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China`s 2016 oil demand in the red as GDP growth hits 26-year low

Source: www.chinamining.org     Citation: www.platts.com      Date: February 04, 2016

China`s apparent oil demand slipped into the negative territory in 2016, a sharp reversal from the near 7% growth witnessed a year earlier, as the country`s slowest GDP growth in 26 years slashed appetite for industrial and transportation fuels in Asia`s biggest oil consuming nation.

A near 25% growth in LPG demand and close to double-digit growth in naphtha and jet fuel demand failed to offset the impact of sharp falls in gasoil and fuel oil consumption, pulling down overall oil demand in 2016 by 0.8% to 11.11 million b/d, compared with a growth of 6.6% in 2015. 

The world`s second biggest oil consumer saw a sharp slowdown in demand after GDP growth slowed to 6.7% in 2016 from 6.9% in 2015 and 7.3% in 2014. GDP growth was 3.9% in 1990.

Although GDP growth was only 0.2 percentage points lower than in 2015, fixed asset investment growth slowed to 8.1% year on year in 2016 from 10% in 2015. 

Industrial production grew 6% in 2016, also lower than the 6.1% growth seen in 2015, data from the National Bureau of Statistics showed. 

These factors together pulled down gasoil consumption in the transportation and construction sectors, resulting in a 5.4% year-on-year fall in apparent demand for the fuel, which accounts for around 30% of China`s overall oil products consumption. 

Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly throughput at Chinese refineries and net product imports. But the official data fails to reflect some of the crude throughput increases from the new crude oil consumers — the independent refineries. 

If output from the independent sector is taken into account, apparent demand last year is estimated to be around 11.34 million b/d, representing 1.3% year-on-year growth, according S&P Global Platts` China Oil Analytics. 

For 2017, analysts expect GDP growth to further soften to 6.5%. The country`s think tank, the State Information Center, forecasts international trade will soften amid global protectionism and this will lead to slower growth in the consumption of transportation fuels. 

But oil demand will find some support in infrastructure investment, which according to HSBC will remain a key pillar of growth in 2017. 

COA forecasts China`s apparent demand will reach 11.57 million b/d in 2017, a 2% increase against the adjusted numbers for 2016. 

GASOIL FEELS THE PINCH 

Although gasoil demand recovered to a 24-month high of 3.76 million b/d in November, driven by busy transportation activity for raw materials, it failed to lift apparent demand growth for gasoil into positive territory in 2016. 

The transportation sector accounts for around 65% of gasoil demand, while agriculture and construction account for the rest. 

"Gasoil demand has been retreating since late November, with stocks building up," said a Shandong independent refinery source. 

 In 2016, apparent demand for gasoil was 3.35 million b/d, a 5.4% decrease year on year, compared with only a 0.4% decline in 2015, Platts` calculations showed. With an adjustment in output data, COA estimates demand at around 3.52 million b/d in 2016, a 0.6% fall year on year. 

The decrease would narrow further if the incremental supply from the blending pool was taken into account. Blended barrels, with imported light cycle oil and domestic kerosene as the main components, are not included in gasoil apparent demand calculations. 

China`s imports of light cycle oil surged 135% year on year to 4.46 million mt in 2016, data from the General Administration of Customs showed. Blending with 1 mt of LCO could get 2-2.5 mt of off-spec gasoil, which is used mainly in the construction and fishing sectors. 

"Gasoil demand, including adjusted refinery output, could fall to 3.45 million b/d in 2017 as the economy restructures further and developed provinces along the eastern coast continue to move away from gasoil intensive activity," said Song Yen Ling, a senior analyst with COA. 

GASOLINE GROWTH MODERATES 

Apparent demand for gasoline was at 2.78 million b/d in 2016, representing slower year-on-year growth of 3.2%, compared with the 9.6% growth registered in 2015. But COA estimates that adjusted demand would be at 2.91 million b/d, a 7.8% increase from 2015 levels. 

Similar to gasoil, blending pools also played a role in overall gasoline supplies. Sales of imported mixed aromatics, which are used mainly as a blending material for gasoline, provide an indication of demand. 

Data from the GAC showed that imports of mixed aromatics surged 81.4% year on year to 11.7 million mt in 2016, suggesting a significant rise in blending activity. About 3 mt of mixed aromatics are needed to blend 10 mt of gasoline. This means that up to 39 million mt, or 906,000 b/d, could have been added to the supply pool in 2016. 

 Gasoline demand also found support in a 14% year-on-year rise in gasoline-fueled vehicle sales in 2016, data from the China Association of Automobile Manufacturers showed, with sales of gasoline-guzzling sport utility vehicles surging 43% year on year. 

This year, COA expects growth in adjusted gasoline demand growth to slow to around 6% to 3.08 million b/d. "It is likely that the growth of car sales in 2017 would be softer than 2016," Song added. 

LPG, NAPHTHA 

LPG demand surged to 1.57 million b/d in 2016, up 24.8% year on year, compared with 20% growth in 2015. Market sources attributed last year`s strong growth to increasing demand from petrochemical plants, industrial and residential users. 

China launched two new PDH units, with a total capacity of 1.16 million mt/year, in the fourth quarter of 2016, adding to the six existing PDH plants with a total capacity of 4.74 million mt/year. As a result, China`s LPG imports jumped 33.4% on year to 505,000 b/d in 2016. 

This year, LPG demand is expected to continue growing but the year-on-year increase could slow to around 8.3% or 1.7 million b/d because downstream demand is likely to be limited. In addition, no new PDH plant is expected to come online, according to COA. 

Apparent demand for naphtha rose 9.8% year on year to 969,000 b/d in 2016. It was slightly higher than the 9% growth registered in 2015.

China`s ethylene production rose 3.9% year on year in 2016, stronger than the growth of 1.6% in the previous year. Around 65% naphtha is estimated to be used as feedstock to produce ethylene, while 30% go to reformers.

In 2017, as more reformers are expected to come on stream, naphtha imports are expected to grow sharply, while output from refineries is expected to remain stable. As a result, COA estimates growth to slow to 5.6% this year to 1.02 million b/d. 

JET FUEL, FUEL OIL

Apparent demand for jet fuel in 2016 rose 8.7% year on year to 754,000 b/d, slowing from 15.9% growth in 2015 when new production units came on stream. 

Latest data from the Civil Aviation Administration of China showed that aviation traffic turnover rose 12.7% year on year in the first 11 months of 2016, down from the 13.8% growth in the whole year of 2015. 

In 2017, COA expects apparent demand for jet fuel to grow at 12.3% to 847,000 b/d because of higher production yields of 8.6%, compared to 7.9% last year. 

Apparent demand for fuel oil in 2016 fell 23.9% year on year to 716,000 b/d, compared with an increase of 14.9% in 2015. The sharp fall in 2016 was mainly because independent refineries reduced fuel oil use, including bitumen blend, after they were granted crude oil import quotas. 

Independent refineries in Shandong province cracked only 1.9 million mt of fuel oil in 2016, down 76.8% from the previous year, data from Beijing-based information supplier JYD showed. COA expects consumption to decline only 1.4% year on year in 2017 to 704,000 b/d. 

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin China in September 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us. For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

China`s coal-producing province to curb production

Source: www.chinamining.org         Citation: Xinhua        Date: January 28, 2016

North China`s Shanxi Province, one of the country`s major coal-producing provinces, plans to maintain its coal production within 1 billion tonnes in next five years, the provincial government said on Thursday.

Speaking at the annual meeting of the provincial legislature which opened Wednesday, the government proposed a five-year development plan to curb overall production, adjust structures for coal products and boost the transformation of coal to more efficient forms like electricity or chemicals.

In addition, the province will continue to boost the integration of coal resources and mergers of mining enterprises, and reduce the number of coal mines so as to improve the efficiency of the industry, it said.

Coal production in Shanxi decreased to 944 million tonnes in 2015 from 976 million tonnes in 2014. Shanxi`s coal industry lost 9.425 billion yuan (1.43 billion U.S. dollars) last year as government curbs on the polluting sector took their toll, official statistics indicated on Thursday.

The industry had suffered losses for 18 consecutive months by the end of 2015, beginning in July 2014.

Statistics also shows that the price for each ton of coal dropped 431.8 yuan, down 66 percent from its peak in May 2011 to December, 2015.

Shanxi has produced more than 14 billion tonnes of coal since 1949, accounting for about one fourth of China`s coal production.

The Shanxi government has controlled the growth of production in recent years in the hope of shaking off heavy economic reliance on coal resources. The provincial government is approving no new coal mines for the next five years to tackle overcapacity.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

Russia again beats Saudi as China`s top crude supplier

Source: www.chinamining.org         Citation: Reuters        Date: January 27, 2016

Russia beat Saudi Arabia as China`s top crude oil supplier in December 2015 for the fourth month in a row due to robust demand from independent Chinese refiners, which prefer shipments from the Far East over high-sulfur oil from the Middle East.

Russia strengthened its position in Asia by supplying nearly one-quarter more crude to the region in 2015, shifting the balance of power in one of the few bright spots in the global market and blunting the Organization of the Petroleum Exporting Countries` high-profile drive as to win customers.

China is one of the top targets for Russian oil after small, independent oil plants known as "teapots" won the right to import crude for the first time just several months ago. These plants were busy placing orders toward the end of 2015.

"These new plants were in a rush to use new quotas. But logistically they are not equipped to buy larger shipments from the Middle East or West Africa," said a Beijing-based official involved in marketing Middle Eastern oil. "Russian cargoes ¡­ suit them."

China`s December imports from Russia hit a record of 4.81 million tons, or 1.13 million barrels per day (bpd), up 29 percent over a year earlier, according to Chinese customs data.

Imports from Saudi Arabia, the world`s top exporter, were down 1.2 percent year-on-year during December at 1.05 million bpd.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

Asia`s largest manganese ore discovered in SW China

Source: www.chinamining.org         Citation: Xinhua        Date: January 25, 2016

A reserve of more than 192 million tonnes of manganese ore, believed to the the largest in Asia, has been discovered in southwest China`s Guizhou Province, it was announced Friday.

Pujue manganese ore was discovered in mountains between Songtao Miao Autonomous County and Jiangkou County by the No. 103 Geology Group under the Guizhou Provincial Geology and Mineral Exploration Bureau, according to Songtao government.

The mine will help poverty alleviation in Guizhou, one of China`s least developed provinces, local officials said.

Manganese is used to make metal alloys, particularly stainless steel.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China 2015 coal imports plunge 30 pct on demand slump

Source: www.chinamining.org     Citation: Reuters    Date: January 14, 2016

China`s coal imports slumped 30 percent to 204.1 million tonnes in 2015, customs data showed on Wednesday, hit by a slowdown in domestic demand and a collapse in the price of locally produced coal.

Imports could fall further this year, analysts said, with overall demand still declining. Coal also faces the twin headwinds of state efforts to cut pollution and a weaker Chinese currency that will further erode the cost advantages once enjoyed by foreign miners.

"Going into 2016, the overall theme will still be there, with demand still weak as China steers away from high energy-intensive industrial growth and the replacement (of coal) by other energy sources continues," said Helen Lau, analyst with Argonaut Securities in Hong Kong.

She expected imports to fall another 10 percent in 2016,

While overseas suppliers could usually rely on lower production costs to undercut their Chinese counterparts during periods of high demand, their advantage has been eroded after a supply glut cut domestic coal prices.

"The decline in coal import volumes has two main causes - the decline in overall demand caused by China`s economic slowdown, and the fall in domestic prices which has undermined the price advantage enjoyed by imported coal," said Zhang Xiaojin, a coal analyst with China`s Everbright Securities.

Chinese coal producers, which suffered widespread losses last year, are desperate to cut production in order to shore up prices. China`s raw coal output is expected to fall 4.2 percent in 2016 to 3.6 billion tonnes, down from an estimated 3.76 billion tonnes in 2015, according to the China Academy of Sciences.

Thermal coal prices at the northern port of Qinhuangdao SH-QHA-TRMCOAL lost nearly 30 percent over the course of last year and have held at 370 yuan ($56.25) per tonne since late November.

Lau said the devaluation of the Chinese yuan could help spur exports, but they were unlikely to exceed 5 million tonnes for the whole of 2016, given weak global demand. ($1 = 6.5783 Chinese yuan)

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China goes underground to expand its strategic oil reserves

Source: www.chinamining.org     Citation: Reuters    Date: January 07, 2016

China is building underground caverns capable of holding up to a quarter of its expanded strategic oil reserves by 2020, as it looks for new storage methods away from expensive and exposed above-ground tanks in crowded coastal regions.

In a move to improve its energy security and take advantage of cheap oil, China is spending billions of dollars to build up strategic petroleum reserves (SPR) to meet up to 90 day`s worth of net import demand in case of a disruption.

While many western countries make SPR data public, China rarely gives detailed information on its oil reserves or locations.

So far, China has built almost all of its SPR tanks above ground, but now at least five underground sites have been identified, with one at Huangdao in Shandong province completed and another four under construction, according to local media and several oil analysts surveyed by Reuters.

"Building facilities all on the ground would be like putting all your eggs in the same basket. That is why the government diversified its stockpile centres," said a senior researcher involved in storage design at the Research Institute of Petroleum Exploration and Development, run by China National Petroleum Corp.

The official declined to be named because he was not authorized to speak to media.

Despite the cost of drilling the caverns, underground storage can be up to two-thirds cheaper than above-ground tanks, especially as the cost of land surges in coastal regions, and are less prone to potential sabotage, experts said.

"While traditional above-surface storage has the advantage of a shorter construction period, the underground caverns generally have the advantages of lower costs, lower environmental risks, as well as greater perceived level of security," said Wendy Yong, a senior analyst with energy consultancy FGE.

Underground sites are slated to hold about 130 million barrels, which would account for nearly a quarter of the 550 million-barrel SPR target set by Beijing for 2020, according to local media and analysts.

Three underground rock cavern sites under construction are at Jinzhou in northeast Liaoning province, and Zhanjiang and Huizhou in southern Guangdong, all expected to be ready to take oil over 2016 or early 2017, according to industry sources and analysts. A salt cavern has been partially completed in Jintan, in eastern Jiangsu province.

TECHNICAL PROBLEMS

Beijing confirmed the completion of its first underground site, a 19 million-barrel facility in Huangdao in Shandong province, in December when it said its reserves had doubled in the eight months to mid-2015 to 190 million barrels.

However, construction of caverns is taking longer than expected as Chinese builders are new to the technology and challenges such as water seepage during excavations and rock disposal can be daunting, experts said.

Engineers are encountering technical problems in adapting to local geological conditions, resulting in construction delays and the abandonment of one small, pilot underground facility due to oil leakage and high maintenance costs.

"China had a late start on research related to underground oil. In practice we borrowed foreign technologies that don`t apply to China`s scenario," said Zhuang Duanyang, a researcher at Dalian University of Technology.

Unlike the United States, which stores its vast oil supplies in hollowed-out underground salt domes, China`s different geology means it mainly has to excavate hard rock caverns up to 200 metres (220 yards) below the surface, similar to South Korea.

Once the caverns are filled with oil, pressure from water naturally present in surrounding rock prevents it from seeping away, and Chinese officials say the caverns are relatively cheap, long-lasting and require little maintenance.

China has still identified two salt mines, the Jintan site and Qianjiang in central Hubei province that could be suitable for oil storage.

Work is also being carried out at Jintan by companies including PetroChina and Hong Kong`s Towngas for gas storage.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China`s 2015 zinc concs output to post first
annual decline of 4% to 4.8 mil mt: CNIA

Source: www.chinamining.org         Citation: Platts      Date: December 25, 2015

China is expected to post its first ever annual decline in zinc concentrate output this year, as miners produced 4.22% less at 4.8 million mt on the back of weak domestic prices, stringent environmental requirements and ore degradation, China Nonferrous Metals Industry Association said late Wednesday.

In a report reviewing the country`s nonferrous industry performance, CNIA said the drop in domestic production would be offset by zinc concentrate imports, which is estimated to reach 3.2 million mt in 2015.

Chinese smelters have been able to maintain operating rates at a relatively high level so far this year, with large producers running at an average 86.55% and mid-tier ones at 73.92%.

China is expected to see the addition of 590,000 mt/year of new smelting capacity over 2015-2016.

In the first nine months of this year, the country already saw the startup of 290,000 mt/year of new capacity, and the remaining 300,000 mt/year capacity is likely to be ready for commissioning next year.

Inventory of zinc ingot in the Shanghai, Tianjin and Guangdong districts has reached 365,200 mt by year end, a 83% jump year on year.

Looking into 2016, CNIA has cited that continuing excess in existing and incremental zinc production capacity, slowing Chinese economic growth and closure of inefficient steel producers would suppress zinc prices further.

However, concerted efforts of leading Chinese zinc smelters to cut production, the drop in treatment charges of zinc concentrate to $160-170/mt recently -- from around $190/mt in November -- and suggestions within the industry of establishing commercial stockpile might help support domestic prices, which CNIA tipped to be rangebound within Yuan 10,000-15,000 ($1,544-2,316)/mt.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China`s 2015 magnesium output seen at 44% of 1.6 mil mt/year capacity

Source: www.chinamining.org         Citation: Platts      Date: December 24, 2015

China`s magnesium ingot output is seen at 701,005 mt, equating to 44% of the country`s total capacity of 1.6034 million mt/year and down 20% from 2014, trade platform Northeast Asia Magnesia Material Trading Center said Tuesday. It forecast output in December at 58,000 mt, in line with November. However, demand has not increased in December, with producers facing the twin pressures of falling ingot prices and "hardships in selling," the center said. China`s domestic magnesium ingot stood at Yuan 12,100/mt ($1,936/mt) mid-December, down from Yuan 12,300/mt a month earlier, its data showed.

Cutting output or halting production would intensify a funding shortage this close to year end, so magnesium producers will likely delay such moves until the Lunar New Year holiday in February, the center said.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.