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Metal

Processing
Sector
China
June 2015

Produced by:

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-1-

Table of Contents
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 Production
13.Precious Metals

I. Sector Overview
1.
2.
3.
4.
5.
6.
7.
8.
9.

Sector Highlights
Main Sector Indicators
Sector Revenues and Profits
Sector Costs Overview
Foreign Trade
Investments
Employment
Prices
Government Policy

IV.Metal Products Manufacturing

II. Ferrous Metals Smelting & Pressing


1.
2.
3.
4.
5.
6.

1.
2.
3.
4.

Subsector Highlights
Subsector Indicators
Subsector Revenues and Output
Iron & Steel Production
Iron & Steel Imports and Exports
Subsector Forecast

V. Main Players
1.
2.
3.
4.

III.Non-ferrous Metals Smelting & Pressing


1. Subsector Highlights
2. Subsector Indicators

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Subsector Indicators
Subsector Revenues and Output Value
Metal Products Output
Ferrous Metals Product Trade

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M&A Deals
M&A Activity, 2013-2014
Baoshan Iron & Steel Co., Ltd.
Baoshan Iron & Steel Co., Ltd. (contd)

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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-3-

I. Sector Overview

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-4-

Sector Highlights
Global position
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.

Challenges
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.
Consolidation
Beijing has long been trying to push forward the process of sector consolidation through mergers and acquisitions in order to tackle the overcapacity problems and
achieve a better efficiency and competitive power of industry leaders. While such efforts have met much resistance in recent years, efforts by the central
government have proceeded with a renewed strength. Most recently, the government has announced plans for consolidating the rare earth metal industry into six
large conglomerates. China has also set a goal that the top 10 steel producers control 60% of the market by 2025.

Tight Credit
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.

Main players
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 2014
with 59 companies among the biggest 500, a number unchanged from 2013 and up from 57 in 2012. This is a higher number of companies than
any other industry in the country, with the machine manufacturing and real estate industries sharing the second position in 2014 with 40 companies
each.

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-5-

Main Sector Indicators


Chinas Metal Processing Sector in Figures
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

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

4,494

3,449

5,206

5,217

5,305

Product Inventories, RMB bn

Number of loss making enterprises


Source: Statistics office
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-6-

Sector Revenues & Profits


Sales Revenues
18,000
16,000

28.5%

12,000

15,570
12,573

14,000

Profit From Sales Revenue

16,105

14,190

30%

580

25%

21.7%

10,000

520

12.9%

6,000

10%

9.7%

4,000
2,000

3.4%

0
2010

2011

2012

Revenues, RMB bn

2013

60%
50%
40%

540

15%

8,000

70%

62.5%

560

20%

10,331

585.3

600

30%

530.2
514.2

513.4
14.0%

501.9

500

5%

480

0%

460

2014

-5.3%

0%
-10%

-20%
2010

Growth, % y/y

10%
2.5%

-9.4%

20%

2011

2012

Profit, RMB bn

2013

2014

Change, % y/y

Comments
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.

Source: Statistics office


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-7-

Sector Costs Overview


Cost of Sales

Other Costs

16,000
27.8%

14,249

2011

2012

2013

2014

44.3

43.1

53.4

56.7

60.4

Selling & distribution


costs, RMB bn

118.2

131.4

160.2

174.6

191.1

Administration expenses,
RMB bn

307.2

344.4

382.2

371.0

375.6

Financial expenses, RMB


bn

112.1

150.1

191.5

189.2

216.0

Financial expenses:
interest expenses, RMB
bn

103.3

152.5

193.8

182.8

198.9

14,751

14,000
11,297

12,000

Sales taxes & surcharges,


RMB bn

25%

12,859

10,000

2010
30%

21.8%

20%
9,278

8,000

15%
13.8%

6,000

10.8%

10%

4,000
5%

2,000

3.5%

0%
2010

2011

2012

Cost of sales, RMB bn

2013

2014

Growth, % y/y

Source: Statistics office


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-8-

Foreign Trade
Exports, USD mn

Imports, USD mn

200,000

120,000

180,000
160,000
140,000

85,960

120,000

66,250

100,000

80,000

20,000

14,534

80,000

12,607

14,467

14,812

16,485

51,542

49,847

Metal
products

78,358
25,442

53,154

60,000
40,000

73,202

100,000

Metal
products

23,490

21,687

22,663

55,511

53,882

54,724

Non
ferrous
metals

60,000

Iron and
steel

20,000

49,171

56,230

55,075

40,000

Non
ferrous
metals

17,945
39,583

72,291

25,033

27,192

22,842

21,486

22,498

2010

2011

2012

2013

2014

Iron and
steel

0
2010

2011

2012

2013

2014

Comments
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.
Source: General Administration of Customs
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-9-

Investments
Fixed Asset Investments, RMB mn
2,500,000

30%
27.5%

25%

2,000,000
21.4%

21.4%

20%

1,500,000

711,434
595,501

362,249

292,404
346,502

861,972

448,488

546,494

576,988
8.7%

505,548

506,049

478,939

10%

386,127

Ferrous metal
smelting & pressing

5%
386,048

0%
2010

Non ferrous metal


smelting & pressing

15%

13.8%

504,515

1,000,000
500,000

etal products

2011

2012

2013

Overall growth y/y, %

2014

Comments
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 FAI by 5.6%, while that of the ferrous metals segment dropped by 5.4%.
Source: Statistics office
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- 10 -

Employment
Manufacturing Industry Avg Annual Wage (RMB)

Biggest Employers Among Listed Companies (2014)


Employer

54,094
47,367
43,031
36,386
31,142
26,810

27,800
24,404
16,443

2008

17,260

2009

20,090

2010

41,650

36,665

30,916
24,138

2011

Urban, non-private companies

51,369

46,431

28,215

2012

32,035

2013

35,653

2014

State-owned companies

Private companies

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

33,520

Xinxing 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

Comments
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.
Source: Statistics office, Fortune China
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- 11 -

Prices
Metal Processing Industry PPI, PY = 100
120
110
100
90
80
2008

2009
Ferrous metal smelting & pressing

2010

2011
2012
Non ferrous metal smelting & pressing

2013
2014
Fabricated metal product

China Steel Price Index (pts)


120
100

107.9

111.1

107.1

105.8

101.8

98.5

100.5

102.1

100.6

99.3

99.3

99.1

97.7

80

96.5

94.8

96.0

94.3

93.0

91.9

90.6

86.4

87.0

85.3

83.1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014

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.

Source: Statistics office, CISA


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- 12 -

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 to
involve the scrapping of 80 million tonnes of outdated capacity to relieve oversupply, while the number of steel producing
companies 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 be
released 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 large
state-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 headed
towards 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.

Source: China Daily, Xinhua, CCTV


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- 13 -

II. Ferrous Metals Smelting and Pressing

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- 14 -

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. Companies
were 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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- 15 -

Subsector Indicators
Chinas Ferrous Metal Processing Subsector in Figures
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

176.59

205.46

258.13

298.75

323.11

3,019

3,512

3,912

4,225

4,282

179.23

227.05

257.49

267.4

282.66

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

Accounts receivable, RMB bn

Total liabilities, RMB bn

Product inventories, RMB bn

Number of employees, mn

Source: Statistics office


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- 16 -

Subsector Revenues & Output


Costs & Revenues

Steel Large & Medium Enterprise Gross Industrial Output

9000
8000
7000
6000
5000

30%
24.1%

6,591
21.0%
6,029

5,449
4,982

7,632
7,069

7,156
6,599

7,503
6,945

6.6%

224

215

170

170

-1.7%165

0
2011

2012

2013

Cost of sales, RMB bn

Total profit, RMB bn

Revenues annual growth

3,020

3,065

40%
2,922

0%

1,000

-5%

500

10%
1.5%

0%
-4.7%

-7.5%

-10%

-11.7%

-20%
2009

2010

2011

GIO, RMB bn

2012

2013

2014

Annual change

Comments

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.

Source: Statistics office, China Iron and Steel Association


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- 17 -

30%
20%

17.8%

1,500

2014

Revenues, RMB bn

2,069

2,000

5%

2000

2010

2,500

10%

8.6%

3000

3,263
2,770
33.9%

3,000

20%
15%

4000

1000

3,500

25%

Iron & Steel Production


Iron & Steel Production, thou tonnes

Product

Iron ore

Pig iron

2010

2011

2012

Purchased Steel Consumption, thou tonnes

2013

181,318

2014

1,080,161 1,335,025 1,327,300 1,522,129 1,514,240

595,601

645,429

670,102

748,084

711,599

58,358
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

2010
Source: China Iron and Steel Association, Statistics office
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- 18 -

2011

50,088

49,140

2012

2013 (Jan-Nov)

2014

Iron and Steel Foreign Trade


Exports, thou tonnes
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

Imports, thou tonnes


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

Source: China Iron and Steel Association


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- 19 -

Subsector Forecast
Market Size
800

14.0%

700

12.0%

11.7%

600

10.0%

9.6%

500

7.5%

400

6.0%

300

4.0%

200
100

8.0%

2.2%

1.9%

2.0%

0.0%
2014

2015

2016
Steel market value, USD bn

2017

2018

Annual change

Comments
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%.
Source: Marketline
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- 20 -

III. Non-ferrous Metal Smelting and Pressing

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- 21 -

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 rates
than 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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- 22 -

Subsector Indicators
Chinas Nonferrous Metal Processing Subsector in Figures
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

142

164

203

235

267

1,236

1,476

1,769

2,024

2,256

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

934

885

1,216

1,281

1,294

Accounts receivable, RMB bn

Total liabilities, RMB bn

Product inventories, RMB bn

Number of loss making enterprises

Source: Statistics office


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- 23 -

Subsector Revenues & Costs


Revenues & Profit

Cost of Sales

6000

45%

5000

40%

4500

35%

4000

4,725

40%

37.7%

5000

5,075

38.9%
4,654
4,127

4000

26.4%

3000

20%

2000

15%

14.0%

12.8%
9.1%

25%

2500

20%

1000

3,298
26.2%

2,613

2,918

11.9%

30%

3000

25%

2000

35%

3,761

3500

30%

3,687

4,329

15%

15.1%

1500

10%

9.1%

1000
5%
207

176

162

2010

145

5%

500

149

10%

0%
2011

2012

Revenues, RMB bn

2013

2014

Profit, RMB bn

2011

2012

Cost of sales, RMB bn

Revenues annual growth


Source: Statistics office, China Iron and Steel Association
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

0%
2010

- 24 -

2013

2014

Annual change

Top 10 Non-ferrous Metals


Ten Non-ferrous Metals Production

25,507
23,383

26,044
23,518

2008

2009

31,360
28,191

34,389
31,001

2010

2011

Ten non ferrous metals, tonnes th

36,970
33,580

40,288
36,798

2012

44,170
40,500

2013

Ten non ferrous metals: ore, tonnes th

Comments

The ten major non-ferrous metals include aluminum, copper, lead, zinc, nickel, tin, antimony, mercury, magnesium and titanium.

Source: China Nonferrous Metals Industry Association


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Copyright 2015 EMIS, all rights reserved.

- 25 -

2014

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.

Capacity

Chinese 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%.

Expansion

About 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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- 26 -

Aluminum Production
Aluminum Production, thou tonnes

Aluminum Trade

11,255

15,000

13,613

8,573

16,244

11,895

20%

9,183

9,734

18,135

20,000

10,127

22,046
20,251

11,403

25%

12,657

24,382

12,296
11,916

26.0%

11,065

25,000

30%

13,189

30,000

15%
11.6%

11.7%

10.6%
8.9%

5,000

5,188

10,000

10%

5%

0%
2010

2011

2012

2013

2014
2008

Aluminium production, tonnes th

Annual growth, %

2010

2011

Aluminum imports, USD mn

Source: China Nonferrous Metals Industry Association


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Copyright 2015 EMIS, all rights reserved.

2009

- 27 -

2012

2013

2014

Aluminum exports, USD mn

Aluminum Forecast
Market Size
70,000
60,000

12.0%
10.6%

10.0%

9.7%

50,000
40,000

6.5%

7.3%
6.1%

8.0%
6.0%

30,000

4.0%

20,000

2.0%

10,000
0

0.0%

2014

2015

2016
Aluminum market value, USD mn

2017

2018

Annual change

Comments
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.
Source: Marketline
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 28 -

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
investments

A 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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- 29 -

Copper Production
Refined Copper Production

Copper Trade

9,000

18%
16.3%

8,000
7,000

13.7%

6,000

12.1%

5,000

4,540

5,163

13.9%

7,959
16.4%

6,839

68,660

68,332

57,640

12%
10%

4,000

8%

3,000

6%

2,000

4%

1,000

2%

35,720

Refined copper production, tonnes th

2010

2011

2012

2013

2014

Copper imports, USD mn

Annual growth, %

Source: China Nonferrous Metals Industry Association


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Copyright 2015 EMIS, all rights reserved.

2009

6,127

2008

6,451

2014

6,515

2013

6,024

2012

4,194

0%
2011

37,191

3,168

5,033

0
2010

68,828

16%
14%

5,879

70,339

- 30 -

Copper exports, USD mn

Lead & Zinc


Lead Production
4,604

5,000

4,158
10.2%

4,000

4,591

Zinc Production
4,475

15%

4,221

10.7%

6,000
5,800
5,600
5,400
5,200
5,000
4,800
4,600
4,400

10%

3,000

5%

2,000

-0.3%

0%

-2.5%

1,000

-5%

-5.7%

-10%
2010

2011

2012

2013

Lead production, tonnes th

5,212

5,209

2014

2010

2011

2008

2009

211

2010

56

2011

Lead imports, USD mn

2014

Annual growth, %

2012

151
2013

3,344

3,347
2,727

2,236

3,028

3,142

2,053

278

156

2008

2014

131
2009

217

179
2010

2011

Zinc imports, USD mn

Lead exports, USD mn

Source: China Nonferrous Metals Industry Association


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Copyright 2015 EMIS, all rights reserved.

2012

Zinc production, tonnes th

3,284
2,182

169

2013

-6.4%

3,273

2,043

120

9.9%

Zinc Trade

2,510

290

8.6%
4,881

Lead Trade

1,774

5,302

0.1%

Annual growth, %

3,178

25%
20%
15%
10%
5%
0%
-5%
-10%

5,827

21.5%

- 31 -

104
2012

96
2013

Zinc exports, USD mn

423
2014

Other Major NF Metals Production


Other Major Non Ferrous Metals Production, thou tonnes

874
770
698

675

651

354
312
242
193

200
159 149

175

2010

2011

106

82

2012

Antimony

Source: China Nonferrous Metals Industry Association


- 32 -

187

159

148

Magnesium

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Copyright 2015 EMIS, all rights reserved.

263

197
156
68

57

279

2013

Nickel

Tin

Titanium

101

2014

Precious Metals
Gold Production & Consumption

Silver Production

1400
1,176

1200

11.7%

1000
800

8.6%

600
400

516
341

5.9%
361

886

832

761

14%

4400

12%

4200

10%

4000

8%
403

6.2%
428

430

6%

3600

0.4%

2010

2011

2012

Gold production, tonnes

2013

3,700
3,500

3400

2%

3,900

3800

4%

200

4,200
4,100

3200

0%

2014

3000

2010

Gold consumption, tonnes

2011

2012

2013

2014

Silver production, metric tons

Production annual growth, %

Comments
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%.

Source: China Nonferrous Metals Industry Association, Statista


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Copyright 2015 EMIS, all rights reserved.

- 33 -

IV. Metal Products Manufacturing

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- 34 -

Subsector Indicators
Chinas Metal Product Manufacturing Subsector in Figures
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

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

2,405

1,433

1,926

1,990

2,090

Product inventories, RMB bn

Number of loss making enterprises

Source: Statistics office


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Copyright 2015 EMIS, all rights reserved.

- 35 -

Subsector Revenues & Costs


Costs and Revenues

Output and Sales Value

4000
3500

3500

30.0%
26.7%

3,527

26.7%
3,284

3000

25.0%

26.0%

2,852

20%

2,295
16.8%

1,971
17.1%

2000

1,964

25%

2,500

2500

20.0%
2500

3,081

26.8%

2,907

3000

2000

30%

15.0%

1,684

15%

14.1%

13.0%

1500

1500
10.0%

1000

10%
1000

7.4%

8.1%

5.0%
500
155

184

188

201

136

2010

5%

500

0.0%
2011

2012

Revenues, RMB bn

2013

2014

Profit, RMB bn

2011

2012

Cost of sales, RMB bn

Revenues annual growth


Source: Statistics office
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

0%
2010

- 36 -

2013

2014

Annual change

Metal Products Output


Steel Products Output, thou tonnes (unless specified)

Other Metal Products, thou tonnes

Product

2010

2011

2012

2013

2014

Product

2010

2011

2012

2013

2014

Railway use

5,503

4,410

5,154

6,080

5,654

Steel wire

2,016

3,634

5,305

n/a

n/a

Rod

68,926

69,401

74,102

78,200

79,418

Bar

130,964

154,056

175,377

206,192

215,277

Steel wire rope

2,779

3,121

3,727

n/a

n/

Wire rod

105,528

122,591

136,161

150,893

153,832

Steel strand

2,460

2,862

3,690

3,973

6,047

Ultra heavy plate

4,817

6,179

5,370

6,637

7,270

4.4

5.6

6.8

7.4

9.6

Heavy plate

22,236

26,036

23,410

23,988

26,385

Metal container cub m th

73,608

90,560

94,965

102,725

130,145

Medium plate

42,417

41,237

38,028

38,124

40,009

Others

14,595

17,924

18,983

23,585

35,290

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

Product

2010

2011

2012

2013

2014

Medium thick wide strip

102,892

105,038

108,662

119,882

123,008

Copper product

9,851

10,373

11,014

14,987

17,837

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

Aluminium product

19,906

23,519

25,941

39,624

48,458

Hot rolled narrow strip

45,212

46,883

50,932

59,319

59,592

Lead product

9.7

10.1

9.7

n/a

n/a

Cold rolled narrow strip

8,245

9,653

9,189

10,251

12,487

Zinc product

16.8

14.7

14

n/a

n/a

Plated sheet, plate, strip

28,466

31,566

37,579

43,378

50,749

Nickel product

6.314

4.542

4.853

n/a

n/a

Coated sheet, plate, strip

5,538

5,833

7,779

7,590

8,252

Tin product

38.578

39.719

39.241

n/a

n/a

Electrical steel sheet,


plate, strip

5,717

6,197

6,588

8,385

8,852

Magnesium product

0.059

0.087

0.112

n/a

n/a

Seamless tube & pipe

25,281

26,490

28,197

29,628

31,369

Copper coil rod

1,812

2,116

2,305

n/a

n/a

Welded tube & pipe

32,370

40,487

47,754

50,162

57,611

Aluminium coil rod

906.8

1,278

1,192

n/a

n/a

Metal cutting tool, units mn

Source: China Iron and Steel Association, China Nonferrous Metals Industry Association, Statistics office
Any redistribution of this information is strictly prohibited.
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- 37 -

Ferrous Metal Products Trade


Ferrous Metal Products Trade, USD mn
Product

2010

2011

2012

2013

2014

Import

Export

Import

Export

Import

Export

Import

Export

Import

Export

16,429

42,558

15,586

48,904

13,660

55,793

14,077

62,336

14432

93784

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

Steel products

angle, shape, section

Source: China Iron and Steel Association


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- 38 -

Non-ferrous Metal Products Trade


Non-ferrous Metal Product Exports, USD mn

Non-ferrous Metal Product Imports, USD mn

11,948

7,600

7,828

10,407

10,362

6,743

9,799

6,446
6,037

7,543

3,593
4,526

4,224

4,177

4,232

125
116
60
43

139
37
33
30

150
95
57
35

74
126
74
37

2011

2012

2013

2014

3,872

110
87
33
32

2010

Copper products

Aluminium products

Lead products

Zinc products

Tin products

Nickel products

3,126

Source: China Nonferrous Metals Industry Association, Statistics office


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- 39 -

3,390
3,026

3,018

496
2
197
89

577
239
77
6

605
240
61
6

533
211
55
7

481
53
211
3

2010

2011

2012

2013

2014

Copper products

Aluminium products

Lead products

Zinc products

Tin products

Nickel products

V. Main Players

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- 40 -

M&A Deals
Top 15 M&A15 Deals in Chinas Metal Processing Sector (Jan 2014-May 2015)
Date
3.1.2014

Target Company
Minmetals Development Co Ltd

31.1.2014 Sulzer Metco


8.11.2014 Shandong Iron and Steel Co Ltd
25.2.2015 Jiangsu Shagang Co Ltd

3.4.2014

Xinjiang Production and Construction


Corps Agricultural Division Eight Tianshan
Aluminium Plant Co Ltd

15.5.2015

Hubei Sanxia New Building Materials Co


Ltd

19.3.2014 Xiamen Tungsten Co Ltd

Deal Type

Buyer

Minority stake
China Minmetals Corp
purchase
Acquisition OC Oerlikon Corporation AG
Minority stake
Institutional investors
purchase
Li Feiwen - private investor; Liu Zhenguang - private investor; Huang Lihou - private investor; Li
Acquisition Qiang - private investor; Wang Jiman - private investor; Zhu Zheng - private investor; Liu Benzhong private investor; Yan Weimin - private investor; Jin Jie - private investor

Acquisition Xinren Aluminum Holdings Ltd

Seller

1627.11 (Official data) 42.56


Sulzer Ltd

Source: DealWatch
- 41 -

100

813.73 (Official data) 30.03


748.3

Private
investor(s)

510.65 (Official data)

Lianzhong Guangzhou Stainless Steel


E United
Acquisition Anshan Iron and Steel Group Corp
Corp
Group
Hubei Fuxing Science and Technology Co Minority stake
14.4.2015
Institutional investors
Ltd
purchase
Jilin Liyuan Precision Manufacturing Co
Minority stake
24.12.2014
Institutional investors
Ltd
purchase
Shenzhen Zhongzhi Chantou Huanbao Investment Partnership LP; Guangzhou Huiyin Aofeng Equity
Investment Fund Management Co Ltd; Shanghai Xinghong Asset Management Co Ltd; Shanghai
Shenzhen Green Eco-manufacture Hi-tech Minority stake
17.2.2015
Star-Venture Capital Management Center LP; China Post & Capital Fund Management; Ping An
Co Ltd
purchase
Asset Management Co Ltd; Huaxia Life Insurance Co Ltd; Shanghai Deyi Huiyin Equity Investment
Co Ltd ; Zhongqi Gangerqi Nanjing Venture Capital Fund Center LP
Changshu Fengfan Power Equipment Co Minority stake
27.11.2014
Institutional investors
Ltd
purchase
Shenzhen CDB Jintai Investment Development Partnership LP; Zhuhai Hengqin Yuancheng Equity
Minority stake
9.6.2015 China Western Power Industrial Co Ltd
Investment Center LP; Beijing Haihoutai Equity Investment Center LP; Suzhou Haihoutai Equity
purchase
Investment Center LP; Zhoushan Venture Investment Partnership LP
Minority stake Zhou Zhenke - private investor; Xu Jinguang - private investor; Chen Yueqiang - private investor;
10.1.2015 Baocheng Investment Co Ltd
purchase Huang Yongjian - private investor; Chen Shaoda - private investor
Minority stake
29.9.2014 Yunnan Aluminium Co Ltd
Institutional investors
purchase
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Copyright 2015 EMIS, all rights reserved.

945.65 (Official data)

Jiangsu
Shagang
Group Co Ltd

Shenzhen Mengshang Fund Management Co Ltd; Shenzhen Haizhimen Leisure Sports Development
Acquisition Co Ltd; Shenzhen Qianhai Furong Asset Management Co Ltd; Golden Eagle Asset Management Co
Ltd; Xu Xizhong - private investor; Chen Gengfa - private investor
Nanjing Gaoke Co Ltd; Fujian Investment and Development Group Co Ltd; Fujian Rare Earth (Group)
Minority stake
Co Ltd; Shanghai Rationalize Investment LP; Golden Circle Capital Management (Xiamen) Co Ltd;
purchase
Haoxi Equity Investment Management (Shanghai) Co Ltd; Ke Xiping - private investor

10.10.2014

Deal Value Deal Value Stake


(USD mn)
Source
%

(Official data) 55.12

30

500.37 (Official data) 59.69


493.97 (Official data) 18.03
493.11

(Market
estimate)

60

491.27 (Official data) 28.76


490.96 (Official data)

25

489.03 (Official data) 20.81

488.98 (Official data) 30.91


484.07 (Official data) 30.31
402.26 (Official data) 66.03
389.04 (Official data) 25.61

M&A Activity, 2013-2014


Number and Value of Deals in Metal Processing Sector

Number of Deals by Deal Value, USD (%)


100.1-500mn;
23.3%

42

2013
Total value of deals (USD mn)

3,177

Q1

18
2,765

Q4

25

21
1,740

Q3

27
4,435

Q2

50.1-100mn;
15.5%

33
7,724

4,051

Q1

32

4,127

5,750

34

Q2

Q3

Q4

0-50mn;
53.4%

500.1-1000;
2.6%
> 1000mn;
2.6%
Undisclosed;
2.6%

2014
Number of Deals

Number of Deals by Deal Type (%)

Number of Deals by Region of Investors (%)

Minority stake
purchase
30.2%
Block Trade
27.2%

Acquisition
36.6%

China 85.6%

EMEA 4.4%

Open market
purchase 2.6%

Asia 1.9%

SPO 1.3%

North & South


America 2.5%

IPO 2.2%
Source: DealWatch
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

Hong Kong
5.6%

- 42 -

Baoshan Iron & Steel Co., Ltd.


Financial Performance
202,413

Highlights

220,872
191,135

2012

Revenues, RMB mn

EBT, RMB mn

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 ecommerce 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.

5,792
8,278

2011

187,414

5,818
8,010

10,090
12,664

7,362
9,260

12,889
17,076
2010

189,688

2013

2014

Net income, RMB mn

Other Financial Indicators


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


mn

104,746

113,470

117,342

119,957

124,205

Net cash from opera-ting


activities, RMB mn

18,856

12,242

22,202

12,090

28,280

Cost of sales

177,817

203,041

176,879

171,718

168,931

0.74

0.40

0.58

0.35

0.35

Earnings per share


Source: Company data
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- 43 -

Baoshan Iron & Steel Co., Ltd. (cont'd)


Expenses, RMB mn

Sales expenses

Revenues from Steel Products, RMB mn

2013

2014

Change y/y

1,963

2,200

+12.09%

120,000

100,000
Administrative expenses

6,881

7,728

+12.32%

Financial expenses

-544

488

n/a

R&D expenses

3,430

3,931

+14.61%

Other iron
and steel
products

7,111
4,849
9,830
4,893

80,000

31,320

9,116
4,971

Steel tubes
and pipes

28,816

Heavy plates

60,000

Regional Distribution of Revenues (2014)

Hot-rolled
carbon steel
sheets and
coils

40,000

50,883

20,000

China 89.9%
Resf of the
World 10.1%

Cold-rolled
carbon steel
sheets and
coils

0
2013

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

51,369

- 44 -

2014

Jiangxi Copper Company Ltd.


Financial Performance

158,556

Highlights

175,890

Jiangxi Copper Company Ltd. is the largest copper


producer in China. The company is also a major supplier of
gold, silver, selenium, tellurium, rhenium, as well as sulfide
chemicals. It is one of the largest Chinese producers of
gold and silver.
The Company, established back in 1997, is listed both in
Shanghai and Hong Kong.
Its major assets include six mines under production, PRCs
largest 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 for
13.33% of total operating revenues.
Plans for 2015 include the production of 1,220,000 tonnes
of copper cathode (from 1,200,000 in 2014) ,25.4 tonnes of
gold (26), 560 tonnes of silver (567), 2,900,000 tonnes of
sulphuric acid (3,010,000), and 209,500 tonnes of copper
contained in copper concentrate (210,000).
The 20% fall in profits in 2014 was mostly due to the
weakness in copper prices on the market.
The company has actively been looking for new
opportunities to expand its international presence. Most
recently, its senior management has been exploring the
prospects for outsourcing copper mining and processing in
Kazakhstan, in line with the central governments One
Road One Belt policy.

198,833

117,641
76,441

Revenues, RMB mn

2012

2,851
5,721

2011

3,565
6,532

5,216
7,435

6,549
9,771

4,907
8,047
2010

2013

Gross profit, RMB mn

2014

Net income, RMB mn

Other Financial Indicators


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 mn

34,123

39,303

42,820

44,523

45,734

1.56

1.89

1.51

1.03

0.82

Earnings per share


Source: Company data
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 45 -

Jiangxi Copper Company Ltd. (cont'd)


Revenues Distribution by Business (2014)
Copper rods
and wires
23.3%

Copper
cathodes
59.3%

Expenses, RMB mn

Copper
processing
products 2.6%

5,000

Gold 3.7%
Silver 1.3%
Chemical
products 0.7%
Rare metals
and other nonferrous metals
7.9%
Others 1.2%

4,000
2,328

2,326

3,000

157

2,000

Revenues Distribution by Region (2014)

1,703

1,846

Administra
tive
expenses

547

Sales and
distribution
expenses

1,000

Mainland
China 87.6%

545

Hong Kong
4.9%

-6

2013

Others 7.5%
-1,000

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

Expenses
on
research
and
developme
nt
Financial
expenses

- 46 -

2014

Aluminum Corporation of China Ltd.


Financial Performance
169,431

143,437

138,206

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 consumption
growths 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.

-17,049

Revenues, RMB mn 113060.949

634

2013

141,772

751

2,751

2012

-8,644

11

691

7,370
2011

Highlights

2014

Gross profit, RMB mn 7413.145

Profit for the year, RMB mn 969

Other Financial Indicators


Indicator

2010

2011

2012

2013

2014

105,648

130,836

143,426

166,680

141,139

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


mn

51,581

51,826

43,808

44,358

28,276

0.06

0.02

-0.61

0.07

-1.2

Cost of sales, RMB mn


Operating expenses, RMB
mn

Earnings per share


Source: Company data
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 47 -

Aluminum Corporation of China Ltd. (cont'd)


Revenues by Business, in RMB mn

Highlights
The output of alumina in 2014 amounted to 12.02 million
tonnes, representing an annual decrease of 1%, the
output of alumina chemicals amounted to 1.82 million
tonnes, representing an annual increase of 5.81%, and
the output of primary aluminum products amounted to
3.38 million tonnes.
In May 2015, the company's parent group announced plans
to set up two financial arms with a total capital of RMB
2.8bn to facilitate its financial business and help it deal with
the losses suffered in recent years.
Meanwhile, CHALCO has also started spinning off some of
its non-core assets in order to reduce losses. In December
it announced that it would be selling three fully-owned
companies as well as one 72%-owned and one 27%owned. The subsidiaries in question were engaged in
silicon metal, photovoltaic materials and polysilicon
production.
In August 2014 CHALCO was approved by the government
to integrate rare earth enterprises in the provinces of
Guangxi, Jiangsu, Shandong and Sichuan to its wholly
owned subsidiary China Rare-earth Corp. In early 2015 it
also formed a coalition with eleven other local smelters
aiming to boost local aluminium prices.
Recently, the Company was hit by a corruption scandal as
its general manager Sun Zhaoxue was charged with
soliciting and accepting bribes and was dismissed from his
senior position at the Communist Party of China. In another
major change in management, chairman Xiong Weiping
was replaced by former Chengdu mayor Ge Honglin.

250,000
200,000

0
332

150,000

117,295

789
5,159
Corporate
and other
operating
segments
Energy
segment

348
5,242
137,283
110,108

100,000
50,000
0

58,036

49,953

31,846

33,980

30,706

2012

2013

2014

40,423

Trading
segment

Expenses, in RMB mn
14,000
294

12,000
10,000

194

185

8,000
6,000
4,000
2,000
0

206

162
2,190

2,917

2,450

2,553

1,448

2010

4,061

5,670

5,233

4,832

2,750

2,947

1,488

1,834

1,859

1,753

2011

2012

2013

2014

Research and
development
expenses
Finance costs,
net
General and
administrative
expenses
Selling and
distribution
expenses

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 48 -

Hebei Iron and Steel Co., Ltd


Financial Performance

116,919

Highlights

133,344
111,630

Revenues, RMB mn

697
10,712

2011

2012

2013

Gross profit, RMB mn

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's
largest 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.

98,257

116
9,371

109
9,224

1,383
10,799

1,411
8,349
2010

110,255

2014

Net income, RMB mn

Other Financial Indicators


Indicator

2010

2011

2012

2013

2014

122,545

102,406

100,884

87,546

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 mn

29,431

42,723

42,542

42,560

43,037

0.21

0.13

0.01

0.01

0.07

Cost of revenue, RMB mn 108,570


Total operating costs and
expenses, RMB mn

Earnings per share


Source: Company data
Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 49 -

Hebei Iron and Steel Co., Ltd (cont'd)


Revenues by Product, in RMB mn
120,000

7,210
1,052
4,793

100,000

14,000

8,207
814

Vanadium
products

60,000
40,000

89,985

81,790

1,742

8,000

3,285

3,866

Revenues by Region, in RMB mn


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%

1,255

1.2%

3,218

3.4%

Outside China

Product

Steel products

Chemical products

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

5,489

5,327

Sales and
distribution
expenses

598

649

2013

2014

Output (tonnes)

Operating revenue,
RMB mn (2013)

Region

Administrative
expenses

2,000

Steel
products

2014

1,777

4,000

20,000
2013

10,000
6,000

Billets

Expenses on
research and
development
Financial
expenses

12,000

Others

4,225

80,000

Expenses, in RMB mn

- 50 -

2013

2014

Annual
change

29,743,630

29,599,312

-0.5%

17,075

14,907

-12.7%

Shanxi Taigang Stainless Steel Co.,Ltd


Financial Performance
103,515

96,220

87,198

105,020

86,766

Revenues, RMB mn

Gross profit

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.

442
6,757

2012

630
6,659

2011

1,106
7,686

1,805
8,244

1,372
7,741
2010

Highlights

2013

The company, which was ranked 44th in Fortune China's


list of Top 500 listed companies in the country in 2014,
down from 36th in 2013, is listed on the Shenzhen Stock
Exchange.

2014

Net income, RMB mn

Other Financial Indicators


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 mn

21,843

23,304

24,256

24,630

24,980

0.24

0.32

0.19

0.11

0.08

Earnings per share

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.
Taigangs share In the stainless steel market in China has
shrunk in 2014, reaching 17.5% from 19.3% in 2013.

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2015 EMIS, all rights reserved.

- 51 -

Shanxi Taigang Stainless Steel Co.,Ltd (cont'd)


Revenues by Business, in RMB mn

Expenses, in RMB mn

120,000
100,000
80,000
60,000
40,000
20,000

47,090

27,584

20,085

3,312
16,877

34,161

38,395

2,973

9,000

Plain carbon
steel billets

8,000
7,000

General steel
products

2014

2,294

Expenses on
research and
development

2,252

6,000

Stainless
steel

0
2013

Other
activities

5,000

1,112

Financial
expenses

871

Revenues by Region, in RMB mn


Operating
revenue,
RMB mn
(2013)

Northern China

4,000

Share of
total
(2013)

Operating
revenue,
RMB mn
(2014)

Share of
total
(2014)

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%

Region

3,000

2,982

Administrative
expenses

2,000
1,000
1,425

1,707

2013

Source: Company data


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Copyright 2015 EMIS, all rights reserved.

3,047

- 52 -

2014

Sales and
distribution
expenses

VI. Regional Distribution

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Copyright 2015 EMIS, all rights reserved.

- 53 -

Appendix: Regional Distribution


Steel & Zinc Regional Distribution
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)

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 China
Steel products output (2014):
168.6 tons mn (15% of total)

Southwest China
Steel products output (2014):
67.4 tons mn (6% of total)

Zinc output (2014)


2.2 tons mn (38.1% of total)

Zinc output (2014)


1.3 tons mn (22.9% of total)
Source: China Nonferrous Metals Industry Association, China Iron and Steel Association
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Copyright 2015 EMIS, all rights reserved.

- 54 -

Contact:

Corporate Headquarters
6-8 Bouverie Street
London EC4Y 8DD
UK
Voice: +44 20 7779 8100
Fax: +44 20 7779 8224

Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950

Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th 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 Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
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About EMIS Insight
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- 55 -