HSBC Metals Quartely Q3 2011

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HSBC Metals Quartely Q3 2011

  1. 1. Natural Resources & EnergyGlobal Metals & Mining abc Global Research Metals unmoved by macro cloudsMetals Quarterly Macroeconomic concerns, driven by sovereign debt risk, have grown inQ3 2011 the past quarter but, as far as the fundamentals of the physical markets and spot prices are concerned, metals remain relatively immune. Exchange inventories have not begun to accelerate upwards and bulk Metals prices are, as yet, unmoved by commodity markets remain tight even as production has begun to recover macroeconomic concerns from weather-related disruptions earlier in the year. We have edged up many of our near-term price forecasts, although some of this is currency We raise our 2012 copper price estimate related, and producers will surrender some of the benefit to costs. Andrew Keen* by 13%, but see the market less tight Among metals, aluminium remains our preferred play, with Chinese Analyst than consensus expects domestic inflation only adding to pressure from higher energy prices at HSBC Bank plc +44 20 7991 6764 the top end of the cost curve. In copper, we find ourselves in the unusual andrew.keen@hsbcib.com We raise our 2012 iron ore price estimate position of increasing (albeit slightly) our deficit estimate for 2011 from Thorsten Zimmermann*, CFA by 27% as we expect further delays and 78kt to 143kt, and still think the market is much closer to balance this Analyst cost issues for marginal supply year than consensus believes. We see zinc struggling against a current HSBC Bank plc market surplus and nickel threatened by one that looks likely in 2012. We +44 20 7991 6835 thorsten.zimmermann@hsbcib.com are below consensus in copper (-15%), zinc (-7%) and nickel (-4%), but marginally above consensus for aluminium (+2%) in 2012. Sarah Mak* Analyst In bulks, we raise our 2012 iron ore fines price from USD110/t (FOB, The Hongkong and Shanghai Banking Australian fines) to USD140/t and believe marginal supply will be Corporation Limited +852 2822 4551 delayed by capital cost inflation and funding concerns in the West, while sarahmak@hsbc.com.hk declining grades will keep Chinese production at high cost. We continue Lourina Pretorius* to like the fundamentals of both coking and thermal coal. Analyst21 July 2011 HSBC commodity price revisions HSBC Bank Plc +44 20 7992 3686 Commodity Unit Spot* 2011e Forecast 2012e Forecast Long Forecast lourina.pretorius@hsbcib.com change change term changeIssuer of report: The Hongkong and Shanghai Banking Amit Pansari*, CFA Corporation Limited Aluminium USD/lb 1.12 1.15 1% 1.18 0% 1.00 0% Copper USD/lb 4.39 4.22 4% 3.86 13% 2.30 0% Associate, Nickel USD/lb 10.78 11.11 -4% 9.98 0% 7.00 0% BangaloreDisclaimer & Disclosures Zinc USD/lb 1.09 1.02 3% 1.03 -2% 0.79 0% View HSBC Global Research at:This report must be read with the Ferrochrome Iron ore fines (FOB) USD/lb USD/t 1.15 175** 1.30 160 -3% 8% 1.40 140 -4% 27% 0.90 75 0% 0% http://www.research.hsbc.comdisclosures and the analyst certifications Coking coal*** USD/t 306 284 3% 250 0% 120 0% *Employed by a non-US affiliate ofin the Disclosure appendix, and with the Thermal coal*** USD/t 120 128 -2% 125 0% 82 0% HSBC Securities (USA) Inc, and is notDisclaimer, which forms part of it Source: HSBC estimates Notes: * Spot prices as at close, 18 July 2011; ** Adjusted to FOB; *** JPY fiscal year averages registered/qualified pursuant to FINRA regulations
  2. 2. Natural Resources and Energy Global Metals & Mining abc 21 July 2011ContentsMetals unmoved by macro Coking coal: Prices to fall,clouds 3 but are still high 48Aluminium: Global production Thermal coal: Stable at highat record high 6 levels 50Copper: Closer to balance Commodities consumptionthan widely believed 14 trends 54Nickel: Plenty of projects 22 HSBC equity indices performance 56Zinc: Ample, but copper pricelinked 30 China demand indicators 57Ferrochrome: Temporarily Disclosure appendix 61loses its shine 36 Disclaimer 63Iron ore: Blood from stones 42 2
  3. 3. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Metals unmoved by macro clouds Significant project pipelines to keep the market well supplied No sign yet of a hard landing in China; robust EM growth will continue to offset slow DM growth We raise our copper and iron ore price forecastsAs highlighted in our April report, the end of QE2, Aluminium: Global production at record high arguably small enough to be dismissed by theeasing supply pressures and slowing global macro Global aluminium output has been steadily rising market – as such, 2012 looks increasingly likedata dented the metals rally in the middle of Q2. since the start of the year, clocking a record high 2011, and we raise our price forecasts fromSome lost ground has recently been regained, run rate of c43.6Mt/y in May 2011 supported USD7,500/t to USD8,500/t to reflect this.although exchange metals prices remain, for now, mainly by Chinese growth, which remains robust, Nickel: Plenty of projectsat the mercy of short-term movements in the wider and we do not see any sign of a hard landing. There remains a risk of oversupply in the nickelmarket’s appetitive for risk. Strong global cost inflation, driven by higher industry owing to a number of new projects (mainly energy tariffs, higher bauxite/alumina prices, HSBC base metals price index* low-risk FeNi) coming into the commissioning appreciating mining currencies and increasing 8,200 phase of their development. Demand would need to consumables costs, provides strong support. We 8,000 grow 8-9% per year to hold the market in deficit in 7,800 maintain our price forecasts at USD2,546 for 2012/13 if the planned projects ramp up as expected. 7,600 2011e and USD2,601/t in 2012e. 7,400 At some point in 2012-13, we believe it is likely that 7,200 Copper: Closer to balance than widely believed marginal cost will be breached, which will see nickel 7,000 We see a copper deficit of 143kt in 2011, up from prices average below USD20,000/t (we forecast 6,800 70kt in our last review, but still lower than USD18,500 in 2013). J an-11 Feb-11 M ar-11 Apr-11 J un-11 Jul-11 M ay -11 consensus (500kt). Fundamentals will not provide Zinc: Ample, but copper price linked a clear indication for another 12 months, leaving Exchange inventory marked a new all-time high prices at the mercy of risk sentiment. On our Source: *HSBC base metals index is a USD-denominated weighted index of the six and the market remains in substantial surplus. LME traded base metals revised estimates, 2012 is showing a small surplus Although we continue to see risks for the zinc (300kt, down from 480kt in our last review), price, it appears to be better protected on the 3
  4. 4. Natural Resources and Energy Global Metals & Mining abc 21 July 2011downside supported by higher marginal costs and had forecasted, as the restart in Indian exports has affected by lower demand from China whencopper price linkage. We therefore raise our been delayed. We raise our 2012-13 price forecasts summer consumption ends.average 2011e forecast to USD2,241/t, up from and now believe prices are likely to find a floor HSBC versus consensus estimatesUSD2,179/t. Given the current surplus, we keep around USD140/t FOB (~USD155/t CIF), up from Unit 2011e 2012eour price forecast roughly flat in 2012e, at 2,276/t USD110/t FOB in our last review. Aluminium(down from USD2,312/t before). Given the strong HSBC USD/lb 1.15 1.18 Coking coal: Prices to fall, still high Consensus USD/lb 1.15 1.16production incentive, we now move 2013 to a Spot* USD/lb 1.12 1.12 China has cut prime-grade coking coal imports frombalanced market, from a deficit before. HSBC vs. Consensus % 0% 2% Australia, replacing them with imports from HSBC vs. Spot % 3% 5% CopperFerrochrome: Temporarily loses its shine Mongolia and the US. Australian exports have HSBC USD/lb 4.22 3.86Despite short-term weakness, we remain positive recovered somewhat; April exports were 23% higher Consensus USD/lb 4.35 4.54 Spot* USD/lb 4.39 4.39on ferrochrome prices and believe stainless steel from February but still 27% lower than last year. HSBC vs. Consensus % -3% -15% HSBC vs. Spot % -4% -12%production and supply-side risks will provide The Q3 contract price fell 5% to USD315/t from a Nickelsupport in the medium term. We expect a gradual record high (USD330/t in Q2), and we expect Q4 to HSBC USD/lb 11.11 9.98 Consensus USD/lb 11.40 10.43decline in prices as incremental capacity and new fall further, to USD250/t, as supply tightness eases. Spot* USD/lb 10.78 10.78 HSBC vs. Consensus % -3% -4%projects come on-stream in Kazakhstan, Russia, HSBC vs. Spot % 3% -7% Thermal coal: Stable at high levelsFinland, China and India, but only from 2014 Zinc Australia’s thermal coal supply increased as mine HSBC USD/lb 1.02 1.03onwards. Owing to our revised market forecasts, Consensus USD/lb 1.07 1.11 production recovered from the worst flooding in Spot* USD/lb 1.09 1.09reflecting Q3 weakness, coupled with our Queensland in 50 years. Australian thermal coal HSBC vs. Consensus % -5% -7%(unchanged) views on cost pressures in the HSBC vs. Spot % -7% -5% exports were back to 12Mt in April, from 9.3Mt in Thermal Coal**industry and project delays, we revise down our HSBC USD/t 128 125 February. China’s imports fell 18% in Jan-May,2011 and 2012 ferrochrome price forecasts to Consensus USD/t 125 128 as Chinese domestic prices were at a discount to Spot* USD/t 120 120USD1.30/lb and USD1.40/lb, respectively. HSBC vs. Consensus % 2% -2% imported price. We believe Chinese buyers are HSBC vs. Spot % 6% 4%Iron ore: Blood from stones price sensitive and will cut high-grade imports if Coking Coal** HSBC USD/t 284 250Iron ore producers continue to achieve strong prices regional coal prices are higher than domestic Spot* USD/t 306 306 HSBC vs. Spot % -7% -18%from a struggling steel industry. Supply growth is supply. With an increase in domestic and import Iron Ore Finesproving far more challenging than many have supply, we expect Chinese coal prices to remain HSBC USD/t 160 140 Spot*** USD/t 175 175expected. On our estimates, China will supply 41% stable in summer consumption season, but fall HSBC vs. Spot % -8% -20%of production growth in 2011, with supply from the slightly in end-Aug/Sep and then pick up again in Source: Bloomberg, HSBC estimates. * Spot prices as at close, 18 July 2011; ** JPY fiscal year averages; *** Adjusted to FOB.Major 4 (BHP, RIO, VALE and AAL) actually the winter. As the spread narrows, regional coalstagnating in 2011. Spot prices have not fallen as we prices will follow Chinese price movements, 4
  5. 5. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Commodity price forecast changesCommodity Unit __________2011e ___________ __________ 2012e ___________ __________ 2013e___________ __________ 2014e ___________ ______ Long term (real) ______ Old New Chg Old New Chg Old New Chg Old New Chg Old New ChgAluminium USD/lb 1.15 1.15 1% 1.18 1.18 0% 1.20 1.20 0% 1.18 1.18 0% 1.00 1.00 0%Copper USD/lb 4.04 4.22 4% 3.40 3.86 13% 3.26 3.63 11% 2.81 2.95 5% 2.30 2.30 0%Zinc USD/lb 0.99 1.02 3% 1.05 1.03 -2% 1.25 1.21 -4% 1.57 1.57 0% 0.79 0.79 0%Nickel USD/lb 11.54 11.11 -4% 10.00 9.98 0% 8.00 8.39 5% 8.00 9.07 13% 7.00 7.00 0%Iron ore fines (AUS) USD/t 148.50 160.00 8% 110.00 140.00 27% 110.00 140.00 27% 90.00 110.00 22% 75.00 75.00 0%Coking coal* USD/t 275.00 283.75 3% 250.00 250.00 0% 225.00 225.00 0% 200.00 200.00 0% 120.00 120.00 0%Thermal coal* USD/t 130.00 128.00 -2% 125.00 125.00 0% 110.00 110.00 0% 100.00 100.00 0% 82.00 82.00 0%Ferrochrome USD/lb 1.34 1.30 -3% 1.45 1.40 -4% 1.40 1.42 1% 1.28 1.35 6% 0.90 0.90 0%*Japanese fiscal year averages.Source: HSBC estimatesHSBC commodity prices Unit 2009 y-o-y 2010 y-o-y 2011e y-o-y 2012e y-o-y 2013e y-o-y 2014e y-o-y Real (LT) mid-cycleBase metalsAluminium USD/lb 0.76 -35% 0.99 30% 1.15 17% 1.18 2% 1.20 2% 1.18 -2% 1.00 USD/t 1,670 2,175 2,546 2,601 2,646 2,601 2,205Copper USD/lb 2.34 -26% 3.42 47% 4.22 23% 3.86 -9% 3.63 -6% 2.95 -19% 2.30 USD/t 5,152 7,551 9,300 8,500 8,000 6,500 5,071Zinc USD/lb 0.75 -11% 0.98 30% 1.02 4% 1.03 2% 1.21 17% 1.57 30% 0.79 USD/t 1,658 2,163 2,241 2,276 2,664 3,463 1,742Nickel USD/lb 6.67 -30% 9.91 48% 11.11 12% 9.98 -10% 8.39 -16% 9.07 8% 7.00 USD/t 14,707 21,838 24,500 22,000 18,500 20,000Precious MetalsGold USD/oz 973 12% 1,225 26% 1,525 25% 1,500 -2% 1,450 -3% 1,250 -14% 1,250Silver USD/oz 15 -2% 20 38% 34 69% 29 -15% 24 -17% 20 -17% 20Platinum USD/oz 1,203 -24% 1,610 34% 1,850 15% 1,750 -5% 1,650 -6% 1,776 8% 1,625Palladium USD/oz 263 -25% 527 100% 825 56% 750 -9% 725 -3% 765 6% 700Bulks & EnergyAlumina USD/t 225 -35% 326 45% 382 17% 390 2% 397 2% 390 -2% 298Iron Ore-Fines (Australia) USD/t 62 -33% 112 81% 160 43% 140 -13% 140 0% 110 -21% 75Ferrochrome USD/lb 0.85 -52% 1.24 46% 1.30 4% 1.40 8% 1.42 1% 1.35 -5% 0.90Coking Coal* USD/t 129 -57% 215 66% 284 32% 250 -12% 225 -10% 200 -11% 120Thermal coal (Newcastle)* USD/t 70 -44% 98 40% 128 31% 125 -2% 110 -12% 100 -9% 82Oil (WTI) USD/bbl 63 -35% 80 27% 100 25% 85 -15% 90 6% 91 1% 80*Japanese fiscal year averagesSource: Thomson Reuters Datastream, McCloskey Coal Report, Metal Bulletin, HSBC estimates 5
  6. 6. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Aluminium: Global production at record high Global aluminium production running at record high rates supported by robust Chinese output growth China demand remains robust – strong construction and appliances demand to offset weak auto outlook Maintain bullish outlook – strong cost support, rising utilisation rates and falling stock weeks to drive prices higherSupply Demand Market Balance/Pricing Global production at record high supported by China (Mt/y) China aluminium consumption by end use (2010) High energy prices driving cost inflation to support prices 45 50% 150 3,500 40 Electrical 40% Transport 15% 120 3,000 Packaging Oil(USD /bbl) 35 A li (U SD/t) 18% mtpa 30% 4% 90 2,500 30 25 20% Appliances 60 2,000 15% 20 10% 30 1,500 M ay-03 M ay-05 M ay -07 M ay-11 May-01 May-09 Machinery 0 1,000 Constructi 6% Jul- 00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 on Other 38% 4% World annualiz ed production (LHS) China share of w orld output (R HS) Oil Ali Source: HSBC, IAI Source: HSBC, Brook Hunt Source: Thomson Financial Datastream, HSBC Global aluminium output has been steadily rising since the start of the  We expect global demand growth to moderate to more sustainable levels  We expect global market to remain tightly balanced for the next two year, clocking a record high run rate of c43.6Mt/y in May 2011 supported of c7% in 2011-14e after the post-recession surge of 11.2% in 2010. This years, at which point rising prices will trigger marginal output leading to mainly by Chinese growth. Production in gulf region remained strong in will again be driven by China, where we forecast annual growth of 10%. market surplus. We forecast global stock steadily to decline to 7.4 weeks Jan-May period (+36% y-o-y) as new capacity is ramped up. We expect While the market has been focused on a hard landing in China, recent of consumption by 2013 after peaking in 2009 at 9.3 weeks. LME global aluminium production to increase by 5.6% y-o-y in 2011e to data point to a comfortable soft landing. Chinas Q2 GDP and June IP inventories have declined by 6.7% or c300kt after reaching a record high c42.7Mt. We note that c90% of producers are cash positive at current both came in above market expectations. We expect strong demand of 4.72Mt in mid May. aluminium prices. from construction, home appliances and power sectors to offset slowing  We expect aluminium prices to remain supported by strong global cost Chinese May output was running at c18.1Mt/y. Power-induced automotive demand. inflation driven by higher energy tariffs, higher bauxite/alumina prices, production cuts that market was looking for have not materialised and  We estimate ex-China demand to slow to 4.3% in 2011e after growing by appreciating mining currencies and increasing consumables costs. Most National Bureau of Statistics June production data confirm this view. We 12.4% in 2010. We expect autos and consumer electronics demand recently, the worlds largest aluminium producer, UC RUSAL, reported a expect Chinese production to increase by c10.3% in 2011e to 17.8Mt growth slightly to offset weak construction demand. 19% y-o-y increase in its cash cost of aluminium production in Q1-11. accounting for c42% of global output. We do not see much impact on  We expect that increasing use of aluminium in consumer electronics and  We maintain our LME price forecasts at USD1.15/lb for 2011e rising to production from the MIIT order to shut down c619kt/y of aluminium passenger vehicles (for fuel efficiency) along with recovery in USD1.18/lb in 2012e and USD1.20/lb in 2013e. We anticipate that a capacity in 2011. Despite its efforts to rein in excess capacity, Beijing has construction market in the Western world will continue to support significant portion of aluminium inventories currently tied up in financing not been able to make much progress, and we expect domestic capacity medium-term demand for aluminium. deals (over 50% of all inventories) to remain so as the cost of financing in to increase to c30Mt/y by 2015. USD is likely to remain low on the back of ongoing QE in the US. 6
  7. 7. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Aluminium: Supply and demand model (kt) 2005 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e Change 2010-14e CAGR 2010-14eWorldCapacity 36,884 38,575 42,476 45,964 49,572 50,675 53,657 56,263 58,607 61,331 10,656 4.9%YoY change 8.3% 4.6% 10.1% 8.2% 7.8% 2.2% 5.9% 4.9% 4.2% 4.6%Production 31,206 33,164 37,419 38,772 36,360 40,423 42,688 45,589 48,555 51,955 11,532 6.5%YoY change 6.3% 6.3% 12.8% 3.6% -6.2% 11.2% 5.6% 6.8% 6.5% 7.0%Consumption 31,235 33,713 37,480 37,236 35,258 39,565 42,465 45,532 48,329 51,319 11,754 6.7%YoY change 5.4% 7.9% 11.2% -0.7% -5.3% 12.2% 7.3% 7.2% 6.1% 6.2%Capacity utilisation 85% 86% 88% 84% 73% 80% 80% 81% 83% 85%World balance (29) (549) (61) 1,535 1,102 859 223 57 226 636Reported stocks 2,910 2,666 2,804 4,566 6,325 6,338 6,561 6,618 6,844 7,480Stock/ consumption (weeks) 4.8 4.1 3.9 6.4 9.3 8.3 8.0 7.6 7.4 7.6ChinaCapacity 10,800 11,845 15,284 17,704 21,000 21,650 23,800 25,800 27,300 28,800 7,150 7.4%YoY change 21.6% 9.7% 29.0% 15.8% 18.6% 3.1% 9.9% 8.4% 5.8% 5.5%Production 7,743 9,300 12,606 13,130 12,963 16,133 17,800 19,764 21,749 23,892 7,759 10.3%YoY change 14.6% 20.1% 35.5% 4.2% -1.3% 24.5% 10.3% 11.0% 10.0% 9.9%Consumption 7,042 8,779 12,486 13,024 14,323 16,026 17,904 19,879 21,875 24,031 8,005 10.7%YoY change 16.9% 24.7% 42.2% 4.3% 10.0% 11.9% 11.7% 11.0% 10.0% 9.9%Capacity utilisation 72% 79% 82% 74% 62% 75% 75% 77% 80% 83%SHFE stock change -14 -28 71 117 91 144 -43 0 0 0China exports / (imports) 715 549 49 (11) (1,451) (37) (61) (115) (127) (139)China (% of Global production) 24.8% 28.0% 33.7% 33.9% 35.7% 39.9% 41.7% 43.4% 44.8% 46.0%World ex ChinaCapacity 26,084 26,730 27,192 28,260 28,572 29,025 29,857 30,463 31,307 32,531 3,506 2.9%YoY change 3.6% 2.5% 1.7% 3.9% 1.1% 1.6% 2.9% 2.0% 2.8% 3.9%Production 23,463 23,864 24,814 25,642 23,397 24,290 24,888 25,825 26,806 28,063 3,773 3.7%YoY change 3.9% 1.7% 4.0% 3.3% -8.8% 3.8% 2.5% 3.8% 3.8% 4.7%Consumption 24,193 24,934 24,994 24,212 20,935 23,539 24,561 25,653 26,454 27,288 3,749 3.8%YoY change 2.5% 3.1% 0.2% -3.1% -13.5% 12.4% 4.3% 4.4% 3.1% 3.2%Capacity utilisation 90% 89% 91% 91% 82% 84% 83% 85% 86% 86%World ex China balance (730) (1,070) (180) 1,430 2,462 752 327 172 352 775PricesLME Aluminium price, USD/ t 1,899 2,563 2,641 2,557 1,668 2,175 2,541 2,601 2,646 2,601LME Aluminium price, USD/ lb 0.86 1.16 1.20 1.16 0.76 0.99 1.15 1.18 1.20 1.18YoY 10.7% 35.0% 3.0% -3.2% -34.8% 30.4% 16.8% 2.4% 1.7% -1.7%Source: HSBC estimates, Brook Hunt, IAI 7
  8. 8. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Primary aluminium balance World aluminium balance – annual World aluminium balance – quarterly World aluminium balance by region – Q2-11 2,000 2,800 1200 2,700 750 1,500 2,550 1000 2,500 500 800 2,300 250 1,000 2,300 kt USD/t 600 2,100 USD/t 0 kt 500 2,050 kt 400 1,900 -250 0 1,800 200 1,700 -500 (500) 1,550 0 1,500 -750 (1,000) 1,300 -200 1,300 Africa Other Asia W Europe C&E Europe Oceania L America China N America Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 2002 2003 2004 2005 2006 2007 2008 2009 2010 World balance LME cash (RHS) World balance LME cash (RHS) Source: HSBC, Brook Hunt Source: HSBC, Brook Hunt Source: HSBC, Brook HuntWorld aluminium balance by region (kt) __________________________________________ Annual ___________________________________________ __________________________________________ Quarterly ___________________________________________ 2004 2005 2006 2007 2008 2009 2010 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11North America -1,901 -1,793 -1,886 -1,055 -370 54 -397 -71 -150 60 -117 -129 -211 -199 -179Latin America 1,165 1,051 1,130 1,057 982 995 467 234 213 113 78 127 149 46 55W Europe -2,320 -2,166 -2,623 -2,839 -2,257 -1,831 -2,258 -536 -589 -597 -615 -524 -522 -632 -653C&E Europe 2,789 2,828 2,706 2,981 3,262 2,762 2,790 645 673 666 700 698 726 699 679China 803 723 559 288 324 -913 385 -318 556 735 -116 -29 -205 -238 -40Other Asia -3,703 -3,708 -3,637 -3,482 -3,187 -2,119 -2,405 -575 -710 -611 -711 -576 -507 -497 -474Oceania 1,810 1,801 1,852 1,872 1,835 1,767 1,809 442 444 438 447 463 461 448 453Africa 1,308 1,327 1,399 1,323 1,074 1,123 1,004 283 282 234 235 255 280 298 311World balance (49) 63 (501) 146 1,662 1,839 1,395 104 720 1038 -99 285 171 -75 152Source: HSBC, Brook Hunt 8
  9. 9. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Primary aluminium production World aluminium production – annual World aluminium production – quarterly World aluminium production by region – Q2-11 Other A sia 45,000 15% 11,500 10% 15% 40,000 10% N A merica 10,500 5% 11% 35,000 5% 9,500 0% kt kt C&E 30,000 0% Europe China 10% 8,500 -5% 25,000 -5% 41% W Euro pe 20,000 -10% 7,500 -10% 9% Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 2002 2003 2004 2005 2006 2007 2008 2009 2010 L A merica A frica Oceania 5% World Y-o-y (RHS) 4% 5% World Q-o-q (RHS) Source: HSBC, Brook Hunt Source: HSBC, Brook Hunt Source: HSBC, Brook HuntWorld aluminium production by region (kt) _____________________________________________ Annual____________________________________________________________________________________________Quarterly _____________________________________________ 2004 y-o-y 2005 y-o-y 2006 y-o-y 2007 y-o-y 2008 y-o-y 2009 y-o-y 2010 y-o-y Q4-09 q-o-q Q1-10 q-o-q Q2-10 q-o-q Q3-10 q-o-q Q4-10 q-o-q Q1-11 q-o-q Q2-11 q-o-qNorth America 5,110 -7% 5,382 5% 5,333 -1% 5,643 6% 5,781 2% 4,759 -18% 4,684 -2% 1,172 2% 1,164 -1% 1,179 1% 1,160 -2% 1,181 2% 1,187 1% 1,247 5%Latin America 2,356 4% 2,390 1% 2,493 4% 2,559 3% 2,663 4% 2,508 -6% 2,328 -7% 622 -1% 568 -9% 573 1% 583 2% 604 4% 547 -9% 566 3%W Europe 4,294 6% 4,345 1% 4,174 -4% 4,321 4% 4,627 7% 3,728 -19% 3,807 2% 904 -1% 910 1% 941 3% 962 2% 994 3% 978 -2% 1,000 2%C&E Europe 4,534 4% 4,627 2% 4,678 1% 4,899 5% 5,101 4% 4,425 -13% 4,602 4% 1,109 2% 1,101 -1% 1,153 5% 1,169 1% 1,179 1% 1,152 -2% 1,161 1%China 6,689 21% 7,806 17% 9,349 20% 12,588 35% 13,177 5% 12,965 -2% 17,300 33% 4,060 21% 4,303 6% 4,484 4% 4,365 -3% 4,148 -5% 4,241 2% 4,630 9%Other Asia 2,980 11% 3,412 14% 3,741 10% 3,985 7% 4,240 6% 4,731 12% 5,592 18% 1,223 2% 1,294 6% 1,372 6% 1,410 3% 1,516 8% 1,590 5% 1,657 4%Oceania 2,245 2% 2,252 0% 2,274 1% 2,316 2% 2,297 -1% 2,210 -4% 2,277 3% 564 1% 555 -2% 566 2% 578 2% 578 0% 564 -2% 572 1%Africa 1,711 20% 1,753 2% 1,865 6% 1,815 -3% 1,715 -5% 1,681 -2% 1,742 4% 433 1% 425 -2% 430 1% 442 3% 445 1% 436 -2% 452 4%World 29,919 7% 31,968 7% 33,907 6% 38,127 12% 39,602 4% 37,008 -7% 42,332 14% 10,087 8% 10,320 2% 10,698 4% 10,669 0% 10,645 0% 10,695 0% 11,285 6%Source: HSBC, Brook Hunt 9
  10. 10. Natural Resources and Energy Global Metals & Mining abc 21 July 2011Primary aluminium consumption World aluminium consumption – annual World aluminium consumption – quarterly World aluminium consumption by region – Q2-11 45,000 18% 12,000 20% 11,000 15% Oceania 40,000 12% China 10,000 10% A frica 1% 42% 35,000 6% 9,000 5% 1% C&E kt kt 8,000 0% Euro pe 30,000 0% 7,000 -5% 4% 25,000 -6% 6,000 -10% L America 5% 20,000 -12% 5,000 -15% Other A sia N A merica Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 19% 2002 2003 2004 2005 2006 2007 2008 2009 2010 13% W Euro pe World Y-o-y (RHS) World Q-o-q (RHS) 15% Source: HSBC, Brook Hunt Source: HSBC, Brook Hunt Source: HSBC, Brook HuntWorld aluminium consumption by region (kt) _____________________________________________ Annual ______________________________________________ ____________________________________________ Quarterly ____________________________________________ 2004 y-o-y 2005 y-o-y 2006 y-o-y 2007 y-o-y 2008 y-o-y 2009 y-o-y 2010 y-o-y Q4-09 q-o-q Q1-10 q-o-q Q2-10 q-o-q Q3-10 q-o-q Q4-10 q-o-q Q1-11 q-o-q Q2-11 q-o-qNorth America 7,011 7% 7,175 2% 7,219 1% 6,698 -7% 6,152 -8% 4,705 -24% 5,081 8% 1,322 8% 1,104 -16% 1,296 17% 1,289 -1% 1,392 8% 1,386 0% 1,426 3%Latin America 1,191 11% 1,338 12% 1,364 2% 1,502 10% 1,681 12% 1,513 -10% 1,861 23% 409 4% 455 11% 495 9% 456 -8% 455 0% 501 10% 511 2%W Europe 6,614 2% 6,512 -2% 6,797 4% 7,160 5% 6,884 -4% 5,559 -19% 6,065 9% 1,493 3% 1,507 1% 1,556 3% 1,486 -4% 1,516 2% 1,610 6% 1,653 3%C&E Europe 1,744 2% 1,800 3% 1,972 10% 1,918 -3% 1,840 -4% 1,663 -10% 1,812 9% 436 -1% 435 0% 453 4% 471 4% 453 -4% 453 0% 482 6%China 5,886 18% 7,083 20% 8,790 24% 12,300 40% 12,854 4% 13,878 8% 16,915 22% 3,504 -5% 3,568 2% 4,600 29% 4,394 -4% 4,353 -1% 4,479 3% 4,670 4%Other Asia 6,683 7% 7,120 7% 7,378 4% 7,467 1% 7,427 -1% 6,850 -8% 7,997 17% 1,933 9% 1,905 -1% 2,083 9% 1,986 -5% 2,023 2% 2,087 3% 2,131 2%Oceania 435 9% 451 4% 422 -6% 444 5% 462 4% 443 -4% 468 6% 120 4% 117 -2% 119 2% 115 -3% 117 2% 116 -1% 119 3%Africa 403 13% 426 6% 466 9% 492 6% 641 30% 558 -13% 738 32% 151 4% 191 27% 195 2% 187 -4% 165 -12% 138 -16% 141 2%World 29,968 8% 31,905 6% 34,408 8% 37,981 10% 37,940 0% 35,169 -7% 40,937 16% 9,367 2% 9,282 -1% 10,797 16% 10,384 -4% 10,474 1% 10,770 3% 11,133 3%Source: HSBC, Brook Hunt 10

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