CHINA MINING News

China strengthens hold over oil market as price maker

Source: www.chinamining.org   Citation: Reuters  Date: August 12, 2015

China`s growing ability to buy and sell millions of barrels of crude oil on the Asian physical market in a matter of minutes through its main trading firms has given China so much clout that other traders are often forced to follow its agreed prices.

Leading Chinese oil traders have cornered the market on several occasions since October last year. Early this month, Chinaoil, the trading arm of PetroChina , bought 5 million barrels of crude in just 30 minutes through Asia`s main price-finding mechanism organised by Platts, part of McGraw Hill Financial Inc (MHFI.N).

Market power is shifting towards big consumers, with oil output at record highs and global demand slowing. China`s main oil traders Unipec and Chinaoil have been able to cherry-pick the best offers and take advantage of cheap oil to build strategic reserves.

"China`s view of supply security is now increasingly a question of becoming a price maker and being involved in the entire supply chain globally," said Michal Meidan, director of consultancy China Matters.

This year, China is challenging the United States as the world`s No.1 crude buyer, with weaker oil prices lowering the cost of building China`s strategic petroleum reserves. China bought nearly 11 percent more crude in the first seven months of 2015 from a year earlier. [O/CHINA1]

For China, the cost of importing roughly 200 million barrels of crude a month has fallen to $10 billion at current prices around $50 a barrel, from $23 billion when prices were at $115 a barrel last summer.

`GET OUT OF THE WAY`

Nowhere has China`s move from price taker to maker been more obvious than in daily physical crude oil trading.

Unipec, the trading unit of Sinopec Corp , and Chinaoil often dominate daily trading, surpassing volumes dealt by Western majors.

"Get out of the way when the train is running," said a trader with an Asian refiner. "Little guys like us can get run over easily."

Riding on China`s growth of the past decade, which has not only seen it become a top crude importer but also a large exporter of refined products, Sinopec and PetroChina have evolved from being passive oil importers to sophisticated traders of crude oil and refined fuels.

Since the second half of 2014, both firms saw oil traders ascend to top management, replacing executives of either planning or refinery manager background, company sources said.

Sinopec and PetroChina do not comment on trade-related matters.

The huge volumes exchanged by China`s two major traders are straining Asia`s benchmark price-finding mechanism in the physical oil market, the Dubai Market-on-Close (MoC) by Platts.

In a process called "the window" by many traders, the soaring activity of these traders has often led little space for other participants to trade in the oil price-making process.

"The concern which I and a lot of others have is that the Dubai market does not reflect the true market price of Middle East crude with this kind of action," said Oystein Berentsen, managing director of crude oil with Singapore-based Strong Petroleum .

Additionally, the government is slowly deregulating its import market, granting more licenses to independent refiners to buy overseas crude, further boosting demand not just for physical crude from the Middle East, but also for the main international crude futures benchmarks Brent (LCOc1) and West Texas Intermediate (WTI) (CLc1).

"Granting of crude import licenses is one step towards deregulating China`s oil industry. This also helps boost demand for lighter grades," said Singapore-based brokerage Phillip Futures this week in a note to clients.

"Thus, it could help support both WTI and Brent, which are of the lighter grades."

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China urged to `take rightful place` in world gold markets

Source: www.chinamining.org   Citation: China Daily Europe   Date: August 10, 2015

Growth in the global gold market is shifting from West to East, and China should further liberalize its gold exchanges and allow international participation in order to "take its rightful place" in the world market, says Roland Wang, managing director for China at the World Gold Council.

Wang says the expansion of strong gold trading hubs in Asia will improve price discovery, liquidity, transparency and efficiency, all of which will transform the landscape of the global gold market, and China has a big advantage enabling it to benefit from these trends.

One significant catalyst for China`s increasing gold pricing power is the much-talked-about yuan-denominated gold index, expected to be launched by the Shanghai Gold Exchange by the end of 2015.

The Shanghai Gold Exchange is to launch the yuan-denominated gold index this year,
predicted to increase China`s gold pricing power. Photos provided to China Daily

This new gold index will provide new competition to the London Gold Fix, which is currently the global reference point for the industry, meaning that buyers and sellers of gold would look to the benchmark to determine the exact price of their specific trade.

The Shanghai Gold Exchange was established in 2002 to centralize China`s gold trading. It now consists of a Main Board for Chinese traders and an International Board, which is located in the Shanghai Free Trade Zone, which is dedicated to foreign investors.

Currently the Main Board and International Board are separate from each other because the renminbi is not freely convertible and China`s capital control means financial trades made by domestic and foreign traders have to be separate in order to help maintain this currency control.

But once the renminbi can be freely converted, the two boards are expected to merge and the SGE will become a significant gold exchange center globally, with Shanghai taking its place as one of the three major international gold exchanges, alongside New York and London, Wang says.

While China is a big consumer of gold globally, it still lacks gold pricing power, and Wang says Chinese banks need to increase their participation in international gold exchanges so that the demand and supply of gold in China can be reflected in gold prices in international markets.

"China`s lack of international participation tends to directly impact China`s competition for gold price-fixing power," Wang says.

"Only by involving Chinese financial institutions in the global gold fix mechanism, and by advancing renminbi-denominated commodities to encourage foreign investors to conduct business in the China market, can China increase its gold price-fixing power accordingly," he says.

One major milestone in China`s participation on international gold exchanges is Bank of China becoming the first Chinese lender to join the London Gold Fix, among seven other banks.

Administrated by the ICE Benchmark Administration Limited, the London Gold Fix is a twice daily electronic auction held in London which determines the benchmark gold price.

Wang says this move by the Bank of China will reinforce the connection between the Chinese and overseas markets, with the international gold price better reflecting supply and demand in China, as well as promoting the internationalization of the Chinese gold market.

"Bank of China`s participation in the Gold Fix is the first step for China being the largest gold market in the world, and to become a gold trading center along with London and New York," Wang says.

He says that in the long term China`s increasing gold pricing power globally will also fuel the renminbi`s internationalization, because the International Board of the SGE will offer a range of renminbi-denominated products for foreign investors to trade, which in turn will lead to increasing liquidity for renminbi internationally.

Historically, China`s renminbi was pegged to the dollar but after the financial crisis, extensive quantitative easing by the US has significantly diminished the value of Chinese foreign reserves. China has adopted a policy of gradually opening up its foreign exchange restrictions to help the renminbi become a reserve currency internationally.

Another initiative to help China`s participation in international gold trading is the SGE`s plan to soon establish the world`s largest physical gold fund, the Silk Road Gold Fund, sponsored by Shandong Gold Group.

The fund is expected to raise an estimated 100 billion yuan ($16.1 billion; 14.8 billion euros) and invest in physical gold and gold mining companies along the Silk Road, which is the ancient trade route that connects Asia with the West.

The news first appeared in a May report by Xinhua News Agency, which said that the fund will facilitate gold purchases for the central banks of member states to increase their holdings of gold.

The member states include about 60 countries that lie on the Silk Road, including the world`s two biggest consumers of gold - China and India. Together, these 60 countries account for more than half of the world`s gold production and 80 percent of the total global gold consumption.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Chinese coal producers suffer heavy losses in H1: NDRC

Source: www.chinamining.org   Citation: Xinhua   Date: July 31, 2015

Chinese coal producers suffered heavy losses in the first half of this year due to oversupply and falling coal prices, according to the country`s top economic planner Thursday.

Over 70 percent of the country`s medium-sized and large coal companies suffered losses in H1 and total losses of those loss-making coal producers stood at 48.41 billion yuan (7.91 billion US dollars), according to Lu Junling, a senior official with the National Development and Reform Commission.

Major coal producers as a whole made a profit of 20 billion yuan, equivalent to only 10.5 percent of their profit in the same period of 2012, according to the commission.

The coal market has been troubled by oversupply since 2012 and the situation is likely to continue in the second half as coal demand for electricity production and the steel and construction material sectors is expected to drop while coal production is still in its peak period, according to Guo Zhonghua, a researcher with China National Coal Association.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China sources 84% of H1 iron ore from Australia, Brazil; share seen rising

Source: www.chinamining.org   Citation: Platts   Date: July 31, 2015

China`s iron ore demand is falling, but its share of imports from mining giants Australia and Brazil is rising, which is squeezing smaller miners and curbing their supply.

China imported 453.1 million mt of iron ore in January-June, with 83% of it coming from Australia and Brazil, up from 74% in H1 2014, according to General Administration of Customs data released last week.

The country`s H1 crude steel output fell 1.3% year on year to 410 million mt, the first decline in nearly 20 years and a sign production may have peaked, the China Iron and Steel Association said.

Australia`s top three miners Rio Tinto, BHP Billiton and Fortescue Metals Group, as well as top global miner Vale, all announced higher output in April-June.

"When ore prices fall below $60/dmt level, it is difficult for domestic miners to survive," a Beijing-based trader said.

"When the price fall below $50/dmt level, it is below the cost curve for many overseas small miners."

The trader said output from smaller miners has fallen sharply this year. The Platts IODEX CFR China price was assessed at $56.75/dmt Wednesday, up from a record low of $44.50/dmt on July 8.

Capesize freight rates from Australia to China have increased 15.9% in the same period to $6.20/wmt Wednesday, from $5.35/wmt on July 8.

Given weak prices and lower China demand, miners large and small are looking for any means to cut costs.

"If the price stays below $45/dmt for three months, some big producers may have financial problem not to mention small ones," an international trader said.

Supply from smaller miners has as a result become less stable, leading some steel mills to prefer buying from the top miners. But others have continued to seek out smaller miners for deals.

"For the same iron content, non-mainstream ores is $3-$5/dmt cheaper than mainstream ores," said a steel mill source that buys regularly from small miners, adding that the discount applies mostly to low iron content fines used for blending.

Another steel mill source said most products are currently difficult to source in the spot market except for Pilbara Blend fines from Rio Tinto, and Newman fines and Yandi fines from BHP Billiton.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Peru looks to expand exports to China

Source: www.chinamining.org   Citation: China Daily Latin America   Date: July 30, 2015

The Consul General of Peru in Guangzhou expects the trade between China and his country to continue its robust momentum and generate 20 percent growth this year, while looking to export more categories of products to China.

Bilateral trade between the two countries stood at $16 billion last year, with products exported to China including minerals, fishmeal and fruits, and those imported from China including machinery, telecommunications equipment and chemicals, said David Gamarra Silva.

Two-way trade has been increasing since the free trade agreement (FTA) between the two economies took effect in 2010, he said.

China is Peru¡¯s largest trading partner and Peru is China¡¯s fifth largest partner in Latin America.

Starting this month (July), avocadoes from Peru will enter the Chinese market to join grapes, mangoes, oranges and lemons.

Gamarra hopes, through the FTA, to expand the trade to more fields and enable more small and medium-sized enterprises to export their products, such as jewelry made of pearls, gold and silver, and wool-made handicrafts, to China.

With a long coastline, his country is also developing the aquatic products industry.

However, many Peruvian businesses have no idea how to export their products to China and Gamarra¡¯s team provided guidance in business promotion to some Peruvian SMEs attending the China Import and Export Fair in Guangzhou in April and May.

Guangdong JMA Aluminum Profile Factory (Group) Co, one of the largest Chinese aluminum profile producers, sees a sizable demand in Peru and is seeking partners in the South American country, said Lin Runqu, manager of the export department.

The company plans to attend an international trade show of building materials in Lima, Peru’s capital, later this year.

Guangdong Homa Appliances Co, one of the largest refrigerator and freezer exporters of China, expected its sale to Peru to skyrocket from 3,000 units last year to 30,000 units this year, said Michael Yao, vice-president for sales and marketing.

He attributed the strong momentum to the relatively low tariff and the rising consumption in the Peruvian economy, adding the historical link with people with Chinese origin helps to advance the cooperation between the two economies.

Homa plans to expand its presence in emerging markets, including Peru, by developing new models and strengthening the cooperation with local distributors, brands and manufacturers, Yao said.

Meanwhile, Gamarra hopes that more Chinese investment could flow into Peru to produce higher value-added products, including in the mining industry and into infrastructure.

By the end of last year, Chinese investment into Peru had amounted to $18 billion, extending to sectors such as mining, forestry, fishery, construction and real estate.

He also sees the potential of bringing Peruvian businesses to the free trade zones in Guangdong, which offers incentives to foreign investors.

Gamarra takes special interest in promoting cultural exchanges between his country and South China, pointing to the fact that 12 percent of the Peruvian population of 30 million has Chinese origin.

Peruvians are familiar with Chinese culture and all provinces have many Chinese restaurants, which are called chifas, with similar pronunciation of Chinese word "have meal," he said.

Nearly 90 percent of Peruvian Chinese can trace their roots to cities like Guangzhou, Zhongshan, Jiangmen and Taishan in Guangdong province.

Gamarra is devoted to disseminating Peruvian culture in Guangdong, with links already forged between a number of universities in Peru and Guangdong, and an exhibition of photos depicting the Chinese migrants on his mind.

With his consulate general in Guangzhou formally launched last month, Gamarra pledged efficient visa service to Chinese travelers, 24 hours upon the collection of necessary documents to qualified applicants.

"Chinese travelers to Peru totaled 16,000 last year. China is a huge country and we want to increase that," Gamarra said.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China`s crude steel output suffers first decline in 20 years

Source: www.chinamining.org   Citation: China Knowledge   Date: July 30, 2015

China`s iron and steel industry experienced continuous recession in spite of the nation`s economy tending to be stabilized under a series of stimulus policies, according to the latest press release held by China Iron and Steel Association (CISA).

CISA said that the output of crude steel dropped 1.3% year on year to 410 million tons in the first half of this year, signaling the first decline in nearly 20 years, and steel overcapacity still remains.

In the first six months of this year, the sales income from China`s large and mid-sized steel companies fell 17.9% to RMB 1.5 billion, and its core business suffered a heavy loss of RMB 21.68 billion in the period.

The sustained sluggish demand and long-time low price for steel drag down innovation and transformation in the sector, a senior official in CISA said. Furthermore, the difficulty and high costs in corporate financing, together with the trade conflict due to surging steel export also put huge pressure.

The overproduction of steel products since 2008 financial crisis and falling prices caused by shrinking domestic demand have been the major headache for China.

China should actively adapt to the changes and transform their business model to foster new profit growth in the future, CISA added.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China`s June thermal coal imports slow to 4-month low

Source: www.chinamining.org   Citation: Platts  Date: July 23, 2015

China`s June imports of thermal coal slumped to a four-month low of 6.21 million mt, a 43% on-year drop and down 4% on the previous month, according to customs data released Wednesday.

The tally comprises bituminous and sub-bituminous coals but does not include lower calorific value material classified as lignite.

China`s thermal coal imports in the first six months of 2015 were 42.35 million mt, a 44% fall from the year-earlier period.

Trading sources have pointed to a multitude of reasons for China`s current downturn in imports including price cuts from domestic Chinese producers, more stringent regulatory scrutiny by the government, an industrial slowdown reducing power demand and increased competitiveness to coal from the hydropower sector.

China received 3.76 million mt of Australian thermal coal in June, down 28% on the year and 1% lower than May, while imports from Indonesia slumped 52% on-year to 1.76 million mt.

Thermal coal imports from Russia decreased 56% on-year to 661,790 mt, the lowest monthly intake since October 2012.

Meamwhile, China`s intake of lignite in June fell 18% on the year to 2.9 million mt, the lowest since Platts started collating lignite volumes in September 2012.

Lignite imports for the January-June period were 23.75 million mt, down 35% on the corresponding 2014 period.

First half imports from China`s top lignite supplier, Indonesia, stood at 22.15 million mt, down from 33.91 million mt a year earlier.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China`s top coal miners report declining output

Source: www.chinamining.org   Citation: Xinhua   Date: July 22, 2015

Flagging demand in China has dented output at the country`s top two coal firms, as slower economic growth took a toll on the world`s largest producer and consumer of the mineral.

China Shenhua Energy Co., Ltd., China`s largest coal miner, reported on Tuesday that its coal output declined 10.1 percent year on year to 139 million tonnes in the first half of 2015.

China Coal Energy Co., Ltd, the second-largest coal producer, said on the same day its output slumped 22.1 percent to 46.3 million tonnes in the first six months.

During that period, coal sales by China Shenhua Energy slipped 24.2 percent and those by China Coal Energy fell 12 percent, according to the two companies` statements.

The drop in sales was caused by weaker demand, the impact of government measures to reduce pollution and other reasons, China Shenhua Energy said.

The coal industry will remain anemic in the short term and it will get more difficult for producers to survive, said Wang Xianzheng, head of the China National Coal Association.

Coal accounts for about 66 percent of China`s primary energy consumption, 35 percentage points higher than the world average.

The country`s coal output fell in 2014 for the first time this century as a result of slowing economic growth, government efforts to reduce air pollution and increased investment in renewable energy.

China`s economy expanded 7 percent year on year in the second quarter, unchanged from the first quarter but still much slower than the previous double-digit growth.

Overall coal production in China slipped 6.1 percent in the first four months this year to 1.15 billion tonnes, with the pace of decline accelerating from a 3.5-percent fall registered in the first three months of the year, official data revealed earlier.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.