Monthly Archives: December 2009
The following article is from London’s Telegraph. It is one of several about the recent news that China has revised it’s 2008 GDP figures.
China may have finally crept past Japan to become the world’s second largest economy. Illustration: Michael Fitzjames CHINA has almost certainly overtaken Japan to become the world’s second-biggest economy after state officials dramatically upgraded their estimates for growth last year.
The fast-growing emerging economy had been expected to surpass Japan next year, but the transition looks to have happened in 2009, based on China’s new growth estimates. Its statistics bureau said China grew by 9.6 per cent - rather than 9 per cent - in 2008, meaning its economic output was 31.405 trillion yuan ($A5.2 trillion) last year.
According to the World Bank, Japan’s annual output was the equivalent of $A5.5 trillion last year, but it is expected to shrink by 6.6 per cent this year. Meanwhile, China projects that its economy will grow by more than 8 per cent this year. It means it is likely that it became a larger economy than Japan in the second half of this year.
Statisticians said the bigger-than-expected expansion last year was fuelled largely by strong growth from the services sector, something that was only uncovered after a detailed census into economic activity during the year. The revisions continue a recent trend of officials upgrading estimates for previous years’ economic growth.
In 2005, statisticians dramatically upgraded their estimates of the size of the economy, catapulting it over Britain to become the world’s fifth biggest economy. Peng Zhilong, the head of the bureau’s national economy calculation department, said the main difference was in the overall size of the economy, rather than its growth rate, and that China would expand by more than 8 per cent this year.
David Cohen, of Action Economics in Singapore, said: ”The big underlying factor propelling China’s growth is the migration of people from the agricultural sector to the more modern economy - industry and services. There’s no stopping China.”
Although the breakneck expansion looks likely to continue for some time, there are concerns over the country’s path. Some economists compare China’s position - with authorities combining low interest rates with high government investment and rising asset prices - to Japan in the late 1980s, warning that it, too, could fall victim to a crash. Some worry about demographics. The one-child policy means that in the coming years its population is likely to age quickly, increasing pressure on public finances and dampening long-term growth prospects. Nevertheless, the news about strong growth will add to hopes that China will help lift the wider world economy out of recession next year.
Whereas 2009 was the year that brought the first worldwide economic contraction since World War II, the opening quarter of 2010 is expected to see the major economies back in growth. Although Britain contracted by 0.2 per cent in the third quarter of 2009, it is expected to move back towards growth in the final quarter of the year. But economists said the first quarter of 2010 would be marked by increasing tension over the fiscal position of various countries. Having had to borrow unprecedented amounts to prevent a deeper recession, a number of countries have generated large deficits, which may scare off international investors.
The following article is from the Financial Times in London. For several year, most independent economists have been using provincial numbers as a better guide than those of the NBS.
China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery. But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.
GDP totalled Rmb15,376bn ($2,251bn) in the first half, according to data released individually by China’s 31 provinces and municipalities, 10 per cent higher than the official first-half GDP figure of Rmb13,986bn published by the National Bureau of Statistics. All but seven of the regions reported GDP growth rates above the bureau’s first-half figure of 7.1 per cent.
At the start of the year, Beijing set 8 per cent as China’s growth target for the year.
With the rest of the world looking to China as a beacon of expansion, the discrepancy is a reminder that statistics there are often unreliable and manipulated regularly by officials for personal and political purposes. In recent years, provincial figures have suggested consistently the world’s third-largest economy is bigger than Beijing’s published estimate, but the discrepancy appears to have widened this year.
Even state-controlled media reports and editorials have in recent days raised questions over their accuracy. The Global Times, controlled by the People’s Daily, the Communist party mouthpiece, reported that the public reacted with “banter and sarcasm” to NBS figures showing average urban wages in China rose 13 per cent in the first half to $2,142. It quoted an online poll showing 88 per cent of respondents doubted the official numbers. An editorial on Tuesday in the China Daily, the government’s English-language mouthpiece, quoted another survey that found 91 per cent of respondents sceptical of official data, up from 79 per cent in 2007. Economists abroad have also questioned the reliability of the data in recent months.
“Despite starkly limited resources and a dynamic, complex economy, the state statistical bureau again needed only 15 days to survey the economic progress of 1.3bn people,” said Derek Scissors, of the Washington-based Heritage Foundation, referring to the time it took for the bureau to produce the figures after the end of the first half this year. “At worst, results are manufactured to suit the Communist party.”
Some economists say provincial officials have enormous incentives to improve their career prospects by exaggerating local economic growth. The NBS itself is often wary of data provided by local governments and tends to revise down preliminary estimates using its own statistical model, according to official economists. Calls to the NBS, which like most Chinese government agencies rarely responds to requests for comment, were not returned.
The criticism has prompted the NBS to launch a campaign last week, entitled “Statistical Feelings: We have walked together – Celebrating the 60th anniversary of the founding of New China,” to boost confidence among statisticians. The campaign has already produced works such as: “I’m proud to be a brick in the statistical building of the republic.” In another poem, a contributor writes: “I can rearrange the stars in the sky because I have statistics.”
I found the following announcement while trawling the internet. The bias and self-congratulation is by the author, not me.
UC RUSAL announced that the 3rd anniversary of the Khakas smelter’s operations, which have produced over 750,000 tonnes of aluminum since the start up. 99% of this output is high metal grades.
The cash costs of the Khakas aluminum smelter are 14% less than the average figures across RUSAL’s aluminum operations and is approximately USD 1,200 per tonnes which is the lowest among all the aluminum smelters globally. For the eleven months of 2009 the KhAZ pots performed at 320 kA with a current efficiency of 95% whilst consumption rates of raw materials were minimal and the daily smelter’s output was over 800 tonnes. Such a notable performance came about due to the RA-300 technology developed by RUSAL’s in house R&D staff Engineering and Technology Centre.
The RA-300, a cutting edge reduction process is also moderately energy consuming: KhAZ needs 11% less electricity than the average power consumption parameter across the company in general. Moreover, the technology implies a high level of automation bringing the total headcount to only 440 people, and a very lean labour management, which both helped achieve the world standard productivity level of 618 tonnes per person.
Mr Alexey Arnautov the head of RUSAL’s aluminum division said that “The construction and commissioning of the Khakas smelter were a challenge to RUSAL since this plant became the first aluminum production site to have been built in Russia in the last 20 years. Having demonstrated this project as a success, our company proved its capability to implement advanced smelting technologies, design and create new capacities, start them up and manage them in the most efficient way. Over the first 3 years of operations the Khakas smelter proved the efficiency of its technologies and a strong ability to compete with leading world class aluminum plants.”
The Khakas aluminum smelter was built and commissioned in a record short timeframe of 25 months producing its first batch of hot metal on December 15th 2006. As early as October 2007 the smelter reached its full design capacity of 300 kilo tonne per annum. The entire production process is based on the pre baked anode technology and is highly automated, which allows, if necessary any part of the process to be controlled and readjusted and equipment performance to be monitored on 24 hour basis.
While designing the smelter, close attention was paid to the compliance of the new facility with international labor standards on the shop floor and minimization of hazardous emissions to mitigate the environmental impact coming from smelting operations. The gas and fume treatment units on the production site capture no less than 99.5% of process emissions and surpass the corresponding international environmental norms. The Khakas smelter has the OHSAS 18001 and ISO 14001 certificates.
The Chief Executive Officer at Qatalum announced that the company’s first electrolysis cell started production of liquid aluminum metal, marking the start of primary aluminum production in Qatar, The Peninsula reported.
The first of Qatalum’s 704 reduction cells started operation last morning, in line with the announced production schedule. Qatalum’s Chairman confirmed Qatalum’s ability to deliver products on time, within budget and with an excellent environmental and safety standard. Qatalum, the largest aluminium plant ever launched is a 50/50 joint venture between Qatar Petroleum (QP) and Hydro, which will produce 585,000 tonnes of primary aluminium when it reaches full production capacity.
Qatalum’s CEO added that construction work will continue as testing and training give way to operations. New cells will be started consecutively from now on and during next year, reaching full operational capacity of 585,000 tonnes when all 704 cells are in operation in the second half of 2010.
ALUMINA says it will contribute about $US120 million ($134.8m) toward the development of a $US10.8 billion aluminium project in Saudi Arabia. Alumina’s joint venture partner, Alcoa, is teaming up with Saudi Arabian Mining Co, better known as Ma’aden, to develop an aluminium complex featuring bauxite mining, alumina refining and aluminium smelting. The deal will see Alcoa and Alumina provide alumina for the first stage of the project, due to come on line in 2013, with a bauxite mine and alumina refinery to be developed in the second phase.
Alumina said it will consider a variety of debt funding options for its equity contribution, which will be contributed progressively between 2010 and 2014. “This is a unique opportunity to invest in very low cash-cost alumina production capacity in a major growth region for the aluminium industry and further diversifies our operational and geographic footprint,” Alumina chief executive John Bevan said.
The following article appeared in “The Idependent on Sunday” today.
China “systematically wrecked” the Copenhagen climate summit because it feared being presented with a legally binding target to cut the country’s soaring carbon emissions, a senior official from an EU country, present during the negotiations, told The Independent on Sunday yesterday.
The accusation, backed up by a separate eye-witness account from the heart of the talks of obstructive Chinese behaviour, reflected widespread anger among many delegations about the nation’s actions at the conference.
The concluding agreement about tackling global climate change was widely criticised yesterday for being too weak, and was seen as a dashing the hopes of many concerned about the warming threat. The lack of teeth in the “Copenhagen accord” – which, it is accepted on all sides, is inadequate for fighting climate change – was widely blamed by environmentalists on President Barack Obama for not making bigger US commitments to cut carbon emissions.
Yet the key element of the agreement, a timetable for making its commitments legally binding by this time next year, was taken out at the last minute at the insistence of the Chinese, who otherwise would have refused to agree to the deal.
Also removed, at Chinese insistence, was a statement of a global goal to cut carbon emissions by 50 per cent by 2050, and for the developed world to cut its emissions by 80 per cent by the same date. The latter is regarded as essential if the world is to stay below the danger threshold of a two-degree Centigrade temperature rise.
The “50-50″ and “50-80″ goals have already been accepted by the G20 group of nations and world leaders who were negotiating the agreement, including Gordon Brown, Angela Merkel of Germany, Nicolas Sarkozy of France and Kevin Rudd of Australia. They were said to be amazed at the Chinese demands, especially over the developed nations’ goal. The European official said: “China thinks that by 2050 it will be a developed country and they do not want to constrain their growth.”
China, with its rapidly expanding economy, has now overtaken the US as the world’s biggest CO2 emitter, and although at the meeting it agreed for first time to a target to constrain its emissions growth in an international instrument, it is desperate not to have that made legally binding, the official said. He added: “This conference has been systematically wrecked by the Chinese government, which has adopted tactics that were inexplicable at first as we had been led to believe they wanted an agreement.”
Even more pointed allegations about Chinese behaviour came last night from another source at the heart of the negotiations.
The source was present as heads of state and government drafted the final document, and gave the IoS an astonishing eyewitness account. He said: “There were 25 heads of state in the room; this was about six o’clock on Friday night. To my right there was President Obama in the corner, with Gordon Brown on one side, the Ethiopian President on the other, the President of Mexico, the Prime Minister of Papua New Guinea…
“If China had not been in that room you would have had a deal which would have had everyone popping champagne corks. But this was the first sign that China is emerging as a superpower, which is not interested in global government, is not interested in multilateral governance that affects its own sovereignty or growth. You could tell this lack of engagement through the process; they play a much cleverer game than anyone else. They were running rings around the Americans.
“It’s always easier to block than to try and get something. The Americans will probably be given some of the blame because that’s the conventional narrative all the pressure groups have – that the rich countries are bad, they didn’t give enough money or they would not create enough mitigation targets.”
The source went on: “But the truth is, I was in that meeting and the ‘Annex 1′, rich countries had mitigation targets of 80 per cent by 2050 which everyone supported, and it was taken out by the Chinese. The deal was watered down because the Chinese wouldn’t accept any targets of any sort, for anybody. Not themselves or anybody else. Legally binding stuff was taken out by the Chinese as well and there was a lot of anger in the room. It was controlled but it was very, very clear what the feelings were.
“The Chinese were happy as they’d win either way. If the process collapsed they’d win because they don’t have to do anything and they know the rich countries will get the blame.
“If the deal doesn’t collapse because everyone is so desperate to accommodate them that they water it down to something completely meaningless, they get their way again. Either way they win. I think all the other world leaders knew that by that stage and were just furious that they couldn’t do anything about it.
“It was extraordinary to see, and incredibly worrying for what it bodes for the future of our planet in this century. China is not going to get less powerful, and if this is the way that it’s going to behave, then we have problems.”
Ed Miliband, the Secretary of State for Energy and Climate Change who led the negotiations for Britain, said last night: “It’s disappointing that the Chinese insisted we should not commit to a global 50 per cent emissions cut, and it’s disappointing that they didn’t support a legally binding treaty. I think both of these are necessary.”
The following announcement appeared in several blogs and journals. We got this one from Metals. The announcement does not mention what technology would go into this proposed plant, but I wonder if AP50 will be chosen. RTA must be far enough advanced with their Quebec trial plant to know whether this technology is suitable. Another choice would be AP3X.
Rio Tinto Alcan, a unit of global mining giant Rio Tinto said on Monday it could invest up to 2.5 billion US dollars in a potential aluminium smelter in Paraguay. Rio Tinto Alcan said it had begun negotiations on a possible power purchase agreement for the potential smelter. “Our projections indicate the total investment … to be approximately 2.5 billion,” Sandeep Biswas, the head of Rio Tinto Alcan’s new business division, told reporters in Asuncion.
The company signed a letter of intent with Paraguay’s state-run National Electrical Administration (ANDE) to begin negotiations on an energy purchasing agreement in the future. “Under the terms of this agreement, Rio Tinto Alcan will be working with ANDE to develop an energy and development agreement that balances a competitive electricity price for a state-of-the-art aluminium smelter and its contribution to Paraguay’s social and industrial development priorities”, said an official release from the corporation. “Safety, environment, and ethical business practices are key commitments at Rio Tinto Alcan. Our operations would seek to contribute to long-term employment and industrial development in Paraguay,” added Sandeep Biswas.
Rio Tinto Alcan is the global leader in the aluminium industry. Its operations in Latin America include shares in both the Porto Trombetas bauxite mine and Alumar refinery in Brazil. Rio Tinto’s regional experience includes a 30% share of Escondida, the world’s largest copper mine, in Chile and development of the wholly-owned La Granja copper project in Peru. Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.
The following article appeared in several online journals. This one is from Interactive Investor.
Aluminum Corp of China Ltd (Chalco), the top aluminium group in China, has resumed all idle capacity of alumina and aluminium, boosting production, company executives said on Monday. “We have basically resumed all idle capacity,” Lu Youqing, vice president of Chinalco, the parent of Chalco, told Reuters. Chalco has annual capacity of 4 million tonnes of primary aluminium and 11 million tonnes of alumina, the main material for aluminium production. “(The restarts) were based on market conditions,” said Liu Qiang, Chalco’s board secretary.
The following article appeared in Forrex Yard. It is one of several which reported the same results from China’s latest Statistical announcements.
China’s soaring industrial output translated into record demand for oil and record output of many metals and coal in November, but steel production suddenly slowed.
Official data on Friday show China is on course to cap a decade of robust economic growth with a year of unparalleled demand for raw materials and power, despite the economic crisis that has crippled consumption growth in its main export markets.
Oil demand jumped 20 percent in November from a year before, a Reuters calculation showed, as refiners processed more crude than in any previous month, pumping out gasoline and diesel to feed China’s growing horde of motor vehicles and take advantage of the highest pump prices Chinese drivers have ever seen.
Except for crisis-hit 2008, China’s refining runs have increased in every December since 2001, so next month’s oil demand picture may point to a still stronger appetite for fuel, which some experts see continuing into 2010.
“Conservatively speaking, China’s oil demand will grow by no less than 8 percent next year,” said Qiu Xiaofeng, a Shanghai-based senior analyst from China Merchants Securities.
However the rise in demand was not reflected in China’s production or imports of crude oil, which slipped 4 percent and 10 percent respectively from October.
That implies refiners tapped existing stocks of crude oil, the price of which clung close to $80 per barrel during November and has since fallen towards $70. And not all the refining activity reflected real demand, since fuel stocks at the two top oil firms grew 5.3 percent.
COPPER SURPRISES, STEEL STUTTERS
China’s hunger for raw materials, bolstered by stimulus measures and direct government support, gave rise to huge imports of a wide range of commodities in 2009. But the rush to ship to China has slowed as markets elsewhere showed signs of picking up and China began to look oversupplied by imports and the gathering pace of its own production.
Indeed, its output of copper , aluminium , zinc , iron ore , magnesium and nickel all hit record monthly volumes in November, building on a strong showing in October.
The risk of oversupply was cited when China’s rampant imports of copper suddenly slowed to a crawl in October, after seemingly defying gravity for several months. Many analysts had expected the volume of shipments, a crucial driver of the world copper market as well as a gauge of demand from Chinese builders and manufacturers, to show a similar lethargy in November.
But figures issued by China’s Customs office on Friday contained a surprise: imports of unwrought copper, along with aluminium and zinc, bounced back modestly in November, with 290,158 tonnes of unwrought copper arriving in China.
A Reuters calculation based on preliminary figures showed refined copper demand may have risen about by about 35,000 tonnes, or 6 percent, after sliding 20 percent in October. Final import figures are not expected to be issued until Dec. 22.
Another sector plagued by oversupply fears, China’s vast steel industry, stuttered in November. Crude steel output fell 8.7 percent from October to 47.26 million tonnes, although output of steel products inched up to the highest ever at 62.95 million tonnes.
And even that slower pace of crude steel output implies an annualised production of 575 million tonnes, 15 percent higher than in 2008.
A further crumb of comfort for steel firms came from China’s exports of steel products, which have fallen 62 percent this year but rose 5 percent in November to within 3.4 percent of last November’s exports.
POWER UP
Overall, commodity demand appeared in rude health. Industrial output surged 19.2 percent in November from a year earlier, picking up from 16.1 percent in October to achieve the fastest pace since June 2007.
That contributed to the fastest year-on-year growth in power generation in nearly 4 years. Thermal — mainly coal-fired — plants generated more power than in any previous month, up 7.7 percent from October, as nuclear and hydropower output slowed.
That power surge, supported by unexpectedly heavy snows, helped drive China’s coal production to an all-time peak of 288.9 million tonnes, despite official pronouncements about slowing the growth of the world’s biggest carbon footprint.
The weather caused gas shortages across China, prompting the government to ask energy suppliers to raise output. They did, and China’s gas production hit a monthly record of 7.86 billion cubic metres, adding to growing supplies of liquefied natural gas and supporting the market ahead of the launch of a gas pipeline from Turkmenistan this month.
The following article is from the Financial Times.
The Chinese government, battling severe over-capacity and high pollution levels in the country’s steel industry, plans to eliminate mills with a capacity of less than 1m tonnes per year, according to a draft policy document released on Wednesday.
China’s Ministry of Industry and Information Technology also said it will force mills that do not meet environmental standards to upgrade equipment or lose their licences. Mills should not use more than 92kg of coal and 6 tonnes of water for each tonne of steel produced. Waste water emissions should not exceed 2 cu m per tonne of steel produced, and sulphur dioxide emissions should also be limited to 1.8kg per tonne of steel. “Those enterprises with no hope of rectification must gradually withdraw from steel production,” the document said. Banks should not extend credit and government departments must not issue iron ore import permits to mills failing to meet the new requirements, the ministry said in the proposal open for public comments.
But steel market analysts questioned the effectiveness of the draft measures, noting that Beijing has been trying for years to force inefficient, highly polluting smaller mills out of business, with little impact. China’s steel over-production is overwhelming demand created by the government’s stimulus package and depressing profits for larger mills.
The same ministry announced last August that it was banning all new capacity projects for the next three years, and said it would starve them of bank credit. But 32 new expansion projects have been announced since then at 27 different steel mills, according to Steel Business Briefing in Shanghai. “Beijing has shown it can’t police these small mills . . . and many of the smaller companies are not even known to the government anyway,” says Graeme Train, China research manager for Steel Business Briefing. Mills often buy environmental equipment required by government – “but then they don’t use it”, he says.
Beijing says the nation’s steel capacity is more than 700m tonnes.
0