The world of metals is becoming dramatically more complicated and interconnected. China is embarking on another transformation of its economy, which has practically ground to a halt as a result. Its domestic steel demand will likely be lower this year than last. Indonesia’s ban on the export of unprocessed metallic ores caused price shocks in nickel and bauxite. Geopolitical risks abound, and bank funding of miners has never returned to pre-financial crisis levels.

1. Bloomberg Intelligence
East Meets West

2. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Copper
Copper market defecit may end year at
100,000 metric tons

3. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
A Bloomberg Intelligence study of new mine supply projects a
copper deficit of almost 100,000 metric tons this year.
Numerous delays to new mines ramping up and above-average
disruptions at existing supply have dramatically shifted the
situation from ICSG’s original forecast of a 405,000 mt surplus.
A rebound in Chinese demand adds to the squeeze though it
must be adjusted for flows of bonded stocks, which suggest 5.2%
global demand growth in 2014.

4. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
New copper supply / New mine data

5. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Copper
Copper deficits may return by 2020 if
demand beats 3.5% growth

6. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
The global copper market may return to deficit by 2020 if demand
surpasses an average of 3.5% from 2015 on.
This compares with the previous four-year growth rate of 3.76%
and an assumed 5.2% in 2014 based on year-to-date figures.
An apparent property slowdown in China may make this rate
tough to achieve.
There are at least 14 projects in the new supply pipeline vulnerable
to delays or cancellation, though, which could lower the threshold.

7. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Copper supply and demand

8. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
Aluminum
China aluminium profit widens when producers use captive power

9. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
Aluminum production may be far more profitable with captive power, when the producer owns the plant, according to Bloomberg Intelligence analysis.
Captive power China smelters save an average of 2,700 yuan (about $436) per ton of aluminum produced vs. smelters using grid power, according to the BI Chinese Aluminum Profitability Index.
Northwest smelters in Xinjiang gain about 0.2 yuan per kilowatt hour vs. central China smelters in Henan, which pay more than 0.6 yuan.

10. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
New copper supply / New mine data

11. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
Aluminum
Xinjiang may see 50% of China aluminum capacity growth this year

12. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
China’s Xinjiang province may add 2.45 million tons of aluminum capacity this year, or 50% of the nationwide total, based on Bloomberg Intelligence calculations.
Expansion may have been even faster if the Xinjiang government hadn’t tightened approval regulations and implemented tiered electricity pricing in March.
Smelter construction may accelerate once dedicated power plants are completed, further boosting the province’s aluminum output.

13. BLOOMBERG INTELLIGENCE | Analysts: Yi Zhu & Kenneth Hoffman
Xinjiang to build new aluminum capacity of 2.45mn tons in 2014

14. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Nickel
Indonesia may boost new smelter
capacity by 56,000 mt by 2017

15. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
The nickel supply-demand balance hinges on Indonesian smelters
after the country banned raw ore exports.
The Bloomberg Intelligence Indonesian Nickel smelter model
attempts to discern the ramp-up by applying a proprietary
score based on factors, including accessibility to power and the
consistency of information from the companies and government.
This suggests 21,000 metric tons of contained nickel capacity may
be added through 2015 and 56,000 mt by 2017.

16. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
New smelter pipeline in Indonesia

17. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Nickel
Pipeline of nickel mine capacity set to
peak in 2014 on demand

18. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Bloomberg Intelligence calculates 169,000 million metric tons, or
25%, of committed nickel supply may reach the market this year,
the lowest in five years.
The largest mines to ramp up include Vale’s Goro Mine, Highland
Pacific’s Ramu, and Ambotovy, operated by Sherritt.
A further 680,000 mt of uncommitted supply could also appear if
nickel prices continue higher. Supply additions are currently set to
fall 78% in 2018 and 91% in 2020.

19. BLOOMBERG INTELLIGENCE | Analysts: Oliver Nugent & Kenneth Hoffman
Incremental nickel supply

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