Will China s Zinc Consumption Keep on Growing? Ronghui Zhang

Will China s Zinc Consumption Keep on Growing? Ronghui Zhang

Major Points of this Presentation 1, Overview of China s zinc consumption by area and by usages 2, Will China s galvanizing sector keep on growing? 3, How about other applications? Diecasting, Oxides, Brass and etc? 4, Will there be enough metal to feed China s zinc consumption appetite? 5, Conclusion

1, Overview of China s Zinc Consumption China is now the largest consumer of zinc metal in the world. Although the annual consumption growth rate is slowing in the past several years, the total consumption volume is increasing steadily. In 2014 China s zinc metal apparent consumption is about 6.25 million tonnes, recording a y-o-y growth rate of 5%.

China s apparent consumption of refined zinc is 6.25 million tonnes in 2014( 10K tonnes) Sources:NBS,CNIA, Antaike, Minmetals 4

China s zinc metal consumption by district Interestingly, China s major zinc consumption areas are highly related with the economic development. The more developed areas, the more zinc is consumed. East China is the largest consuming area, accounting for 42% of the country s total usage in 2014. East China mainly includes Shanghai, Zhejiang, Anhui, Jiangsu, Fujian, Jiangxi, Shandon. About 50% of China s galvanizing capacity is located in these areas. South China is the second largest consuming district in China, taking up 20% of the country s total. Here you will find China s largest zinc diecasting alloy market. This area mainly refers to Guangdong.

Major Zinc Consumption District in China in 2014 6

China s zinc metal consumption by end uses Zinc is mainly used in China in those sectors like galvanizing, die casting alloy, brass, zinc oxide, battery and others. Galvanizing is the major contributor of zinc consumption, taking up to 57% in 2014.

Zinc consumption area in China in 2014 8

In the last few years, galvanizing and oxide are the two major drivers of consumption growth, others almost no growth(1000 tonnes). 2011 2012 2013 2014 2014/2013 yoy Galvanizing 2,622 2,950 3,240 3,600 11% Die casting alloy 1,250 1,330 1,420 1,360-4.2% Zinc Oxide 455 480 540 570 5.55% Brass 715 490 520 480-7.7% Battery 187 200 210 230 0% Others 50 120 30 30 0% Total 5,250 5,570 5,960 6,250 4.86% Sources:NBS, CNIA, Antaike,Minmetals 9

2, So Will China s galvanizing industry keep growing in the coming years? The answer is yes, but maybe at a much slower pace due to China s GDP slowing down. The galvanizing sector is China s largest zinc consumption area, accounting for more than 57% in 2014. The galvanizing sector is also the fastest growing area of zinc consumption with an annual growth rate of more than 10% in the past several years due to China s infrastructure, power and communication boom.

Galvanized sheet 11

Power Transmission Towers. In 2014, China s State Grid investment was 381.5 billion yuan. And this figure may rise to 400 billion yuan in 2015 12

Railway Power Transmission Structures. In 2014, China invested 808.8 bn yuan in railway construction sector and may invest more in the future 13

Highway Fences---Official figures show that China had a total of 111,950 km of highway in use by the end of 2014 and that figure may reach 160,000 km in the next few years. 14

Communication Towers. It is estimated that there will be one million mobile stations for 4G by the end of 2015 15

China s Production of Galvanized Sheet & Strip( 10 k tonnes). From the chart below, we can see clearly that China s galvanizing sector is developing rapidly, growing more than 15% annually for the past three years. Sources:NBS, CISA (China Iron and Steel Ass.,Minmetals 16

So if we assume 40kg of zinc metal is consumed per tonne of galvanized sheet & strip, that means about 2 million tonnes of zinc metal were used in 2014 and that figure may jump to 2.14 million tonnes in 2105 (10 Kt) Sources:NBS, CISA (China Iron and Steel Ass.,Minmetals 17

The galvanized sheet & strip does not represent the whole galvanizing industry. In 2014 the whole galvanizing industry consumed about 3.6 million tonnes of zinc. Assuming 7% growth next year, we forecast China s galvanizing industry may use 3.85 million tonnes of zinc in 2015 (10 Kt) Sources:NBS, CISA (China Iron and Steel Assn,Minmetals 18

3, How about other applications? Diecasting is the second largest consumer The diecasting alloy sector is the second largest area of China s zinc consumption, consuming 1.36 million tonnes of zinc in 2014. But the consumption trend is slowing in the last few years. Diecasting zinc alloy is mainly used in auto industry, construction and machinery.

In 2014 Diecasting sector consumes about 1.36 million tonnes of zinc metal (10 Kt) Sources:CNIA, Minmetals 20

And diecasting alloy is mainly used in auto industry. China s auto production is increasing steadily. ( million units) Sources:NBS, CNIA, Minmetals 21

3, How about other applications? Zinc oxide is the third largest consumer in China Zinc oxide occupies 9.1% of China s total zinc consumption, consuming 0.57 million tonnes of zinc in 2014. And demand for this sector is growing fairly fast in the last few years. China s production of zinc oxide is very steady at an annual rate of 700,000 tonnes in the last few years. The majority of the oxide production uses zinc residues instead of primary zinc. Zinc oxide is mostly used in car tyres and the ceramic industry which relies heavily upon export. About half of China s ceramic products were exported abroad in 2014.

In China, zinc oxide s production uses about 0.57 million tonnes of zinc. (10 Kt) Sources:CNIA, CISA (China Iron and Steel Assn,Minmetals 23

China s production of ceramic products stays flat producing 196 million pieces in 2014 Sources:NBS, Minmetals 24

But the production of car tyres increases steadily, reaching 1114 million pieces in 2014 Sources:NBS, Minmetals 25

Zinc oxide consumption area: Tyres and ceramic sanitary ware production (10 k piece) Sources:CNIA, Antaike,Minmetals 26

3, How about other applications? Brass is the fourth largest consumer of zinc in China The brass sector is also a very important zinc consuming area. It ranks the fourth largest area of China s zinc consumption, consuming 0.48 million tonnes of zinc metal in 2014. Like diecasting, the consumption trend for the brass sector is slowing in the last two years due to the domestic demand and exports slowing down. And the trend of consumption is still going down in 2015. It is very common that the brass makers use copper semis scraps or brass scraps. The end usage of brass is in making hardware like door handles, knobs, locks and etc.

China s copper semis [roduction is increasing rapidly in recent years, reaching a historical level of 17.84 million tonnes in 2014 Sources:NBS, CNIA, Minmetals 28

But the zinc used in brass sector is decreasing, because most semis producers use semis scrap. In 2014, about 0.48 million tonnes of zinc were consumed in brass making. Sources:CNIA, NBS, Minmetals 29

How about other applications? Batteries are the fifth largest consumer of zinc in China Batteries are the fifth largest consuming area of zinc in China,consuming 0.23 million tonnes of zinc metal in 2014. In this sector, zinc is used in making zinc manganese primary battery. And most of the primary battery is for export.

China s Primary Battery Production is steady in the last few years, reaching 38000 million units in 2014 Sources:NBS, CNIA, Minmetals 31

But zinc used in this sector is not increasing much,consuming about 0.23 million tonnes of zinc metal 2014.

, Will there be enough metal to feed China s zinc consumption market? ased on the steady growth of zinc consumption in the next few ears, China still has to import zinc from ore to refined metal to zinc lloy. ust look at the following chart, we can see China s demand is arger than China s production.

China s Refined Zinc supply and consumption. ( 10 k tonnes) The red bar for consumption, the blue for production.

, So Let s come to the conclusion hina s zinc consumption will keep on growing in the next few ears, but the growth rate may be much lower than previous years. e forecast an annual growth rate of 5%-7%. e still see strong growth in consumption of zinc for the galvanizing ector due to China s investment in infrastructure, power, ommunication as well as a relatively strong export of white goods air conditioners, washing machines, refrigerators). We forecast an nnual growth rate of 8%-10% of zinc consumption for the alvanizing sector.

, Conclusion or zinc oxide, we see steady growth of zinc consumption in the oming few years, a y-o-y increase of 5-6%. But this sector heavily epends on export of the downstream products like tyres and eramic products. or other applications like die-casting, brass, battery and others, we ee little growth or even negative growth of zinc consumption in the ext two years.

, Conclusion o the question is: Will there be enough zinc from China to feed hina s zinc consumption market? he answer is No! verall, China still has to import zinc from ore to refined metal to inc alloy. We estimate a net import of about half million tonnes of oth refined zinc and zinc alloy in 2015.

0 that s the End of This Presentation hank you for your attention!