China copper market off to a slow start this year

  • HC Insider
  • China copper market off to a slow start this year
18 April 2019
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Our Metals & Minerals team recently attended the annual copper forum at Yingtan in China

The copper market started 2019 at lows not seen for around two years after having fallen sharply since mid-2018. Speakers and delegates at the Yingtan forum discussed many market issues, but the question of whether copper’s fortunes would rise in 2019 was central. We have selected the following as key takeaways from the event.

Copper concentrate
Concentrate supply has been lagging behind demand as Chinese smelters have been raising capacity over the last two years while investment on the mining side has been limited. Treatment and refining charges (tc/rc) have fallen sharply with the growth of smelting capacity and competition for concentrate. China’s concentrate imports hit a record high for the month in February, and the country’s smelters are expected to add a further 950,000t of capacity this year, according to research firm Antaike. The tightness of concentrate supply is expected to ease slightly over the first half of this year, but the tc/rc are likely to remain low. Trading groups recognise the opportunity presented by this situation, and companies started actively hiring concentrate traders toward the end of 2018. Some of our clients are working to strengthen their concentrate teams, and we expect this to continue in the medium term.

Refined copper
China imported a record 3.75mn t of refined copper in 2018, and import data show the country’s increased appetite running over into the start of this year. This increase broadly reflects the country’s need to meet downstream demand amid the ban on imports of Category 7 copper scrap and the fact that many smelters are undergoing maintenance. The current hiring trend on the refined copper side shows that companies are exercising caution and taking a wait-and-see approach, with no immediate need to build headcounts.

China’s economic expansion has slowed, but the market expects the country’s GDP to grow at 6-6.2% this year, signalling a stabilisation after last year’s bearish readings. The manufacturing purchasing-managers’ index rose to 50.8 in March from 49.9 in February, reflecting a return to expansion and calming concerns that the world’s second-largest economy was showing signs of industrial contraction. The general opinion at the Yingtan forum was that the refined copper market will remain steady and that there are reasons to anticipate demand growth, with the copper-hungry electric vehicle industry enjoying government support and the electronics sector showing signs of growth.

Access to credit has tightened for smaller Chinese companies, and market activity is becoming focused on the majors. The difficulties being faced by smaller participants have led to some companies closing down, driving supply of refined-metals talent higher.

The IIoT
Another topic of discussion at the Yingtan forum was the Industrial Internet of Things (IIoT) and the significance of the increasing digitalisation of the copper market. The IIoT platform collects big data and allows it to be shared across diverse groups such as copper companies, government agencies, lenders, insurers and logistics providers. The platform’s architecture allows greatly increased automation for producers, collaboration between companies and the ability to meet consumer needs with greater accuracy. The IIoT’s application is in its early stages and is therefore not driving talent demand, but we expect activity to increase with time.

 

China’s concentrate imports hit a record high for the month in February, and the country’s smelters are expected to add a further 950,000t of capacity this year, according to research firm Antaike.

People Moves

EMEA

  • Traxys has hired Julián Gonzalez to trade zinc and lead concentrates. Gonzalez was last at Trafigura, where he headed Refined Zinc and Lead Trading
  • George Mihaleto has joined Natixis as a Senior Metals Client Coverage Corporate Banker.  He joined from Standard Bank where he held a similar role
  • Amine Hayek has joined Freepoint Commodities in London as a Financial Coal Trader.  He was previously a Financial Coal Trader at Vitol in London
  • Raphael Bajer has joined Grafton Commodity Trading as a Coal Trader, based in Tel Aviv.  He was previously a Financial Coal Trader for Trailstone
  • Adhitya Sethaputra has moved to Geneva as the Head of Refined Metals, Europe in IXM. He was previously a Refined Metals Trader with IXM Singapore
  • Martin Riesen has Joined Bluequest in Zug in a Senior Metal Concentrates role.  Previously Martin was the Head of Trading at MRI in Zug

Asia

  • James Baulderstone is leaving Andrew Forrest’s Australian Industrial Energy for Sanjeev Gupta’s GFG Alliance. Baulderstone was heading up Mr. Forrest’s Australian Industrial Energy venture to create the nation’s first LNG import plant. He will be in charge of strategic projects for the GFG Alliance in Australia
  • Sari Mackay, formerly GM Supply Chain Grains Group at GrainCorp in Sydney, has joined Bradken in Newcastle as Executive General Manager Supply Chain
  • Mark Ruston, formerly Head of Mining at Newcrest Mining in Melbourne has joined Baralaba Coal Company in Brisbane as General Manager Operations
  • Matthew Wall, most recently a Senior Advisor to Allegiance Coal in Sydney, has joined Pacific American Coal as Chief Executive for Coal
  • Michael Negri, most recently CEO of Viadux, has joined Liberty OneSteel as Executive Managing Director of Liberty Building Products in Sydney
  • Amanda Yang, previously Copper Trading Manager at Jiangxi Copper, joined Raffemet in Shanghai as Head of Trading, managing the copper business
  • Alex Pang, previously Marketing Assistant/Manager with Ocean Partners, joined Azurite Trade in Hong Kong as Marketing Manager in 2019
  • Adam Waise, previously a Met Coal Broker at GlobalCOAL in Singapore has joined Anglo American as Sales Manager, Metallurgical Coal, still in Singapore
  • Metal Exchange Corporation (MEC) has announced the opening of a trading office in Singapore to serve the South and Southeast Asia markets. The Singapore office, MEC Global Trading Pte Ltd, will be led by Craig Weber, Global Business Manager. Craig has 24 years of experience with MEC and has previously established both the Zurich trading office and the Shanghai representative office
  • Jake Hays, formerly Chief Transformation Officer (CASCNA) with Cargill Minnesota has relocated to Cargill Shanghai as the Global Steel Trading Manager for Flats, reporting to Paul Ruston
  • Anthony Sive, previously MD at NEPEAN Building & Infrastructure, has joined Liberty OneSteel in Sydney as Executive Managing Director for Liberty Construction Solutions
  • Jonathan Deane, most recently Head of APAC Commodities Trading at JP Morgan in Singapore, has joined Grasshopper Capital, a Hedge Fund, in Sydney as an Investment Manager. He will retain his position as CEO of TCM Capital
  • Cyber Chen, previously with PSU & Brightpoint as an Iron Ore Trader, has joined Jiangtong International in Singapore, the international trading arm of Jiangxi Copper to build an iron ore desk
  • Michael Yu, previously Associate Director at IHS Markit where he was responsible for Asia coal/freight market intel and index, has joined Anglo American as a Thermal Coal Trader in Singapore
  • Jacky Song, previously Head of Iron Ore at E-Commodities, has joined SSOE subsidiary of Aditya Birla Group as the Iron Ore Trading Manager based in Shanghai
  • Yiming Zeng, previously Principal Market Analyst at South32 Singapore, has joined Anglo American in Singapore as Market Intelligence Manager for Metallurgical Coal and Shipping

Americas

  • Catarina Moura Almeida, formerly with Vale, has joined Porto Sudeste in Brazil as Head of HR
  • Manuel Hermeto, previously Senior Associate at Stocche Forbes, joined Porto Sudeste on April 1st in Brazil as Head of Legal Counsel
  • Paul Demzik, formerly Head of Coal Trading at Anglo American, has joined Arch Coal as Chief Commercial Officer

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