How long will it be coldest for China's mining ind

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How long will China's mining industry be "cold"?

July is not only the beginning of high-temperature and hot weather, but also the time for relevant departments to air their "report cards". However, for China's mining industry, which is in the cold winter period, the continuous high temperature in July this year not only did not bring a trace of "heat", but with the release of relevant data, it felt a bone chilling cold

according to the data released by relevant national departments, in the first half of this year, the added value of China's mining industry was only half of that of industries above Designated Size, and the total profit fell by nearly 60%. However, this does not mean that China's mining industry has been at the lowest point of recovery

"considering that China's economy has entered the new normal, and other economies cannot pick up the baton of China's rigid demand for mineral resources, China's mining industry may not recover until at least 2017." At the launching ceremony of the open source mining industry M & A fund of China National Mining Corporation held with Beijing international mining city recently, the analysis of Wang Jiahua, executive vice president of China Mining Federation, cast a shadow on China's mining industry, which seems to see the dawn

domestic mining industry continued to decline

it can be said that since the second half of 2012, China's mining industry, like the "domino effect", has quickly caused a chain reaction in other industries since the coal industry began to decline. Even the most promising gold, which has been very strong for many years, can't resist the downward trend, "falling endlessly" to close to the cost price

the worst is often a good start. However, although China's mining industry has experienced continuous decline and in-depth adjustment in the past three years, there is still no sign of a turnaround today

according to the "geological survey trends" compiled and issued by the development research center of the China Geological Survey, China's economy has entered a new normal, the economic growth rate has changed from high-speed to medium high-speed, and the industrial structure is undergoing a new round of adjustment, optimization and upgrading. The growth rate of China's demand for many mineral products has declined significantly, and some even the total demand has declined. Affected by this, the global mining industry has shown a downward trend for four consecutive years. The prices of some minerals, such as gold, silver, aluminum, lead and zinc, have approached or reached their average production costs. If the prices continue to fall sharply, the entire industry will face risks; The prices of other minerals, such as copper, nickel and tin, continued to decline, and the magnitude of the earthquake was still large

the relevant data recently released by the National Bureau of statistics shows that from January to June, the added value of China's industries above designated size increased by 6.3% year-on-year. Among them, the added value of the mining industry above designated size increased by 3.2%, but decreased by 0.1 percentage points from January to May. From January to June, the business income of mining owners was 2605.86 billion yuan, a year-on-year decrease of 15.4%

and the fixed investment, as the barometer of the industry, continues to decline. According to the data, from January to June, the fixed asset investment of the national mining industry was 526.1 billion yuan, a year-on-year decrease of 7.7%, and the decline narrowed by 1.4 percentage points. In addition, the growth rate of investment in non-metallic mineral products industry related to mining industry narrowed slightly, the decline in investment in ferrous metal smelting and rolling processing industry expanded, and the growth rate of investment in non-ferrous metal smelting and rolling processing industry expanded

as for the total profit of the mining industry, the first half of this year was almost "annihilated". Unless the metal industry can still ensure that "the city gate is not lost", the profit decline of other industries is much higher than that of other industries. According to the profit data of industrial enterprises recently released by the National Bureau of statistics, from January to June, industrial enterprises above Designated Size achieved a total profit of 2844.18 billion yuan, a year-on-year decrease of 0.7%, 0.1 percentage points smaller than that from January to May. Among them, from January to June, the mining industry achieved a total profit of 139.61 billion yuan, a year-on-year decrease of 58.8%. Among the 41 major industrial industries, the total profits of 30 industries increased year-on-year and 11 industries decreased. Among them, the total profit of coal mining and washing industry was 20.04 billion yuan, a year-on-year decrease of 67%; The total profit of oil and gas exploitation industry was 62.89 billion yuan, a year-on-year decrease of 68.4%; Profit of ferrous metal mining and beneficiation industry celanesecorp And southwireco., an American wire and cable manufacturer LLC has developed a kind of extruded transmission line made of thermoplastic composites, with a total amount of 18.64 billion yuan, a year-on-year decrease of 47.5%; The total profit of nonferrous metal mining and beneficiation industry was 21.39 billion yuan, a year-on-year decrease of 17.4%; The total profit of non-metallic mining and beneficiation industry was 16.55 billion yuan, with a year-on-year increase of 4.6%

the reality seems to be more serious than the official figures. China mining news learned in the interview that many coal enterprises not only limited production and reduced production, but also took "emergency" measures to stop production and take holidays. Although the local government has approved the resumption of production and technological transformation of some resource integrated coal mines in Yuzhou mining area, none of them is willing to start construction. Even the state-owned coal mines, which have been in normal production in previous years, have taken the initiative to stop production and have holidays since the second half of this year due to serious losses

this is not an isolated case. It is understood that since this year, the raw coal output of Shanxi, Inner Mongolia, Henan, Shandong and other coal producing provinces has decreased to varying degrees, mainly due to the shutdown and holiday of many coal mines

the decline in the overall benefits of the coal industry and the increase in the arrears of coal loans have directly led to the fact that coal enterprises cannot make ends meet, and the wages of coal miners have declined significantly, and some coal mines have even begun to default on their wages

the steel industry, which is "brother to brother" with the coal industry, is not much better. In Benxi City, Liaoning Province, known as the "coal city and steel city", since this year, except for the iron ore enterprises subordinate to Benxi Steel, many other iron ore enterprises have been forced to stop production due to serious losses

the person in charge of a mining company subordinate to a central enterprise in Shandong told that the company had started to suffer losses since the second half of last year, with a loss of more than 100 yuan per ton of refined iron powder. Because it is a state-owned enterprise, it has to consider local economic development and employee employment before it has to support production

"we have taken various measures to reduce production costs, such as optimizing mining and beneficiation processes, saving energy and consumption, and reducing wages, but due to the constraints of mining methods and iron ore grades, we are bound to lose money. If this situation cannot be reversed sooner or later, we will sooner or later stop production and have a holiday." The person in charge said helplessly

global mining continues to cool

under the general trend of global economic integration, facing the reality of great downward pressure on the domestic economy, it has become an inevitable choice to actively expand overseas markets and rely on other new economies to achieve their own economic development

however, during the "shift" period when China's economy has entered the new normal and its economic development has shifted from high-speed growth to medium speed growth, no economy is able to shoulder the heavy responsibility of strong rigid demand for mineral resources. The global economic growth has slowed down structurally, the US economy is still recovering and adjusting, and the economies of the eurozone and Southeast Asia are also facing the risk of turbulence. These adverse factors have directly led to the continued cooling of the global mining industry

according to the "geological survey dynamics", as of May 2015, the global mining industry activity index (PAI), taking the S-type sensor as an example, has fallen to 41 points, reaching the lowest level in recent three years; SNL metal index prices also almost fell to the lowest point in the past three years; The market value of mining industry has rebounded in the past half year, but it is far less than that in the same period last year. The global mining industry continues to show a cooling trend, and there is no sign of improvement

confidence is more important than gold. However, the current mining situation has made many heads of mining companies and even some industry experts pessimistic. "Has the current mining industry reached its lowest point" and "when can the mining industry recover"? These questions have become the theme of exchanges between industry insiders on various occasions, which is the best evidence

according to the analysis of geological survey trends, the current global mining situation is still severe. The reasons mainly include the following aspects: first, it is affected by the cyclical fluctuations and downward pressure of the overall economic situation. This is an internal law that is difficult to change. The second is caused by overcapacity and oversupply of mineral products. The high price of mineral products in previous years led to the expansion of capacity and production of many mines, and the decline after the release of production capacity and the surge in demand led to an oversupply. Third, human factors. Market economy is also "confidence economy" to some extent. Lack of confidence and pessimistic expectations often bring false information about supply and demand in the market, resulting in sharp fluctuations in the market

the price of mineral products is the wind vane of the mining market, which directly determines the future trend of mining industry. But the current price of mineral products is also not awesome. It is understood that the current price of important mineral products in the world is close to the average production cost, and the trend continues to differentiate. In the first half of 2015, the spot price of LME gold fluctuated around $1200/oz, which is also the marginal production cost of global gold producers. International iron ore prices fell sharply. By March 2015, the average price of imported iron ore in China had fallen to $67.03 per ton, falling for 15 consecutive months. On April 10, it fell to the lowest point, at $46.84/ton. Goldman Sachs analysts said that the price of iron ore was expected to fall to $52 per ton in 2015, down 18% from previous expectations. Goldman Sachs' price expectations for the next two years are $44 and $40 per ton respectively, down about 30% from the previous forecast. Citigroup research report believes that due to the decline in Chinese demand and the adverse expansion of many iron ore giants around the world, the lowest iron ore price will fall to $30/ton. Citigroup predicts that the oversupply of iron ore in 2015 will exceed 110 million tons, of which 68 million tons of overcapacity is caused by Rio Tinto. This will inevitably lead to the continued decline of iron ore prices. The prices of copper, nickel and tin continued the downward trend since 2011, and continued to decline with a large amplitude

as for the main coal of another major mining industry, the prospect is also bleak, and the coal price is still hovering at a low level, with insufficient upward momentum. Although the thermal coal market hit the bottom for the first time in the year in June, it was weak and stable due to weak terminal demand support. Although July and August of each year are the traditional peak summer coal consumption, it is still difficult for industrial power demand to rebound significantly in the short term. Considering the increase in hydropower output and the substitution effect of clean energy, it is expected that the domestic market will be in a long bottom shock process in the later period

the cooling of global mining industry and the negative view of industry insiders on the short-term mining situation have directly led to the decline of mergers and acquisitions of global energy and solid mineral companies. According to the report released by wood McKinsey, the number of global oil and gas M & A transactions fell significantly in the first four months of 2015, according to geological survey dynamics. The average monthly number of transactions from January to April is about 20, compared with 30 to 50 at the end of last year. The monthly oil and gas trading volume was almost below US $10billion, a sharp drop from US $20billion in December last year. However, a big deal in April, in which shell spent more than US $80 billion to acquire BG, broke many records and set a 15 year high for the global single monthly transaction amount

from the perspective of global mining mergers and acquisitions, according to SNL statistics, there were 24 mergers and acquisitions in the world in the first quarter of 2015, down from 43 in the fourth quarter of 2014 and 52 in the third quarter. The total amount was US $4.67 billion, basically unchanged from the fourth quarter of 2014. As in previous years, mining M & A activities in the first half of this year are still mainly concentrated on a few minerals such as gold and copper. For example, mubadaladevelopment company paid about $2billion

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