Monthly Archives: March 2009
Alumina
The imported alumina price remained unchanged at US$210-220/tonne. After another week of increases, domestic non-Chalco alumina prices rose RMB80/tonne to RMB1930-1950/tonne and have now caught up with the imported alumina price. It is said that some domestic alumina prices had actually reached RMB2110/tonne by last weekend. The Chalco price remained stable at RMB2200/tonne.
Aluminium
Last week, the domestic aluminium price finally rose above production cost. Chalco’s aluminium price is now greater than its RMB13000/tonne production cost, having increased RMB600-800/tonne to RMB13600-13800/tonne. Last Thursday, some spot sales of domestic aluminium hit the RMB14000/tonne price mark.
Purchases from the National Strategic Reserves Bureau, combined with reserves building at the provincial level were the main factors behind the higher aluminium price. Meanwhile, production is also increasing, thanks to the lower electricity prices combined with improving metal price.
The central government has decided to raise China’s export tax rebate, starting from 1st April, on certain processed textile materials, light industrial goods, electronics, iron and steel, non-ferrous metals and petrochemical products.
Green Coke
With the arrival of significant imports of high S GPC, last week saw domestic high S GPC prices begin to decline.
Last week, only a few refineries in North Western China raised their prices. Urumqi Petro-chemical 3#’s quoted price remained stable at RMB1500/tonne, as did Dushanzi 2#’s price, with 2#A at RMB1400/tonne and 2#B at RMB1350/tonne. Tahe halted production for maintenance purposes.
Markets in the Northeast remained stable, with some parts of the region in a bit an over-supply situation. Prices in Jinzhou, Jinxi, Liaoyang, Liaohe, Daqing and Funshun all remained unchanged over the previous week.
In Northern China, while quoted prices aspect remained stable, actual quantities exchanged were not significant. Shijiazhuang refinery suspended production for maintenance purposes. Meanwhile, Tianjin petrochemical plant resumed operations.
Shandong province market prices declined last week, especially at local refineries. Qilu refinery, which produces CFB-use GPC, last week left its 3#B price unchanged at RMB1150/tonne, while High S was all consumed inside the refinery. Jinan refinery, Shengli oil field and Qingdao refinery all widened their actual deal price ranges.
In Eastern China, the 3# price declined slightly, while the High S price decreased. At Jinling refinery, the 3#B quoted price remained stable at RMB1130/tonne. High S price was unchanged at RMB1030-1010/tonne. Yangzi refinery, Gaoqiao refinery, Shanghai petrochemical plant, and Zhoushan refinery have all decreased their prices.
A new payment method was launched for monthly settlements to be made at month-end starting from this month.
Southern China market prices remained stable.
Calcined coke
Low sulphur and moderate sulphur CPC prices remained stable last week, while the price for high sulphur CPC rose RMB100-150/tonne to RMB1500/tonne. Market demand remains very weak. With the decline in GPC price, it is expected that the CPC price will begin to decline next week.
Anode
Anode market prices remained unchanged at RMB2400-2600/tonne last week. Market demand is still very weak, especially the export market. As China’s biggest exporter of anode, Shandong province has yet to see an export order come through. Meanwhile, inventory levels are very high, already reaching 150,000 tonnes in Shandong and Henan provinces - and this number does not include inventory held by aluminium smelters.
A growing number of anode plants have started to cut back output or to further reduce their output. Currently, less than half of China’s main production capacity is still left running.
Coal tar
Coal tar prices continued to rise last week. Prices were up, reaching RMB2000/tonne in Shanxi province, RMB2100/tonne in Shandong and Jiangsu provinces, and over RMB2000/tonne in Hebei and Hunan provinces.
Coal tar pitch
Last week, domestic modified coal tar pitch prices began to rise again. The prices in Shanxi province remained stable at RMB1950-2000/tonne, increased RMB100/tonne to RMB2100/tonne in Hebei province and were up RMB50 to RMB2200/tonne in Shandong province. Modified pitch prices in other regions stayed around RMB1800-1900/tonne on average. Domestic mainstream moderate temperature pitch prices rose RMB100/tonne to RMB1800/tonne.
According to local media reports, Henan province is planning to build up an aluminium reserve of 500,000 tonnes, and institute a loan pledge and interest pledge system. These steps are in order to help those aluminium smelters in the region to restart.
Henan province is the largest producer of the metal in China, with about one fourth of the domestic market. Currently, nearly 40% of the province`s capacity is stopped.
Henan will also offer interest cover on capital loans taken by smelters. Enterprises needing to borrow capital will deposit metal as a pledge for the loan. The provincial government will also underwrite the loans using a RMB 150 million interest reserve fund. As we understand it (the details are not available), the provincial government will pay the interest on these metal-pledged loans, using a 2 for 1 ratio. Smelters must pledge metal to the government in return for the government paying the interest on the loan. Upon return to profitability, the smelters will be able to pay back their interest and capital by selling the metal.
In order to reduce smelter production costs, the Henan provincial government will lower the electricity generating cost for power stations through decreasing coal price or by giving power stations subsidies.
In return for making these loans and interest subsidies and electricity prices available to smelters, the Government has called on all participating smelters to resume full production by the end of March.
There is no information about what the buy price will be for the 500,000 tonnes going into the reserve, or how many other provinces will follow suit with their own strategic reserves purchase.
The question begging in these plans is, what are power stations and banks going to do with so much pledged metal? How are they to pay their employees, their creditors, their taxes? Much of this metal is sure to be put up for sale.
Clearly the driver in this is jobs; with little or no attention to the longer-term effects on the metal market, or possibly even any rigorous examination of how long it would take for smelters to return to profitability.
I have known Tony Botelho since he was sales manager at Goa Carbon in India. So it was a good chance to catch up with him when he came to Beijing this week. I asked him a few questions regarding the Indian market and his views on China.
Welcome to China, Tony. How often do you come here?
I have been coming to China once a year since 2004, excepting 2005, although that is the year I began doing business with Chinese companies.
Tell me a bit about your background. Most people know you as the man behind Goa Petcoke Consultancy, and before that you were with Goa Carbon. What is the Tony Botelho story when it comes to this industry ?
I joined Goa Carbon in 1989, with previous stints in two companies whose line of business was exports. The Indian petcoke business was tightly controlled then - freight equalization for GPC deliveries, imports not permitted, calciners were allocated GPC by the Indian Oil Corporation, and generally sold the calcined product against advance payments !
It all changed with the freeing of the Indian economy. Goa Carbon was disadvantaged because of its location on the West Coast of India, and I believe my previous work experience in exports helped turn give it a fresh lease of life as India’s first exporters of calcined coke, well even before Rain Calcining started and came on the scene. It helped that the management of Goa Carbon gave me a free hand.
How has the transition been, going from Goa Carbon to being your own boss?
My experience at Goa Carbon was an important part of my career. Having achieved my goals there, I felt ready to embark on newer challenges. It’s been an interesting experience representing companies from different parts of the world for different raw materials for smelters. And the consultancy work for calciner projects with a handful of former colleagues from Goa Carbon. Being my own boss has its own advantages and I am enjoying that, even if the wife thinks I work harder and longer hours now!
How has the current economic crisis affected India? Are the smelters there cutting back like elsewhere?
India has not been exposed as badly as the West to the “toxic” instruments and swaps. But the impact on the West has had its repercussions in India.
Again, Indian smelters have not been affected as badly as some of those in China and the West. There has been a slow down of the new smelter projects, and the two Soderberg technology smelters acquired by Vedanta have curtailed or stopped metal production whilst still making profits from sale of electricity from their power plants.
How have the calcining companies reacted to the current market?
In my opinion with the exception of the Maniyar Goup, most of the Indian calciners did not react sensibly and in time to the fast-unraveling circumstances in China, and are paying the price now - with the exception of NALCO the other Indian smelters are buying sizable quantities of cheaper Chinese calcined cokes.
Indian companies were big in the news in recent years, with Rain taking CII and Hindalco taking Novellis. What was the Indian view of these flourishes? What is the view now?
The prize acquisitions were made when the Indian economy was in a buoyant mood, with possibly a dash of “me too” posturing. Perhaps they made sense then with Rain-CII becoming the largest calciner company in the world, and Hindalco becoming one of the world’s largest integrated aluminum companies.
Right now with the possibility of LME prices recovering looking grim, the rupee depreciating against the dollar and the loans taken to finance the acquisitions becoming costlier, the companies’ net worth has been dragged down, perhaps Hindalco more so than Rain-CII.
I believe the decline in aluminium and coke prices led to the companies getting affected by a negative price lag effect, largely due to the time gap between the purchase of raw materials and the sale of the finished products.
Turning to China, there is a strong tie between the two markets. How does India look on the Chinese coke industry?
Trade between the two countries rose in 2008-9 by almost 30 % to over $51 billion. Both the countries, which account for over a third of the world’s population, have been discussing bilateral trade and economic relations lately in the context of the global slowdown. However India is concerned that some Chinese imports into India, calcined coke included, could be instances of “dumped” goods.
For many years the port-based Indian calciners were dependent on spot purchases of Chinese GPCs, until the aluminium industry in China took off at a gallop and supplies almost dried up. Now not only is plenty of Chinese GPC available to Indian calciners, but there’s plenty of cheaper Chinese calcined coke available to Indian smelters.
Indian calciners and smelters therefore have conflicting perspectives. The calciners look upon the Chinese calcined coke imports by Indian smelters as a threat to their existence. The smelters welcome the lower Chinese coke prices which help them reduce costs.
There seems to be a lot of interest in Chinese calcined coke from Indian buyers recently. Isn’t that like taking coals to Newcastle ?
From November 2008 Chinese calcined cokes began being imported into India, as they worked out cheaper than purchases from Indian calciners. This situation came around due to the closure of metal production capacity by smelters in China.
The Indian Oil Corporation takes time to reduce its GPC prices, which does not enable local calciners to compete with Chinese calcined coke delivered prices. In November 2008, IOC sold GPC at approximately $ 340/t, whereas delivered prices of Chinese calcined coke to India were around $ 380. Although the IOC did reduce GPC prices since, calcined coke ex-China prices also dropped. A reduction in Indian GPC prices should come by 31 March.
What’s your view of the current Chinese market? What’s your forecast for coke prices through the rest of this year ?
I believe that China as the world’s largest consumer of metals will hold the key to commodities prices. Demand may be weak right now, but the stimulus spending packages and de-stocking should eventually reverse the trend. I understand China would be spending almost $ 600 billion in metal-intensive projects like railways and housing.
On the other hand, although GPC prices in China are increasing, a decreasing trend could be seen again during 2Q09, as new cokers come on stream, which is likely to depress prices.
In any case coke prices are unlikely to reach October 2008 levels so soon again.
Thanks Tony.
Alumina
Last week, imported alumina prices remained unchanged at US$210-220/tonne. Domestically, non-Chalco prices rose RMB40-50/tonne to RMB1850-1870/tonne, while Chalco’s price remained unchanged at RMB2200/tonne. The rise in domestic non-Chalco prices was mainly driven by National Reserves Bureau (NRB) purchases of aluminium, which by decreasing domestic aluminium inventory levels, boosted aluminium production and therefore increased market demand for alumina.
Aluminium
Chalco’s aluminium price rose RMB600/tonne to RMB13000/tonne. Chinese aluminium C&F spot prices rose to US$1476-1496/tonne as at 20th March.
A decrease in domestic aluminium inventory levels caused some of the aluminium smelters that had been shuttered to resume operations.
Those 15 aluminium smelters that were recently designated by the central government to pilot a new preferential electricity pricing policy have already signed separate price agreements with different power stations. While the new average price achieved by these 15 smelters is below the average for all smelters in China, some are still not happy with the policy, believing they could have done better outside the policy.
Green Coke
Last week, domestic green coke market prices remained stable. However, recent deliveries of imported green coke have put a lot of pressure on domestic sales, and a growing number of refineries have begun to cut their prices and/or halted operations for maintenance work. Meanwhile market demand for green coke stayed flat.
With regard to general market prices, there have been no signs of cuts. Market prices remained stable, at RMB1400-1450/tonne for 1#A GPC and RMB1350-1500/tonne for 1#B GPC. Prices for 2#-3#A also did not move, at RMB1200-1350/tonne in Northern China, RMB1050-1300/tonne in Shandong province, and RMB1200-1300/tonne at local refineries. Prices along the Yangzi River remained unchanged as well. The price for 3#B was stable at RMB1000-1200/tonne. Meanwhile, high sulphur prices stayed put at RMB900-1000/tonne.
Calcined coke
Last week the market price for low sulphur calcined coke remained stable at RMB2350-2400/tonne. The prices for moderate sulphur calcined coke rose RMB150/tonne to RMB 1750-2600/tonne. On the other hand, as a result of the recent deliveries of low priced imported green coke, high sulphur calcined coke prices dropped RMB150/tonne to RMB1350-1400/tonne. Market demand remained very weak.
Anode
The market price for anode remained unchanged last week. There are expectations that anode export prices will rise along with raw materials prices, and that they might reach US$440-460/tonne. However, international demand is still very weak, so that the estimates for anode exports are not particularly optimistic.
The domestic production rate for anode is currently running at 40%, and is expected to fall further.
Coal tar
Coal tar prices continuously increased last week, with Shanxi prices rising to RMB1850-1900/tonne, Hebei prices climbing to RMB1850-1950/tonne, Shandong prices at RMB1950-2000/tonne, and prices in Southern provinces such as Jiangsu, Hunan, Guangxi, and Jiangxi all rising by around RMB100/tonne. Meanwhile, the shortage of raw materials is deepening.
Coal tar pitch
Last week, domestic modified coal tar pitch prices began to stabilize, with prices remaining put at RMB1950-2000/tonne in Shanxi province, RMB2000-2100/tonne in Hebei province and RMB2150/tonne in Shandong province. Modified pitch prices in other regions stayed around RMB1700-1800/tonne on average. Domestic mainstream moderate temperature pitch prices remained unchanged at RMB1700-1800/tonne.
Inventory of domestic coal tar pitch is low, as most producers have modified their business model and many have almost no inventory left –by only producing to order, they have found a way of preventing increases in inventory levels. Market demand remains very weak, but we believe that coal tar pitch prices will be driven up further along with the increase in coal tar prices.
Aluminium Fluoride
Nothing to report this week.
Following our highly successful Black China conference in June 2008, and in response to so much interest in a follow-up conference, I am pleased to announce that we have set in motion the planning to conduct our next conference.
We are tentatively scheduling it for May 2010 (I did say it was a very early heads-up). We are currently looking at options for venues, with the short list being Hong Kong, Qing Dao or here in Beijing. Hong Kong has obvious advantages for international travellers. Qing Dao is famous for its sailing and its beer. If we choose Beijing, it will be at one of the resorts on or close to the Great Wall. You are welcome to submit your comments and preferences as to venue.
No other details yet. But I am pleased to say that Mrs Ros Rath, who organised the last conference, has agreed to take on this project. We will publish more details as they become firm.
Alumina
Last week the imported alumina price remained unchanged at US$210-220/tonne. Domestically, non-Chalco prices dropped RMB20/tonne to RMB1800-1830/tonne, while Chalco’s price remained unchanged at RMB2200/tonne.
Aluminium
Chalco’s aluminium price rose RMB100-200/tonne to RMB12400/tonne. The domestic aluminium price was lowest in Zhejiang Wuxi, at RMB11960/tonne.
Last year, the central government cancelled the industry’s preferential electricity pricing policy across every region. Replacing that policy this year is a new one whereby factories can purchase electricity from power stations directly. Some aluminium smelters, however, will be hurt by this new policy as they were already enjoying lower prices thanks to local government support. Meanwhile, the central government has already named 15 aluminium companies to pilot the new preferential electricity pricing policy, 7 of which belong to Chinalco.
It is anticipated that more heavy polluting and high energy consuming aluminium smelters will be forced out of the market.
Green Coke
After strong price increases over several weeks, the price of coke last week remained stable. Only a few refineries made small price adjustments.
In the high sulphur coke market, increased imports of green coke were recently delivered to coastal cities. This put additional pressure on domestic coke sales, especially in the high sulphur coke segment. It was reported that Rizhao port in Shangdong province received two shipments (representing around 12,000 tonnes) of high sulphur coke (sulphur: 7, ash: 0.19, VM: 11.06, and moisture: 7.2) from Taiwan at the beginning of March. The selling price was RMB 850/tonne. Affected by these coke imports, the Qingdao refinery’s listed price has dropped to RMB 860/tonne from RMB900/tonne.
The price of imported high sulphur coke is much lower than that of domestic coke –with the price of imported high sulphur coke including import duties estimated to come to under RMB700/tonne, or RMB200/tonne less than the price of domestic high sulphur coke. This increases the incentive to import coke.
In the moderate sulphur coke segment, the market gradually stabilized after two months of price hikes. Although demand for coke remains soft, low operating rates at refineries have prevented prices from declining. In Shandong province, the average operating rate at local refineries decreased to 10%. Along the Yangzi River, the Jiujiang and Changlin refineries will stop production for overhaul and maintenance.
The market for low sulphur coke remained stable.
Calcined coke
Calcined coke prices have risen along with green coke prices. Last week, low sulphur calcined coke prices remained stable at RMB2350-2400/tonne. Moderate sulphur calcined coke prices stayed unchanged at RMB1600-1700/tonne, while high sulphur calcined coke prices increased RMB150/tonne to RMB1500-1550/tonne.
Coal tar
Last week, coal tar prices consistently moved up, with the mainstream prices in Shandong, Shanxi and Hebei provinces rising to RMB1750-1900/tonne, prices in Guangxi and Guangdong provinces already reaching RMB2000/tonne, and RMB1800-1900/tonne in Central China.
A shortage of raw materials and continuous cutbacks by many coal tar producers are directly affecting the supply of coal tar. It is expected that coal tar prices will rise further.
Coal tar pitch
Last week, domestic coal tar pitch prices continued to increase, with modified pitch prices rising to RMB1950-2000/tonne in Shanxi province, and mainstream modified pitch prices increasing to RMB2000-2100/tonne in Hebei province and RMB2150/tonne in Shandong province. Modified pitch prices in other regions averaged RMB1800-2000/tonne.
Domestic mainstream moderate temperature pitch prices rose to RMB1700-1800/tonne.
One thing that is very clear is that the coal tar price increases are not benefiting the coal tar pitch producers. The latter have actually been forced to raise their prices while market demand remains very poor, which is putting them under significant pressure. Many producers are saying that they have already reached their limit, and will surely halt operations should the price of coal tar continue to rise while market demand remains unchanged.
Anode
Last week, anode prices increased slightly. In Shanxi province, mainstream quoted prices rose to RMB2700-2800/tonne, the price for low-end anode was unchanged at RMB2650/tonne, while the price for high-end anode increased to RMB3000/tonne. In Shandong province, mainstream prices were around RMB2700-2800/tonne, and the price for low-end anode dropped to RMB2500/tonne; in Henan province, mainstream prices remained unchanged at RMB2600-2800/tonne, high-end anode prices rose to RMB3000-3150/tonne, and the price for low-end anode dropped to RMB2400/tonne.
The actual deal price on anode last week was on the rise as well, but not the quantity sold. Those anode plants that were closed down have not been reopened and there are no plans to restart operations. It is estimated that export volume will fall further.
Aluminium Fluoride
Nothing new to report this week.
Here is an article which appeared yesterday in the China Daily.
Alcoa sees China as linchpin in aluminum market
(Agencies)
Updated: 2009-03-11 10:38
China has been the linchpin in the global aluminum industry with its sizable production cuts and measures to boost industrial demand, steps that have brought the global market into balance despite a rapid decline in the metal price, Alcoa Inc’s CEO said on Tuesday.
Speaking to Reuters Global Mining and Steel Summit, CEO Klaus Kleinfeld credited China’s massive smelter production cuts of over 20 percent, which turned China into a net importer of the shiny metal, as helping to bring the global aluminum market roughly into balance.
He added, however, that the market outside of China is still running a supply overhang of more than a million tonnes, which, if it continues, could pressure Alcoa to cut more capacity at its US smelters, its highest-cost producers.
Alcoa has a list of variables to consider before making such a move, including the smelter’s cost-curve position and terms of its power contracts.
“So the pressure is still on. We’ll continue to look at our situation and then decide what to do about it. But it’s possible,” the CEO said of additional US capacity cuts.
With benchmark aluminum prices on the London Metal Exchange sliding from a record high of $3,375 a ton last July to around $1,300 a ton currently, the aluminum giant has had to manage its cash position, trimming costs wherever possible.
At the same time, China has boosted demand for the metal with its giant economic stimulus package.
While some observers have been concerned that China’s recent metal purchases have gone straight to inventories, Kleinfeld said that was not the case with aluminum.
“Almost none goes to inventories. Almost all goes to real projects. One thing about China’s economy is that their economic stimulus program has really focused on what I would call ‘the shovel-ready projects.'”
Despite its rapid response to a deteriorating market, Kleinfeld said China cannot lead the world economy out of its current downturn and puts that role on the United States, whose own economic stimulus package has a smaller allotment for infrastructure and will take much longer to go into effect.
Still, China holds attractive prospects for investment opportunities, the aluminum producer’s chief said.
Though last year it ended an agreement with China’s Chinalco to buy a stake in Rio Tinto that will return more than a $1 billion of cash back to Alcoa, Kleinfeld added that the company was still seeking strategic opportunities with Chinese companies, including the State-owned aluminum group.
“I believe China has a very bright future. We have some investments in China. But I’m open to looking at other opportunities or the Chinese market or together with Chinese players. We have strengths in our cooperation with Chinalco, but there are also other co-operations that we have in place.”
Two weeks ago, he said, Alcoa signed a memorandum of understanding with Yunnan provinces for joint ventures involving operations from smelting to fabricating.
Those of you who heard or read my presentation at TMS will remember I predicted that China’s exports situation is unlikely to improve for some time, but that government spending and investment were the two big levers of the economy that we should watch.
The exports data is being widely reported. Bad news sells newpapers, so expect to see more gloomy predictions in the world’s press. But the real space to watch for signs of the direction of China’s economy is not in the lagging indicators but in the leading ones. New loans written, government infrastructure spending and domestic investment figures will give us a better indication of what is likely to happen next in China.
Here is one article from the China Daily about the latest figures.
China’s exports slump, investment rises
(Agencies)
Updated: 2009-03-11 15:24
China’s exports tumbled in February as the world’s third-largest economy felt the full force of the global financial crisis, but capital spending accelerated with the help of the government’s massive stimulus package.
With the world experiencing its deepest recession in decades, pessimists said the slump in exports was unlikely to end soon. Some said China could even record a trade deficit before long.
But optimists saw fresh hope in the more forward-looking investment data that China might pull out of its swoon faster than other major economies thanks to the government’s pump-priming and galloping credit growth.
“China has finally and spectacularly succumbed to the world financial crisis on the export side, and it’s difficult to see why that would improve in the short term,” said Paul Cavey, an economist at Macquarie Securities in Hong Kong.
Exports in February slid 25.7 percent from a year earlier, dwarfing forecasts of a 5.0 percent fall, while imports dropped 24.1 percent, close to projections of a 25.0 percent decline.
The drop in exports was the steepest since bankers started keeping records in 1993.
The resulting trade surplus was $4.84 billion, a three-year low, compared with $39.1 billion in January and a record $40.1 billion in November, the customs administration said on its website, www.customs.gov.cn.
The drop in the surplus to well below the forecast $27.3 billion figure, sparked broad dollar buying.
Big Impact
Chinese exporters had hitherto fared better than others, such as South Korea and Japan, encouraging conjecture that cost-conscious shoppers in the West were trading down to cheaper made-in-China goods.
But Isaac Meng, an economist with BNP Paribas in Beijing, said it was unrealistic to expect China to remain immune to what he called the sharpest drop in global trade in 80 years.
“It will have a pretty big impact on Chinese domestic demand,” Meng said of last month’s dive in overseas shipments.
“Probably 60-70 million workers directly work in these export sectors, so there will be secondary impacts on capital expenditure, employment and consumption,” he said.
The government estimates that 20 million migrant workers, who labour mainly in export factories and in construction, have lost their jobs so far because of a collapse in global demand and a slump in the domestic real estate market.
Mei Xinyu, a researcher with the Ministry of Commerce, said the slump in exports was likely to last at least until mid-year.
“Any recovery in the export sector will not take place until the third or even the fourth quarter of this year,” he said.
investment Perks Up
But other figures released earlier by the National Bureau of Statistics suggested that the government is already enjoying some success in its drive to make up for the shortfall in exports by boosting capital spending.
Investment in urban areas in fixed assets such as roads, power plants and apartment buildings rose 26.5 percent in January and February from a year earlier, easily beating market forecasts of a 21.5 percent increase.
“The figure shows the economy is doing very well and Beijing’s stimulus package is working,” said Jiang Chao, an analyst at Guotai Junan Securities in Shanghai.
In all of 2008, urban fixed-asset investment was up 26.1 percent.
The combined number is meant to smooth out distortions caused by the Lunar New Year, which fell in January this year but in February last year.
Yu Song and Helen Qiao at Goldman Sachs said the rebound in investment came sooner than they had expected, increasing the likelihood of an upside revision to their forecast of domestic demand.
A breakdown pointed to the initial impact of the 4 trillion yuan ($585 billion) stimulus plan unveiled in November.
Spending on projects backed by the central government rose 40.3 percent in the first two months, while investment in transport, including railways, rose a whopping 210.1 percent.
“There’s no doubt that fixed-asset investment will be on an upward trend in the first half of this year, given the capital being injected into infrastructure and public housing,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai.
Bank lending is surging; cement and steel output rose 17 percent and 2.4 percent, respectively, in the first two months, while the decline in power demand slowed; and car sales topped 800,000 in February for the first time in eight months.
But other statistics suggest China is not out of the woods yet. Investment in China’s real estate sector was just 1.0 percent higher than in the first two months of last year; inventories of raw materials such as coal have started to mount again; and a rise in prices of steel proved to be short-lived.
If you are wondering what happened to the anodes and coal tar pitch sections of this week’s market review, the simple answer is, we left them off. I have fixed that now. You will find them in the review.
Black China Report subscribers have the password for the review.
The principle highlight for this week’s report is the rumour doing the rounds inside China that Alcoa is now also looking at a JV with a supplier of CTP.
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