Basic Situation Analysis of Domestic and International Zinc and Zinc Concentrates in the Second Half of the Year
Land and Resources Date: November 14, 2005 Source: China Nonferrous Metal Mineral Resources Information Network
< p>------------------------------------------------ --------------------------------Abstract: Since 2003, zinc prices at home and abroad have has risen sharply and has now reached a new high in seven years. However, because the production capacity of zinc mines cannot keep up with changes in smelting capacity, there is a shortage of zinc concentrate supply. This situation is expected to achieve a supply balance in 2007. Due to the shortage of supply, the processing fee for zinc concentrate has been falling. At present, the spot processing fee for imported zinc concentrate in my country has reached a minimum of 20 US dollars per ton, and it is expected to drop to more than ten US dollars in the near future.
1. International market situation
1. The development of lead and zinc mining in the West is slow, and the smelting industry is in turmoil. In recent years, the changes in zinc production capacity in Western countries are similar to those in my country, that is, mines The production capacity cannot keep up with changes in smelting capacity. As the global zinc smelting industry is in turmoil, zinc concentrate processing fees are declining year by year, causing some high-cost production capacity to withdraw, while the smelting capacity in post-development and undeveloped areas is growing. This situation is true at home and abroad. .
According to data and related information from the International Lead and Zinc Research Group, Western countries may have a net increase in zinc mine production capacity of approximately 410,000 tons since 2004, including 220,000 tons of new construction, 240,000 tons of expansion, and 220,000 tons of closures. 200,000 tons were recovered. In 2005, an additional 330,000 tons were added, 80,000 tons have been closed, and there may be a net increase of 250,000 tons.
The main newly added mines belong to Hindustan Zinc Company. The three mines have added 134,000 tons of zinc ore capacity through expansion. They have been put into production at the beginning of the second quarter of this year, but they were also put into operation in July. An electrolytic zinc plant was put into operation with a production capacity of 170,000 tons. The closures of production capacity all occurred in Canada, and they were all closed due to resource depletion. Among the newly added mine capacity, there are not many large mines, and most of them are expansions of existing small and medium-sized mines. These new mine capacity may not be able to reach production as scheduled soon. The closed mines are relatively large and have a significant impact on the market. Smelting capacity in Europe and the United States continues to shrink, while Asia begins to develop.
2. There are many uncertain factors in production
Data released by the International Lead and Zinc Research Group show that from January to August 2005, global refined zinc consumption increased to 7.098 million tons. , 6.979 million tons in the same period last year. Refined zinc production increased to 6.874 million tons, compared with 6.705 million tons in the same period last year. In addition, producer inventories rose to 306,000 tons in August, compared with 297,800 tons in July and 262,000 tons at the end of 2004.
Global production of zinc concentrate is expected to be 4.005 million tons in 2005, an increase of 72,000 tons over the same period last year and a year-on-year increase of only 1.8%. In 2005, the Bench'mark processing fee dropped by US$16/ton compared to 2004, to US$126/ton. The lowest spot processing fee in Asia has reached US$20/ton, and the spot processing fee in Europe has also dropped to a historical low of US$70/ton. point.
3. Increased demand for zinc
According to statistics from the International Lead and Zinc Research Group, global zinc consumption increased by 56,000 tons from January to May this year compared with the same period last year, and Western countries decreased by 4.1% year-on-year. million tons. Global consumption growth mainly relies on Asia, with China and India leading the growth. Western zinc consumption is quite weak, which is related to the Western galvanized sheet market. For example, in the first half of the year, the output of galvanized sheets in North America fell by 4.7% (560,000 tons) compared with the same period last year, to 11.42 million tons; consumption fell by 0.7% year-on-year, to 12.96 million tons. European production in the first half of the year fell by 1.3% year-on-year to 14.6 million tons; European consumption during the same period fell by 1.5% year-on-year to 15.35 million tons. The production of galvanized sheets in Asian countries other than China increased by 4% year-on-year to 14.4 million tons; during the same period, consumption increased by 9.1% to 11.08 million tons.
4. The premium level of zinc is rising steadily
Since this year, the premium of zinc ingots in the European and Asian markets has maintained a steady and rising pattern. The premium in the European market is the strongest. Above US$95/ton, the main reason is that there are many smelter closures in the region. In Asia, due to reduced exports from China and increased demand, the premium remains at US$100/ton. The higher premiums suggest supply and demand remain relatively tight in much of the world. Entering October, the spot premium for zinc in the Japanese market is USD130-140/ton at CIF Japanese ports (based on the LME spot price).
Some traders said: Chinese suppliers and traders are not very active in zinc exports because the domestic selling price is US$200/ton higher than the LME spot price. my country's current imported zinc premiums are above US$100/ton, and some have exceeded US$150/ton. Judging from the quantity of zinc imports, it has become an upward trend. Due to the relationship between supply and demand, the profit margins that have been formed, and the potential for rising domestic zinc prices, the number of imported zinc ingots is expected to exceed 70,000 tons in the third quarter, and the premium level in the future will not be less than US$130.
5. Inventory reduction
Since October last year, the LME has reported that inventories have continued to decline, giving strong support to zinc prices. The average LME spot price from January to July 2005 was US$1,280/ton, an increase of 23% over the same period last year; the average price of the three futures zinc during the same period was US$1,293/ton, a year-on-year increase of 22.4%. This year, the LME spot price reached a maximum of US$1,500/ton. The highest three-month futures price is US$1,503/ton. In the first five months, LME reported inventory has been declining at a rate of about 20,000 tons per month, with a cumulative reduction of 104,600 tons by the end of May. The current inventory is around 506,900 tons.
2. Domestic market conditions
1. Domestic prices have reached a record high
Since this year, domestic market prices have been relatively strong. In the fourth quarter of 2004, the price of domestic #1 zinc ingots once fell below 11,000 yuan/ton, but this year it has been higher than 12,000 yuan/ton, most of the time between 12,500 and 13,000 yuan/ton, and has risen to 14,000 yuan/ton since August. Near 15,720 yuan/ton, it has reached a record high of more than 15,720 yuan/ton.
2. Strong demand growth
Increasing demand, cost-pull and tight supply are still the main factors causing strong domestic prices this year. In 2005, the galvanizing industry will still be the main area of ??zinc demand growth, mainly reflected in: the demand for hot-dip galvanized sheets and color-coated sheets from home appliances, construction industries and automobiles is consistent with last year; an additional 70 million kilowatts of installed capacity will be added in 2005 , the demand for galvanized steel in the power industry is undoubtedly very strong; the demand in the transportation industry has increased significantly. By 2020, my country will have a national highway network of 85,000 kilometers. Macroeconomic control has had little overall impact on zinc demand. Although the steel industry has suffered from price declines and slowed production growth due to macroeconomic control, the growth of galvanized sheet production has accelerated. It is expected that the annual galvanized sheet production will be close to 10 million tons, an increase of about 3 million tons compared with 2004, and the increase in zinc consumption is close to 150,000 tons. The development of the automobile and construction industries has caused domestic coatings and rubber production to grow rapidly year by year, and the demand for zinc oxide has maintained steady growth. Copper and copper alloys are currently the second largest zinc user industry in my country. In the first half of this year, my country's copper output increased by 6.9% year-on-year, reaching 2.6 million tons. Among all zinc consumption areas, only the growth pace of battery consumption has slowed down, mainly due to the adjustment of battery structure. Zinc consumption growth in other areas has remained good. It is estimated that my country's zinc consumption in 2005 will increase by 7.8% compared with 2004.
3. The spot concentrate price accounts for about 70% of the zinc ingot price.
The rise in domestic zinc ingot prices has improved mining investment to a certain extent. In the first half of the year, 105 lead-zinc mine investment projects were started in my country, an increase of 48 compared with the same period last year. From January to July this year, the national zinc concentrate output increased by 3.27% year-on-year to 961,800 tons. However, it still cannot keep up with the increase in smelting capacity, and the price of concentrate has been soaring. Even when the price of zinc ingots fell, the price of concentrate still rose. At present, the price of zinc ore with a grade of 50% in the domestic market has exceeded 9,500 yuan/ton, and it is expected that it is not impossible to reach 10,000 yuan/ton in winter. According to this estimate, its cost accounts for about 70% of the zinc price.
4. Zinc metal production increased moderately and net imports increased
According to statistics, from January to July this year, domestic zinc production increased by 4.73% year-on-year to 1.5037 million tons. There will be comparisons in the second half of the year. A lot of new production capacity has been invested. It is raw materials rather than production capacity that determine output. It is estimated that my country's zinc production will reach about 2.68 million tons in 2005, an increase of about 160,000 tons from 2004. This means that the average monthly production capacity in the second half of the year will reach 230,000 tons. tons, an average monthly increase of 17,000 tons compared with the first half of the year.
In the first half of the year, my country’s net imports of zinc concentrate were 293,228 tons in physical form, down 2.7% year-on-year; net imports of zinc alloys were 91,902 tons, an increase of 4% over the same period last year; and net imports of zinc materials were 21,790 tons, down 2.7% year-on-year. 35%; net imports of zinc scrap and scrap were 32,000 tons, a year-on-year decrease of 1%. The net import of zinc ingots was more than 50,000 tons, nearly 40,000 tons more than last year.
3. Future Market Forecast
The supply of zinc ores has been in short supply for three years. It is expected that a significant increase in mine production capacity will only occur around the end of 2006. The global concentrate market in 2007 Until supply and demand are basically balanced, processing fees will continue to be low, which will limit the production of smelters. It is expected that supply in Western markets will remain in short supply until 2007.
In short, the fundamentals of the global zinc market continue to improve, and tight and stable supply will be the main features this year and next. However, the overall macro situation is not conducive to its excessive rise. It is expected to oscillate between 1,250 and 1,550 US dollars per ton for the rest of this year. There are more chances of rising than falling. Domestic zinc prices are expected to remain strong.
The annual average LME spot price is expected to be US$1,300/ton in 2005, US$1,320/ton in the third quarter, and US$1,318/ton in the fourth quarter.
(Excerpted from China Nonferrous Metals News)
Answer: shanhuji - Xiucai Level 2 2-4 00:51
Moderator: Luo Xiaofang Guest: Hou Baoquan Zinc, chief consultant of Pan Fuxiang New Power Studio Chairman of 0751 Zinc Industry Co., Ltd.
Moderator: Recently, an investor wrote to inquire about the situation of 0751 Zinc Industry Co., Ltd., last year’s year-end performance Zinc Industry
The share price was as high as 0.475 yuan, but dropped to 0.161 yuan in the middle of this year. Why did there be such a big decline?
Why? I hope New Power Studio will analyze the zinc industry shares. In order to understand this company in more detail, the "Securities Night" reporter went to Huludao in western Liaoning.
When walking into Zinc Industry Co., Ltd., the reporter’s biggest impression is how big the company is. Although the workers' dormitories are
on both sides of the road outside the factory gate, it still takes 10 minutes for many workers to ride motorcycles to the workshops where they work. At present, the company mainly produces and sells zinc, copper and deep-processed products. It is one of the largest zinc smelting companies in Asia, with an annual production capacity of 330,000 tons. Among them, Huzinc brand zinc is smelted using a traditional distillation zinc system. The content of zinc in the ingot reaches 99.99%, and it is a national export inspection-free product. In the past three years, the company's annual exports of zinc ingots have been more than 100,000 tons, and its foreign exchange earnings have been more than 100 million US dollars. It is such a large state-controlled enterprise that in the middle of this year The earnings per share fell by more than 30%.
Hou Baoquan, Chairman of Zinc Industry Co., Ltd.: The main reason for the company's decline in performance in the first half of the year is the impact of
changes in the international and domestic markets. Zinc Industry Co., Ltd. is in line with international standards. For early companies, the price of zinc ingots
depends entirely on the London Metal Exchange.
Moderator: We learned during the interview that although the company's total nonferrous metal production in the first half of the year hit the best level in history
for the same period, the income was not satisfactory. We also heard the explanation from the chairman of the company just now. Regarding the company's current performance decline, we would like to ask New Power Studio what it thinks. Sit with me
In front of you is Mr. Pan Fuxiang, the chief consultant of New Power Studio. How do you evaluate this situation?
Pan Fuxiang: It should be said that judging from this year's interim report, the current situation of zinc industry shares should be relatively severe
We can see it clearly from the historical mid-term performance chart below.
Last year’s mid-term performance was 0.405 yuan, but this year’s mid-term performance dropped to 0.161 yuan, a drop of 60 %
. If we take into account that in the middle of last year, it had a tax benefit of 1.07 million yuan, and today it has a tax benefit of 60 million, after taking away these two tax benefits, it should have been 2 cents in the middle of last year. 4
Today's mid-term price is 9.3%, so the same decline rate is almost 60%. Therefore, it should be analyzed from this perspective: Zinc Industry Co., Ltd. has encountered relatively big difficulties in its operations this year. Let's carefully analyze the reason why it encountered this difficulty. The chairman just put forward one. It is indeed affected by the international and
domestic markets. I have this on hand. A picture shows the trend of the entire international zinc price in the past two years.
If we actually take a closer look, we can find that the price of zinc dropped significantly in 2001.
In the past, it was 1100 for a relatively long time. US dollars per ton, now we say that it has dropped to as low as 860, so we say that this large decline has been reflected in the export of zinc products of Zinc Industry Co., Ltd. Reflecting a sharp drop in its price, another chart of ours can
illustrate this point. There are two types of zinc industry shares. There are two main zinc products. One is using its distillation method. Distillation
Zinc system produces zinc ingots. Its price has basically dropped by almost 7% compared with the same period last year. Then its other
external electrolysis method to produce zinc ingots has seen its price drop. It is also 7%, so we can find from this process that the price of its entire product has dropped significantly, which has a very important impact on its performance.
On the other hand, the price of its raw materials has increased. We can explain it from the data we can find now.
Last year, when the price of zinc was relatively high, many companies It has begun to expand its own zinc smelting capacity. It is almost well-documented that the country has increased its production capacity by 125,000 tons. Although we say that zinc industry shares are The leader among domestic zinc smelting companies, it is very powerful, but as some small smelting companies have launched, the price of its raw materials has been greatly improved, that is to say Some people competed with it
for raw materials, which caused a relatively large increase in the price of its zinc concentrate. At the highest point, the price rose by no more than 10%. In addition, Coupled with the fluctuation of the entire oil price last year, it also had some impact on the price of coal
This led to a decline in product prices and an increase in costs. Taken together, this constitutes
In the first half of 2001, the performance of zinc industry stocks declined by a relatively large proportion.
Moderator: Indeed, it seems that the decline in zinc prices in the international market and the rise in raw material prices have indeed put considerable pressure on the production and operation of zinc industry shares. Facing the changes in the international market, how did Zinc Industry Co., Ltd. overcome the difficulties?
Let's take a look at what the chairman said.
Hou Baoquan: The main thing is to reduce our processing costs internally and reduce our processing fees, so that
we can have cost reduction space in the smelting and processing industry to ensure that we Can have a certain level of profit
.
Moderator: The chairman is also thinking about how to tide over the difficulties. To what extent do you think he can increase profits by tapping internal potential and increasing efficiency?
Pan Fuxiang: According to its interim report this year, from March to June, it increased its profits by almost 2
8 million through internal tapping of potential. In addition, it may continue to enjoy some preferential policies, such as the supply of 500,000 kilowatt-hours of affordable electricity every day, and the state will continue to give it some preferential treatment on some taxes. Factors like these have a positive impact on< /p>
In 2001, it was helpful for Zinc Industry Shares to recover its performance to a certain extent on the original basis, but
it was not a fundamental effect, because we have seen that In fact, the biggest problem facing the entire zinc industry is that it is currently in a relatively thick link in the entire zinc industry chain, that is,
Its main raw material, zinc concentrate, is not in its hands, so how can it expand its industrial chain from mining, selection to smelting? Processing to form a joint enterprise may be the most important for it to effectively resist the risks brought by external market changes.
Moderator: It seems that internal development of enterprises is not enough only. Zinc Industry Co., Ltd. is currently taking measures to establish close alliances with mining companies. Efforts in the body's direction.
In 2000, the company joined forces with Gansu Jianxin Industrial Co., Ltd. through compensation trade to establish a raw material base of 100,000 tons of zinc metal per year in Inner Mongolia and Gansu. The final report in 2001 It was disclosed that the company decided to use the funds raised from the allotment of shares to buy out the zinc concentrate supply rights of Gansu Jianxin Industrial Co., Ltd. from 2001 to 2008.
Hou Baoquan: This time we are jointly developing the Dongshengmiao and Jiashengtan mining areas in Inner Mongolia with Jianxin Company, so that our zinc company has a stable source of raw materials. Base, this is also a specific measure for us to maintain the company's sustainable development
.
Hou Baoquan: Currently, the company is cooperating with Shenzhen Zunye Nanotechnology Co., Ltd. to develop high value-added products such as nano-oxide
materials, tin, silver, and zinc. It should be said that this project will be of great benefit to the company's long-term development
We are mainly interested in producing nanometer silver oxide and zinc powder, and we will continue to develop it in the next step
Dachai, let him further develop its downstream products and truly improve the high added value of the products. Through the adjustment of the product structure
we hope that by the end of the 15th Five-Year Plan, we can make high-zinc and high value-added products Reaching more than 20% of our sales revenue
.
Moderator: It seems that the leadership of Zinc Industry Co., Ltd. has noticed this problem. He is not only adjusting
to improve his position in the industry chain, but also enriching He has also made some moves in terms of product development and development of several other products. Do you think his actions will actually help his company's future profits?
Pan Fuxiang: It should be of great help, because we know that 60% of the zinc production cost of Zinc Industry Co., Ltd. comes from its zinc ore. Now it Taking some measures to establish alliances with some mining enterprises will play a relatively large role in effectively controlling the cost of raw materials. Another thing we also discovered through this year's final report is that it is conducting deep processing of some zinc products, and is also investing in some high-tech, such as the development of nano-oxides. It should be helpful to
its long-term transformation, but we should also clearly see that from the current point of view, efforts in this area will not be effective overnight. The improvement of its performance may be a relatively long-term one.
Moderator: Just now I know that you showed us a chart, which is the trend chart of international zinc prices from 1998 to the end of 2000. Then I would like to ask, why has it dropped so much? Is it possible that there will be such a big rebound after this?
Just like the zinc price surged in 1997, is this possible? If this is the case
Wouldn’t the profits of Zinc Industry Shares be greatly improved?
Pan Fuxiang: The main reason for the sharp surge in zinc prices in 1997 was the impact of the international speculative market, mainly the futures market. Now there is an explosive decline. We say it is also an adjustment to the rise in 1997. From the analysis of the entire industry, we believe that zinc prices may remain at a low level this year. Operation, of course, now that it has dropped to 860 US dollars per ton, this price has basically reached the full cost price of Zinc Industry
shares. We believe that there will be a batch of similar new ones of smaller scale. Enterprises
may not be able to withstand the impact of competition and may be eliminated. After they are eliminated, prices may rebound after the supply
is reduced. of. But we think that in general, one of the most important challenges to zinc industry stocks comes from the fact that the fate of an enterprise cannot be completely tied to an international market
If the product price fluctuates, we should say that its ability to resist risks is too weak.
Moderator: It is true that prices soared in 1997, which seemed to be very beneficial to the company in the short term. However,
at the same time, many companies came to enter this profit-making industry. It has entered a high-priced industry, so it has invisibly added many competitors, which also caused the price of raw materials to rise. However, if it falls this time, it may also be detrimental to him. Not only is it a bad thing, but it might also push out other less competitive opponents.
Pan Fuxiang: Clean up the door.
Moderator: We have noticed that in addition to the risk of fluctuations in international zinc prices, zinc industry shares have carefully looked at the annual reports from 1998 to 2000. We also found that there are other In the annual report, we found that there is a problem of affiliated companies occupying a large amount of funds of listed companies. This year, the funds occupied by Qimu Company and Huludao New Factory have been returned. However, there are still signs of other affiliated companies occupying the listed company's funds. How does the company's management explain this?
Hou Baoquan: Huludao Zinc Factory acts as an agent for the zinc ingots exported by Huludao Zinc. Since zinc
there is a cautious period after the export of zinc ingots, this will cause The import and export companies have occupied the funds of the zinc industry. It should be said that the company attaches great importance to this phenomenon. In the next step, we must actively work with the import and export companies to strengthen zinc
The cautious period for the export of ingots will accelerate the withdrawal of funds and reduce the occupation of funds. Here I can say that there is no reason for the import and export company's thick zinc ingots to occupy funds due to the extension of the settlement period. Financial risk.
Moderator: We just saw that Chairman Hou said that there is no financial risk. New Power Studio
What do you think about this issue? Are there any funds for related-party transactions? risk?
Pan Fuxiang: It is indeed difficult for us to communicate with the chairman's statement, because researchers from New Power Studio
analyzed the annual report of Zinc Industry Shares for one year Later, I found that since its listing in 1997, a relatively large number of affiliated companies have occupied the listed company's funds every year, and the amount is still gradually increasing.
According to the announcement in this year's final report, the occupied amount is 600 million. After the 600 million is completed, the interest on the funds occupied by the related companies on a monthly basis will be paid to Zinc Industry Shares on a monthly basis. The interest on the funds occupied will reach 270. < /p>
00,000, if calculated based on the capital cost of 6% in 3 to 5 years, the total amount of funds occupied should not exceed 900 million, which is almost the amount of zinc It can be said that such a large amount of funds is often controlled by several affiliated companies jointly controlled by a parent company
Long-term occupation, we say, is an investment risk that cannot be ignored for listed companies. Some similar experiences and lessons in the securities market are worth remembering.
Moderator: I think this may be a very important reason why the China Securities Regulatory Commission and the Shenyang Political Management Office gave it a deadline to make rectifications.
It is that there are a large number of such related transactions. .
Pan Fuxiang: That’s right. Of course, we studied it carefully and found that it also has some special circumstances.
Because this zinc industry share was put on the market in part of the packaging taken out of the Huludao Zinc Factory in the past, so it has since
< p>It is difficult to form a normal production and operation cycle, so many of its cooperation links are still in the hands of its parent companyThe controlling shareholder, so in this case, he and the parent company It is inevitable that there will be certain related transactions
but from the perspective of comprehensively measuring the investment risk of a listed company, we
think that in the future we should follow the development of the company. To develop, we should try our best to reduce the amount of related transactions.
In addition, at a certain time, this problem can be solved by the listed company acquiring some related operating assets of the parent company
This will have an overall impact on the listed company's performance. Healthy development is intentional.
Moderator: Based on the above discussion, how does New Power Studio evaluate the future development of Zinc Industry
?
Pan Fuxiang: We at New Power Studio believe that as the third largest zinc smelting company in the world and the largest in Asia
, zinc industry shares should play a decisive role in the industry, but Judging from the current situation, it is already
big enough, but not strong enough. It should be directed towards itself in the overall future development process.
To develop in the direction of a joint enterprise of mining, selection, smelting and processing, only in this way can we be able to adequately withstand the risks brought by price fluctuations in the international zinc
market and enable the development of the enterprise to be further healthy.
Moderator: In this way, it can truly bargain when selling and purchasing goods. OK
Thank you Mr. Pan for coming to the "Securities Night" program to provide more authoritative analysis of information and more authentic
information for investment.