Monthly Archives: April 2012

May holiday

Written by Paul Adkins

China will have a three day public holiday starting tomorrow, April 29, so the office will be closed until Wednesday. Our weekly report subscribers will get the report two days early as a result.

Over the upcoming weekend, our May 1st early bird discount for the May 22 conference will expire. If you haven’t registered yet and would still like to take advantage of this discount, please take action today.

5 top topics to be discussed at the conference:

1. Once a decade, China gets a new leadership team. What are the implications?

2. Will China continue its path of becoming the world leader in smelting technology?

3. How will calcined coke be marketed and priced in the future?

4. What does the second half of 2012 and the next year hold in store in terms of China’s economy?

5. What are the risks for forming or not forming strategic partnerships with Chinese suppliers?

We are packing in as much valuable content and discussions as possible and are anticipating a great event.

Special guest

Written by Paul Adkins

AZ China is delighted to confirm that Dr Liu Feng Qin will attend our conference in Qing Dao next month.

Dr Liu is probably the best known person in the China aluminium and raw materials space. She has presented countless papers at TMS on the latest technological developments in the areas of petroleum coke calcining, the use of shot cokes and other non-traditional cokes in anodes, and in the latest cathode designs.

As head of Chalco’s R & D in theses areas, and Chalco’s Chief Engineer, she is in the driver’s seat when it comes to smelting technology.

Miss Liu gave a paper at our 2010 conference, as many of you will recall. We are currently discussing topic areas that she could expand on.

I am delighted to have my old friend Miss Liu joining us again this year.

 

Calling it as he sees it

Written by Paul Adkins

At the MB aluminium conference this morning, well-known China aluminium expert Mr Dong Chunming told delegates in no uncertain terms his ideas for the future of China’s aluminium industry. His views included that local government officials, finance companies and industrial corporations are more interested in making money for themselves than they are in the greater good for China.

Mr Dong gave examples to support his views. In one province, he said that that local officials gave an offer of 1 billion tonnes of coal for every 2 billion tonnnes of fixed asset investment. He felt that over-capacity is the result of greed, and called for China to wait “for its soul to catch up”.

It was refreshing to hear someone give their personal views at a conference. One doesn’t have to agree with him to admire his courage.

Mr Dong is planning to be at our conference in Qing Dao, where I hope we can get him to expand on his views.

 

Indonesian bauxite crisis deceased?

Written by Paul Adkins

This is one of those stories that need to be told, even though the truth of the matter may never be revealed.Several sources have reported the mysterious death of the Indonesian Deputy Minister for Mines recently.

It seems he died as a result of a mountain-climbing accident, even though he had never been known as an enthusiast of the sport.

The point that Ian Levy of Australian Bauxite Resources makes is that this man was the one leading the push to tighten controls on the export of commodities such as bauxite.

Mr Rice claims that the indonesian mining industry is rife with corruption, with huge payments flowing back to Army generals and wealthy families. The intended ban on exports would have stopped those payments. But with this deputy minister now dead, the money can continue flowing and China’s primary aluminium industry can breath a sigh of relief.

Apparently there had already been some discussions between the Chinese and the Indonesians as to how to prevent a crisis. Those talks will now take a back seat.

Meantime, China imported a record amount of bauxite in March, taking 5.26 million tonnes. Clearly China was trying to build stock ahead of action by the Indonesians. It will be interesting to see the import statistics for May, the first full month after the death of this government official.

More Sunstone plant pictures

Written by Paul Adkins

We are receiving more and more questions about the optional anode plant tour that is being hosted by Sunstone on May 25th so we thought we’d post more pictures. As we blogged about previously, it’s a worthwhile visit and getting out to see the coutryside is indeed a great way to end out the conference week! Register for the tour before May 10th by emailing charissa.trahms@az-china.com.

April 1st for some…

Written by Paul Adkins

It seems our little April Fools day post got taken a little more seriously than intended.

The global head of anode production for a very large aluminium company told me recently that he received an email from a concerned team member, asking if he knew anything about the new developments on inert anodes, and the new “McAnode”.

And a consultant in the carbon/pet coke industry forwarded me an email that he received from another industry person. Same questions, same level of incredulity.

Both emails got the simple reply, “It’s an April Fools story”. Much relief followed.

I am not revealing any names, for obvious reasons.

Thanks to those of you who wrote telling us how much you laughed. One reader told us he nearly spilt his breakfast cereal he was laughing so hard. We aim to please.

 

Follow AZ China on Reuters

Written by Paul Adkins

Thomson Reuters have an online forum for base metals, a special service where traders, bankers and analysts can log in to gain instant access to the latest news, trends and opinions.

Thomson Reuters has invited AZ China to take a regular guest spot in their base metals forum. Each Wednesday afternoon (morning London time), I will be available online to answer questions about what is happening inside the China aluminium market.

AZ China is delighted to be able to offer this additional service in conjunction with Thomson Reuters. Our purpose is to bring you knowledge, and this is one more way that we can do so.

Wei Qiao woes

Written by Paul Adkins

There are unconfirmed reports that the Weiqiao smelter in Shandong province has suffered a catastrophic failure in the pot line.

We are hearing that there was a “bus bar short circuit”, resulting in the entire line freezing over.

Wei Qiao is refusing to comment at this stage. If the rumours are true, it affects the original line, with an annual capacity of 240,000t.

Weiqiao is the same smelter that had a severe explosion and fire some 4 or 5 years ago, when liquid metal being poured from a casting furnace into a mould came into contact with cooling water. The investigation into that accident laid part of the blame on the original design and construction.

As we have mentioned before in this blog, Wei Qiao was built without approval from Beijing. According to the accident investigation report, part of the blame lay in the fact that the original design was actually a copy of another plant, not one designed, drafted and engineered for the specific site. So too with the construction, where the cheapest work was done.

If the rumours are true, one hopes that nobody was hurt, and that they can get the plant back up and operational as quickly as possible.

 

China’s March aluminium production

Written by Paul Adkins

Further to our posts here and here, China’s National Bureau of Statistics yesterday published the production numbers for March.

According to NBS, March saw 1.57 million tonnes of primary metal produced, which makes for a daily run rate of 50,580 tonnes. That’s a drop of 6% from February.

We have often said in here and in our reports to our clients that it is dangerous to believe the official numbers in China. But it was gratifying to see that our prediction that March would see a drop came true. Our prediction was in stark contrast to some analysts. One particular major bank poured scorn on China for a ramped increase in production in February, even going so far as to suggest that China’s producers were somehow working together to subvert the efforts by western aluminium companies to reduce metal supply.

For the last 5 years, March’s production number has been below the February number. Not only that, the February number has often been a very large jump over January. But most analysts didn’t bother to check. The only other commentator that I saw who picked this was Andy Home at Reuters.

China’s official data comes from two sources. The NBS publishes around the 10th working day of the month (we had 3 public holidays last week). They collect and report on thousands of products from all over the country, so it is hard to believe they can put much effort into cleansing the data before publishing.

The other source is China Nonferrous Metals Industry Association. They are also an arm of the Government. Their data comes out in the third week of most months, but they have their own problems. As a Government instrument, they aren’t allowed to report on output from smelters that don’t have Beijing approval to exist. That accounts for about 2 million tonnes of metal.

They have a daughter company called Antaike, which publishes a monthly report on the China aluminium industry. They feel less constrained than their parent, so they at least report on unapproved smelters, but the Chinese and English versions of their reports sometimes carry different data.

This is why it is so important to check that the analyst you are using isn’t just taking Chinese data on face value. So many analysts, so little analysis.

Only AZ China has the inside story on what is really happening at a smelter level. We will be sharing more about the China aluminium story with our clients, especially in our upcoming new report “China’s Cash Cost Curve”, and at our upcoming conference. For more information about our Cash Cost Curve Report or about the conference, contact us at AZ China. The conference website is here.

The 6 weeks prior

Written by Paul Adkins

We are busily preparing for our upcoming IARM conference in Qingdao and have just released the updated agenda, adding even more interesting speakers to the mix. If you have already registered or are speaking, we’ll be sending out emails this week to assist you with the logisitics of getting to Qingdao and all the other details you’ll need.

For those who have not yet registered, you can still take advantage of a discounted registration fee up until May 1st. However, the sooner you register the better as hotel rooms are filling up fast.

If it’s your first time to China, the L tourist visa doesn’t require an invitation letter and most visa applications take about a week to process. Plan ahead!