of sales, RMB bn Annual change
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Source:
Metal Products Output
Steel Products Output, thou tonnes (unless specified) Other Metal Products, thou tonnes
China Iron and Steel Association, China Nonferrous Metals Industry Association, Statistics office
Product 2010 2011 2012 2013 2014
Railway use 5,503 4,410 5,154 6,080 5,654
Rod 68,926 69,401 74,102 78,200 79,418
Bar 130,964 154,056 175,377 206,192 215,277
Wire rod 105,528 122,591 136,161 150,893 153,832
Ultra heavy plate 4,817 6,179 5,370 6,637 7,270
Heavy plate 22,236 26,036 23,410 23,988 26,385
Medium plate 42,417 41,237 38,028 38,124 40,009
Hot rolled sheet 6,197 9,670 7,924 7,309 8,158
Cold rolled sheet 22,442 25,923 25,618 30,317 37,100
Medium thick wide strip 102,892 105,038 108,662 119,882 123,008
Cold rolled thin wide strip 37,609 42,432 50,313 55,516 52,968
Hot rolled thin wide strip 29,336 32,534 36,388 39,502 42,596
Hot rolled narrow strip 45,212 46,883 50,932 59,319 59,592
Cold rolled narrow strip 8,245 9,653 9,189 10,251 12,487
Plated sheet, plate, strip 28,466 31,566 37,579 43,378 50,749
Coated sheet, plate, strip 5,538 5,833 7,779 7,590 8,252
Electrical steel sheet,
plate, strip5,717 6,197 6,588 8,385 8,852
Seamless tube & pipe 25,281 26,490 28,197 29,628 31,369
Welded tube & pipe 32,370 40,487 47,754 50,162 57,611
Product 2010 2011 2012 2013 2014
Steel wire 2,016 3,634 5,305 n/a n/a
Steel wire rope 2,779 3,121 3,727 n/a n/
Steel strand 2,460 2,862 3,690 3,973 6,047
Metal cutting tool, units mn 4.4 5.6 6.8 7.4 9.6
Metal container cub m th 73,608 90,560 94,965 102,725 130,145
Others 14,595 17,924 18,983 23,585 35,290
Product 2010 2011 2012 2013 2014
Copper product 9,851 10,373 11,014 14,987 17,837
Aluminium product 19,906 23,519 25,941 39,624 48,458
Lead product 9.7 10.1 9.7 n/a n/a
Zinc product 16.8 14.7 14 n/a n/aNickel product 6.314 4.542 4.853 n/a n/a
Tin product 38.578 39.719 39.241 n/a n/a
Magnesium product 0.059 0.087 0.112 n/a n/a
Copper coil rod 1,812 2,116 2,305 n/a n/a
Aluminium coil rod 906.8 1,278 1,192 n/a n/a
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Source:
Ferrous Metal Products Trade
Ferrous Metal Products Trade, USD mn
China Iron and Steel Association
Product 2010 2011 2012 2013 2014
Import Export Import Export Import Export Import Export Import Export
Steel products 16,429 42,558 15,586 48,904 13,660 55,793 14,077 62,336 14432 93784
angle, shape, section 419 5,187 337 6,690 324 11,783 387 4104.8 380.84 4598.8
rod & bar 1,129 1,927 1,148 2,569 895 3,357 1,027 17,106 1203.2 30863
sheet & plate 13,921 24,812 13,202 26,586 11,666 26,984 11,886 27,642 12081 43670
tube & pipe 480 7,309 524 9,241 426 9,635 425 9,570 476.49 10058
for railway use 189 439 92 533 116 540 111 378 46 593
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Source:
Non-ferrous Metal Products Trade
Non-ferrous Metal Product Exports, USD mn Non-ferrous Metal Product Imports, USD mn
China Nonferrous Metals Industry Association, Statistics office
3,872
4,5264,224 4,177 4,232
7,543
10,362
9,799
10,407
11,948
110116 37 95 7433 43 30 35
7432 60 33 57 3787 125 139 150 126
2010 2011 2012 2013 2014
Copper products Aluminium products
Lead products Zinc products
Tin products Nickel products
7,6007,828
6,7436,446
6,037
3,126
3,5933,390
3,026 3,018
26 6 7 389 77 61 55
53197 239 240 211 211496 577 605 533 481
2010 2011 2012 2013 2014
Copper products Aluminium products
Lead products Zinc products
Tin products Nickel products
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V. Main Players
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Source:
M&A Deals
Top 15 M&A15 Deals in Chinas Metal Processing Sector (Jan 2014-May 2015)
DealWatch
Date Target Company Deal Type Buyer Seller Deal Value(USD mn)
Deal ValueSource
Stake%
3.1.2014 Minmetals Development Co LtdMinority stake
purchaseChina Minmetals Corp 1627.11 (Official data) 42.56
31.1.2014 Sulzer Metco Acquisition OC Oerlikon Corporation AG Sulzer Ltd 945.65 (Official data) 100
8.11.2014 Shandong Iron and Steel Co LtdMinority stake
purchaseInstitutional investors 813.73 (Official data) 30.03
25.2.2015 Jiangsu Shagang Co Ltd Acquisition
Li Feiwen - private investor; Liu Zhenguang - private investor; Huang Lihou - private investor; Li
Qiang - private investor; Wang Jiman - private investor; Zhu Zheng - private investor; Liu Benzhong -
private investor; Yan Weimin - private investor; Jin Jie - private investor
Jiangsu
Shagang
Group Co Ltd
748.3 (Official data) 55.12
3.4.2014
Xinjiang Production and Construction
Corps Agricultural Division Eight TianshanAluminium Plant Co Ltd
Acquisition Xinren Aluminum Holdings LtdPrivate
investor(s)510.65 (Official data) 30
15.5.2015Hubei Sanxia New Building Materials Co
LtdAcquisition
Shenzhen Mengshang Fund Management Co Ltd; Shenzhen Haizhimen Leisure Sports DevelopmentCo Ltd; Shenzhen Qianhai Furong Asset Management Co Ltd; Golden Eagle Asset Management Co
Ltd; Xu Xizhong - private investor; Chen Gengfa - private investor
500.37 (Official data) 59.69
19.3.2014 Xiamen Tungsten Co LtdMinority stake
purchase
Nanjing Gaoke Co Ltd; Fujian Investment and Development Group Co Ltd; Fujian Rare Earth (Group)
Co Ltd; Shanghai Rationalize Investment LP; Golden Circle Capital Management (Xiamen) Co Ltd;
Haoxi Equity Investment Management (Shanghai) Co Ltd; Ke Xiping - private investor
493.97 (Official data) 18.03
10.10.2014Lianzhong Guangzhou Stainless Steel
CorpAcquisition Anshan Iron and Steel Group Corp
E United
Group493.11
(Market
estimate)60
14.4.2015Hubei Fuxing Science and Technology Co
Ltd
Minority stake
purchaseInstitutional investors 491.27 (Official data) 28.76
24.12.2014Jilin Liyuan Precision Manufacturing Co
Ltd
Minority stake
purchaseInstitutional investors 490.96 (Official data) 25
17.2.2015Shenzhen Green Eco-manufacture Hi-techCo Ltd
Minority stakepurchase
Shenzhen Zhongzhi Chantou Huanbao Investment Partnership LP; Guangzhou Huiyin Aofeng Equity
Investment Fund Management Co Ltd; Shanghai Xinghong Asset Management Co Ltd; ShanghaiStar-Venture Capital Management Center LP; China Post & Capital Fund Management; Ping An
Asset Management Co Ltd; Huaxia Life Insurance Co Ltd; Shanghai Deyi Huiyin Equity Investment
Co Ltd ; Zhongqi Gangerqi Nanjing Venture Capital Fund Center LP
489.03 (Official data) 20.81
27.11.2014Changshu Fengfan Power Equipment Co
Ltd
Minority stake
purchaseInstitutional investors 488.98 (Official data) 30.91
9.6.2015 China Western Power Industrial Co LtdMinority stake
purchase
Shenzhen CDB Jintai Investment Development Partnership LP; Zhuhai Hengqin Yuancheng Equity
Investment Center LP; Beijing Haihoutai Equity Investment Center LP; Suzhou Haihoutai Equity
Investment Center LP; Zhoushan Venture Investment Partnership LP
484.07 (Official data) 30.31
10.1.2015 Baocheng Investment Co LtdMinority stake
purchase
Zhou Zhenke - private investor; Xu Jinguang - private investor; Chen Yueqiang - private investor;Huang Yongjian - private investor; Chen Shaoda - private investor
402.26 (Official data) 66.03
29.9.2014 Yunnan Aluminium Co LtdMinority stake
purchaseInstitutional investors 389.04 (Official data) 25.61
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Source:
M&A Activity, 2013-2014
Number and Value of Deals in Metal Processing Sector
Number of Deals by Deal Type (%)
Number of Deals by Deal Value, USD (%)
Number of Deals by Region of Investors (%)
DealWatch
5,
750
4,
127
4,
051
7,
724
4,
435
1,
740
2,
765
3,
177
34
42
32 33
27
2125
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014
Total value of deals (USD mn) Number of Deals
Acquisition36.6%
Minority stakepurchase
30.2%
Block Trade27.2%
IPO 2.2%
Open marketpurchase 2.6%
SPO 1.3%
0-50mn;53.4%
100.1-500mn;23.3%
50.1-100mn;15.5%
500.1-1000;2.6%
> 1000mn;2.6%
Undisclosed;2.6%
China 85.6%Hong Kong5.6%
EMEA 4.4%
North & SouthAmerica 2.5%
Asia 1.9%
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Highlights
Source:
Baoshan Iron & Steel Co., Ltd.
Financial Performance
Other Financial Indicators
Baoshan Iron & Steel Co., Ltd., the largest subsidiary of
industry giant Baosteel Group, is active in the
manufacturing and trade of iron and steel products.
The company was incorporated in 2000 and listed on the
Shanghai Stock Exchange later in the same year.
Baoshan is the largest listed steel producer in China,
supplying about half of the nation's auto sheet market. The drop in profit in FY2014 was attributed to rising income
taxes and the general industry problems including low
profitability and overcapacity.
In early 2015, the company registered its new steel e-
commerce online platform ouyeel.com by borrowing RMB
160bn from 15 leading Chinese banks.
The groups stated strategic goal is transformation from
iron and steel to materials, from manufacturing to services
and from China to the world. Major local competitors include Hebei Iron & Steel Co., Ltd.,
Angang Steel Co. Ltd., Gansu Jiu Steel Group Hongxing
Iron & Steel Co., Ltd., Handan Iron and Steel Group Co.
Ltd., and Taiyuan Iron and Steel Group.
Company data
2010 2011 2012 2013 2014
Total assets, RMB mn 216,065 242,122 220,912 226,704 228,653
Total liabilities, RMB mn 111,319 117,630 97,016 106,747 104,448
Stockholder equity, RMB
mn104,746 113,470 117,342 119,957 124,205
Net cash from opera-ting
activities, RMB mn18,856 12,242 22,202 12,090 28,280
Cost of sales 177,817 203,041 176,879 171,718 168,931
Earnings per share 0.74 0.40 0.58 0.35 0.35
202,413220,872
191,135 189,688 187,414
17,076
9,260
12,664
8,010
8,278
12,889
7,362
10,090
5,818
5,792
2010 2011 2012 2013 2014
Revenues, RMB mn EBT, RMB mn Net income, RMB mn
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Source:
Baoshan Iron & Steel Co., Ltd. (cont'd)
Expenses, RMB mn
Regional Distribution of Revenues (2014)
Revenues from Steel Products, RMB mn
Company data
2013 2014 Change y/y
Sales expenses 1,963 2,200 +12.09%
Administrative expenses 6,881 7,728 +12.32%
Financial expenses -544 488 n/a
R&D expenses 3,430 3,931 +14.61%
China 89.9%
Resf of theWorld 10.1%
50,883 51,369
31,320 28,816
4,8934,971
9,8309,116
7,111
4,849
0
20,000
40,000
60,000
80,000
100,000
120,000
2013 2014
Other ironand steelproducts
Steel tubesand pipes
Heavy plates
Hot-rolledcarbon steelsheets and
coils
Cold-rolledcarbon steelsheets andcoils
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Highlights
Source:
Jiangxi Copper Company Ltd.
Financial Performance
Other Financial Indicators
Jiangxi Copper Company Ltd. is the largest copperproducer in China. The company is also a major supplier ofgold, silver, selenium, tellurium, rhenium, as well as sulfidechemicals. It is one of the largest Chinese producers ofgold and silver.
The Company, established back in 1997, is listed both inShanghai and Hong Kong.
Its major assets include six mines under production, PRCslargest blister and copper concentrate smelter and refiner, 8
copper processing plants and two sulphuric acid plants. JCCs reuse rate of industrial water surpassed 93% in
2014.
Sales to the five top customers in 2014 accounted for13.33% of total operating revenues.
Plans for 2015 include the production of 1,220,000 tonnesof copper cathode (from 1,200,000 in 2014) ,25.4 tonnes ofgold (26), 560 tonnes of silver (567), 2,900,000 tonnes ofsulphuric acid (3,010,000), and 209,500 tonnes of coppercontained in copper concentrate (210,000).
The 20% fall in profits in 2014 was mostly due to theweakness in copper prices on the market.
The company has actively been looking for newopportunities to expand its international presence. Mostrecently, its senior management has been exploring theprospects for outsourcing copper mining and processing inKazakhstan, in line with the central governments OneRoad One Belt policy.
Company data
Indicator 2010 2011 2012 2013 2014
Cost of revenue, RMB mn 68,161 106,981 150,609 168,423 192,225
Total operating costs and
expenses, RMB mn 2,300 2,989 1,672 2,687 2,745
Total assets, RMB mn 54,845 68,150 78,133 88,767 95,322
Total liabilities, RMB mn 20,722 28,847 35,314 44,244 49,588
Total stockholders' equity,
RMB mn34,123 39,303 42,820 44,523 45,734
Earnings per share 1.56 1.89 1.51 1.03 0.82
76,441
117,641
158,556175,890
198,833
8,047
9,771
7,435
6,532
5,721
4,907
6,549
5,216
3,565
2,851
2010 2011 2012 2013 2014
Revenues, RMB mn Gross profit, RMB mn Net income, RMB mn
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Source:
Jiangxi Copper Company Ltd. (cont'd)
Revenues Distribution by Business (2014)
Revenues Distribution by Region (2014)
Expenses, RMB mn
Company data
545 547
1,7031,846
157
-6
2,328 2,326
-1,000
0
1,000
2,000
3,000
4,000
5,000
2013 2014
Expensesonresearchanddevelopme
ntFinancialexpenses
Administrativeexpenses
Sales anddistributionexpenses
Copper
cathodes59.3%
Copper rodsand wires
23.3%
Copperprocessing
products 2.6%
Gold 3.7%Silver 1.3%
Chemicalproducts 0.7%
Rare metalsand other non-ferrous metals
7.9%Others 1.2%
MainlandChina 87.6%
Hong Kong4.9%
Others 7.5%
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Highlights
Source:
Aluminum Corporation of China Ltd.
Financial Performance
Other Financial Indicators
Aluminum Corporation of China Ltd. (CHALCO) is active in
the aluminum, alumina, energy and trading segments. It is
Chinas largest alumina and primary aluminum producer
and the worlds second largest alumina producer
It was established as a joint stock limited company in 2001
by the Aluminum Corporation of China (CHINALCO),
Guangxi Investment (Group) Co., Ltd. and Guizhou
Provincial Materials Development and Investment
Corporation.
CHALCO shares are listed on New York and Hong Kong
stock exchanges in December 2001. CHALCO is majority
owned by CHINALCO.
The Company owns 10 branches, 1 research institute, and
12 subsidiaries
The huge loss reported in 2014 was attributed to
impairment charges, weak aluminum prices and provisions
for lay-off costs. However, the Company remained hopeful
for the future, expecting "relatively quick consumptiongrowths in transportation, durable goods and new economic
sectors for the coming decade.
For 2015, CHALCO vowed to lower its production costs by
5% for alumina and by 3% for aluminum, after having
achieved respectively 5.18% and 4.03% in 2014.
Company data
138,206 143,437169,431
141,772
7,370
11
2,751
634
691
-8,644
751
-17,049
2011 2012 2013 2014
Revenues, RMB mn 113060.949 Gross profit, RMB mn 7413.145
Profit for the year, RMB mn 969
Indicator 2010 2011 2012 2013 2014
Cost of sales, RMB mn 105,648 130,836 143,426 166,680 141,139
Operating expenses, RMB
mn 6,250 7,165 8,830 10,233 12,549
Total assets, RMB mn 141,322 157,134 175,017 199,507 192,632
Total liabilities, RMB mn 84,135 98,979 121,246 145,805 153,003
Stockholers' equity, RMB
mn51,581 51,826 43,808 44,358 28,276
Earnings per share 0.06 0.02 -0.61 0.07 -1.2
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Highlights
Source:
Aluminum Corporation of China Ltd. (cont'd)
Revenues by Business, in RMB mn
Expenses, in RMB mn
The output of alumina in 2014 amounted to 12.02 milliontonnes, representing an annual decrease of 1%, theoutput of alumina chemicals amounted to 1.82 milliontonnes, representing an annual increase of 5.81%, andthe output of primary aluminum products amounted to3.38 million tonnes.
In May 2015, the company's parent group announced plansto set up two financial arms with a total capital of RMB2.8bn to facilitate its financial business and help it deal withthe losses suffered in recent years.
Meanwhile, CHALCO has also started spinning off some ofits non-core assets in order to reduce losses. In Decemberit announced that it would be selling three fully-ownedcompanies as well as one 72%-owned and one 27%-owned. The subsidiaries in question were engaged insilicon metal, photovoltaic materials and polysiliconproduction.
In August 2014 CHALCO was approved by the governmentto integrate rare earth enterprises in the provinces ofGuangxi, Jiangsu, Shandong and Sichuan to its whollyowned subsidiary China Rare-earth Corp. In early 2015 italso formed a coalition with eleven other local smeltersaiming to boost local aluminium prices.
Recently, the Company was hit by a corruption scandal asits general manager Sun Zhaoxue was charged withsoliciting and accepting bribes and was dismissed from hissenior position at the Communist Party of China. In anothermajor change in management, chairman Xiong Weipingwas replaced by former Chengdu mayor Ge Honglin.
Company data
1,448 1,488 1,834 1,859 1,753
2,450 2,5532,750 2,947
4,8322,190
2,917
4,0615,233
5,670
162206
185
194
294
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014
Research anddevelopmentexpenses
Finance costs,
net
General andadministrativeexpenses
Selling anddistributionexpenses
31,846 33,980 30,706
58,036 49,95340,423
117,295 137,283
110,108
05,159
5,242
332789
348
0
50,000
100,000
150,000
200,000
250,000
2012 2013 2014
Corporateand otheroperatingsegmentsEnergysegment
Tradingsegment
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Highlights
Source:
Hebei Iron and Steel Co., Ltd
Financial Performance
Other Financial Indicators
Hebei Iron and Steel Co., Ltd. (HBIS) is a Shijiazhuang
based company engaged in smelting, processing and
distribution of iron and steel products. Through its
subsidiaries and affiliates, the company is also involved in
the manufacturing and distribution of coke, industrial gas
and chemical products, among others.
Established in 2008 after the merger of Tangsteel and
Hansteel, the company is listed on the Shenzhen Stock
Exchange. It is the world's second-biggest and China'slargest steelmaker by production capacity.
HBIS is targeting USD 20bn in oversees revenues by 2018,
which would constitute some 30% of the company's total. In
2014, the share of overseas revenues accounted for 3.4%,
up from 1.2% in the previous year. It has stakes in about 70
overseas companies.
In 2013, Hebei acquired a 10% stake in Swiss-based
trading firm Duferco International Trading Holding (DITH)
for USD 78mn. The following year, Hebei signed an agreement to raise its
stake in DITH to 51%.
In 2014, Hebei announced plans to build a steel mill in
South Africa. The plant will produce 5mn metric tonnes
mostly of construction steel when completed in 2019.
Company data
116,919133,344
111,630 110,25598,257
8,349
10,799
9,224
9,371
10,712
1,411
1,383
109
116
697
2010 2011 2012 2013 2014
Revenues, RMB mn Gross profit, RMB mn Net income, RMB mn
Indicator 2010 2011 2012 2013 2014
Cost of revenue, RMB mn 108,570 122,545 102,406 100,884 87,546
Total operating costs and
expenses, RMB mn 6,686 9,022 8,992 9,140 9,774
Total assets, RMB mn 104,938 141,041 154,784 166,898 170,368
Total liabilities, RMB mn 75,507 98,317 112,242 124,338 127,331
Total stockholders' equity,
RMB mn29,431 42,723 42,542 42,560 43,037
Earnings per share 0.21 0.13 0.01 0.01 0.07
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Source:
Hebei Iron and Steel Co., Ltd (cont'd)
Revenues by Product, in RMB mn
Revenues by Region, in RMB mn
Expenses, in RMB mn
Output (tonnes)
Company data
598 649
5,489 5,327
3,285 3,866
1,7771,742
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2013 2014
Expenses onresearch anddevelopmentFinancialexpenses
Administrativeexpenses
Sales and
distributionexpenses
89,98581,790
4,7934,225
1,052814
7,2108,207
0
20,000
40,000
60,000
80,000
100,000
120,000
2013 2014
Others
Vanadiumproducts
Billets
Steelproducts
RegionOperating revenue,
RMB mn (2013)
Share of
total
(2013)
Operating
revenue,
RMB mn
(2014)
Share of
total
(2014)
Northern China 75,888 73.6% 69,167 72.8%
South Central China 5,833 5.7% 5,473 5.8%
East China 18,869 18.3% 15,892 16.7%
Northeast China 410 0.4% 452.3 0.5%
Northwest China 430 0.4% 640 0.7%
Southwest China 355 0.3% 223 0.2%
Outside China 1,255 1.2% 3,218 3.4%
Product 2013 2014Annual
change
Steel products 29,743,630 29,599,312 -0.5%
Chemical products 17,075 14,907 -12.7%
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Highlights
Source:
Shanxi Taigang Stainless Steel Co.,Ltd
Financial Performance
Other Financial Indicators
Shanxi Taigang Stainless Steel Co., a listed subsidiary of
the Taiyuan Iron and Steel (Group) Co. (TISCO), is a
leading maker of stainless steel in terms of production
capacity.
The company, which was ranked 44th in Fortune China's
list of Top 500 listed companies in the country in 2014,
down from 36thin 2013, is listed on the Shenzhen Stock
Exchange.
2014 steel products output of the firm reached 10.72
tonnes, up by 7.35% from 2013. Of those, 3.81 tonnes were
stainless steel, up 18.0% y/y. Both 2014 figures fell short of
the initial plans due to the companys having to deal with
overcapacity issues. Billets production rose by 6.4% to
10.04 tonnes.
Taigangsshare In the stainless steel market in China has
shrunk in 2014, reaching 17.5% from 19.3% in 2013.
Company data
87,19896,220
103,515 105,020
86,766
7,741
8,244
7,686
6,659
6,757
1,372
1,805
1,106
630
442
2010 2011 2012 2013 2014
Revenues, RMB mn Gross profit Net income, RMB mn
Indicator 2010 2011 2012 2013 2014
Cost of revenue, RMB mn 79,457 87,976 95,829 98,361 80,009
Total operating costs and
expenses, RMB mn 6,284 6,432 6,684 6,153 6,452
Total assets, RMB mn 63,605 65,812 69,467 75,811 76,306
Total liabilities, RMB mn 41,762 42,508 45,211 51,181 51,326
Total stockholders' equity,
RMB mn21,843 23,304 24,256 24,630 24,980
Earnings per share 0.24 0.32 0.19 0.11 0.08
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Source:
Shanxi Taigang Stainless Steel Co.,Ltd (cont'd)
Revenues by Business, in RMB mn
Revenues by Region, in RMB mn
Expenses, in RMB mn
Company data
1,4251,707
3,0472,982
871
1,112
2,252
2,294
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2013 2014
Expenses onresearch anddevelopment
Financialexpenses
Administrativeexpenses
Sales anddistributionexpenses
34,161 38,395
20,085 16,877
2,973 3,312
47,09027,584
0
20,000
40,000
60,000
80,000
100,000
120,000
2013 2014
Otheractivities
Plain carbonsteel billets
General steelproducts
Stainlesssteel
Region
Operating
revenue,
RMB mn
(2013)
Share of
total
(2013)
Operating
revenue,
RMB mn
(2014)
Share of
total
(2014)
Northern China 57,156 61.0% 45,241 52.5%
South Central China 13,435 14.3% 8,353 9.7%
East China 8,353 8.9% 15,259 17.7%
Northeast China 3,498 3.7% 1,644 1.9%
Northwest China 1,810 1.9% 1,220 1.4%
Southwest China 1389 1.5% 1,258 1.5%
Outside China 8,046 8.6% 13,193 15.3%
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VI. Regional Distribution
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Source:
Appendix: Regional Distribution
Steel & Zinc Regional Distribution
China Nonferrous Metals Industry Association, China Iron and Steel Association
North China
Steel products output (2014):
379.6 tons mn (33.7% of total)
Zinc output (2014)
0.6 tons mn (9.5% of total)
Northeast China
Steel products output (2014):
88.4 tons mn (7.9% of total)
Zinc output (2014)
0.3 tons mn (4.5% of total)
East China
Steel products output (2014):
375.7 tons mn (33.4% of total)
Zinc output (2014)
1.1 tons mn (18.8% of total)
South Central ChinaSteel products output (2014):
168.6 tons mn (15% of total)
Zinc output (2014)
2.2 tons mn (38.1% of total)
Southwest China
Steel products output (2014):
67.4 tons mn (6% of total)
Zinc output (2014)
1.3 tons mn (22.9% of total)
Northwest China
Steel products output (2014):
45.8 tons mn (4.1% of total)
Zinc output (2014):
0.4 tons mn (6.3% of total)
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Contact:
Corporate Headquarters6-8 Bouverie Street
London EC4Y 8DDUK
Voice: +44 20 7779 8100
Fax: +44 20 7779 8224
Americas Headquarters225 Park Avenue South
New York, New York 10003US
Voice: +1 212 610 2900
Fax: +1 212 610 2950
Asia HeadquartersEucharistic Congress Bldg. No.
III4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137
Disclaimer:
The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney InstitutionalInvestor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright 2015 EMIS, all rights reserved. A Euromoney Institutional Investor company.
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