china s role in world cobalt market · battery began to slide since 2004, its market share have...

China’s Role in World Cobalt Market

Xu Aidong

Chief Analyst

Beijing Antaike Information Development Co., Ltd.Nov. 7th -9th Hangzhou China

Tel:8610-63971195, Fax:8610-63971647Http://www.metalchina.com Http://www.antaike.com

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Overviews

• Production• Consumption• Trade• Competitiveness• Conclusions



ProductionChina’s Refined Cobalt Production 1992-2006 (tonnes)

•The total refined cobalt production in china was nearly 16000tonnes in 2006, only increasing 2.4% y-y, of which JNMC occupied 28%, reducing by 1 point.•After two years’ rapid development, the growth rate of refined cobalt production has begun slowed down.•Besides JNMC, the private producers, play an important role in refined cobalt production, so they should be attached enough attention.Source：Antaike

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2000

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12000

14000

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18000

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OthersJNMCImported Ore and Scraps

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ProductionRefined cobalt production of JNMC

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4500

5000

1998 1999 2000 2001 2002 2003 2004 2005 2006

Cobalt saltsCobalt metal

In recent three years, JNMC’s refined cobalt production has increased a lot, it had reached 4,500 tonnes in 2005,and its production target in 2006 is 6,000 tonnes, but the estimated production in 2006 is 4500 tonnes.

There are several raw material channels for JNMC:•JNMC’s own ore from its nickel and copper mine;• JNMC import some cobalt concentrate and cobalt contained material;•Some private companies import cobalt concentrate to process into the crude cobalt carbonate, then provide to JNMC for further refining;

Source：Antaike



ProductionChina’s Top Ten Refined Cobalt Producers(tonnes Co/a)

产能 2006

JNMC 6000 4500

Ganzhou Yihao 4500 1000

Zhejiang Huayou 2500 2000

Ganzhou 801 2300 800

Zhejiang Galico 2200 1600

Jiangsu Xiongfeng 1100 600

Ganzhou Haofeng 1050 400

Jiangsu Kailike 1000 700

Yingde Jianb 800 400

Hunan Zhaoliao 750 500

Subtotal 22200 12500

others 7800 4500

Totoal China 30000 16000

Source：Antaike



Production percentage of main cobalt countries in the world

Production

•From the statistics of GFMS, China’s refined cobalt production in 2006 is 10000tonnes(excluding that from Umicore China), occupied 18.9% of total world supply;•But Our estimation is 16000 tonnes in total and 15000 tonnes if excluding the production from Umicore in China;•Now China is still the largest refined cobalt producer in the world in 2006.

0%10%20%30%40%50%60%70%80%90%

100%

2003 2004 2005 2006 2007

China

others

Canada

Oceania

Europe

Zambia

Morocco

Source :GFMS



ConsumptionChina’s Cobalt Consumption Status in the world

0%10%20%30%40%50%60%70%80%90%

100%

2003 2004 2005 2006 2007

China

Japan

USA

Europe

Others

•Also from the statistics of GFMS, China’s refined cobalt consumption in 2005 is 11,000 tonnes, occupied 21.3% of total world consumption;

•While our estimation is 11692 tonnes in 2006, nearly the same level with that of GFMS

Source :GFMS



ConsumptionChina’s Cobalt Consumption 1998-2006 (tonnes)

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14000

1998 1999 2000 2001 2002 2003 2004 2005 2006

Cemneted Caride Ceramic and GlazingOthers Battery

From 1998-2005, the average growth rate of cobalt consumption in China is 19.9%, mostly driven by that from battery industry, which occupied 52% of the total in 2005;But the consumption rate has slowed down in 2006 because of the high stocks of down stream market in China, we estimate the cobalt consumption is 11692 tonnes, increasing 4.2%.

Source：Antaike



ConsumptionThe Segmentation of China’s cobalt consumption in 2006

13% 10%3%

12%

13%

48%

1%

Cemented Carbide

Magnet

Metallurgical

Battery

Chemical and others

Glazing

DiamondTotal= 11692 tonnes

Source：Antaike



ConsumptionChina’s Cemented Carbides AP Consumption (tonnes)

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12000

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16000

18000

1980

1983

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2004

App.Cons. Export

•In the first half of 2006，China’s cemented carbide production is about 7582tonnes, it will recover to 15710 tonnes from the recent valley in 2005;

•Increasing output of steel products, motor vehicles, micro-computers and programme-controlled switch board have stimulated the cemented carbide consumption;

•Correspondingly the cobalt consumption in this field will increase to 1571 tonnes in 2006,increasing by 20.4%.

Source：Antaike

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ConsumptionExports of China’s Ni-Cd、 Ni-MH and Li-ion Battery(million Unit)

0100200300400500600700800900

1000

1999 2000 2001 2002 2003 2004 2005 2006

Ni-Cd Ni-MH Li-iron

•In the first eight months of 2006, the exports of Ni-Cd is about 475 million unit, down 11.7% y-y, the exports of Ni-MH is 577 million unit, up 6.1% y-y and the exports of Li-ion is 604 million units,up 42% y-y;

•Is is obvious that exports of Ni-Cd battery began to slide since 2004, its market share have been inched by Ni-MH battery, but in 2006 high nickel and cadmium prices have hurt the production of Ni series battery,but some large companies wish to take the chance to promote the adjustment of battery industry.

Source:China Customs



n Only that of Li-ion battery keep a rapid growth rate in recent years. But due to over stocks of cobalt raw material from the battery producers, cobalt consumption in this field has not increased correspondingly;

n With the lifting of tax rebate from 13% to 17%, exports of Li-ion battery will keep increasing in near future.

Consumption



Consumption

The production of Co Contained Material Used in Rechargeable Battery

Source: Antaike

•In 2006 the production of RE hydrogen storage alloy in China will reduce to 10000 tonnes, to save the cost, the cobalt content have been reduced;

• The nickel hydroxide production is about 11000 tonnes, even so China still need to import some for high quality Ni-MH battery;

•As to the Lithium cobalt oxide,China own a large capacity, but the actual production is about 6700 tonnes in 2006.

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10000

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14000

2002 2003 2004 2005 2006

Nickel Foam(*10000 m2)

Hydrogen Strorage Alloy(t)

Nickel Hydrate(t)

Lithium Cobalt Oxide(t)



ConsumptionProduction of bonded diamond in China (Million Carat）

•The bonded diamonds output of China in 2006 is 3.3 billion Carat, ranking the first in the world, cobalt plays a role as catalyst in diamond industry. But in recent years, due to the advanced property of powder catalyst, some catalyst producers began to produce powder catalyst which doesn’t contain cobalt;and due to the high nickel price, some producers begun to recycled the waste catalyst. Because of the above two reasons, cobalt consumption in this field has reduced dramatically under 100 tonnes in 2006.

Source: Antaike

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2006



ConsumptionCobalt Consumption in Magnetic Alloys(tonnes),1990-2005

Source: Antaike

•The cobalt consumption in magneticalloys mainly focus on the Alnico production.

In 2006, the Alnico production in China was 3400 tonnes, almost half of the world total output, which consumed 700 tonnes cobalt metal; •The production of Sm-Co magnet was 800 tonnes in 2006, which consumed 480 tonnescobalt. Adding some cobalt metal consumed in NdFeB magnet,the total cobalt consumption in magnet field was nearly 1200tonnes in 2006, increasing by 11.1% y-y;•In recent adjustment of tax rebate, that of magnet had been lifted to 17%, which will simulate the cobalt consumption in this field.

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Alnico

So－Co

Co Cons.

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ConsumptionCobalt Consumption in Ceramics & Enamels

•Both glass and ceramic tile industry are the conventional fields of cobalt consumption, due to the surge of real estate development in recent years, the cobalt usage in glazing and bepainting seems to be keeping at a steady growing rate in China. But some industry insides express, their requirement for the raw material is correspondingly not higher,and the entrance doorsill is lower.So there are plenty supply in the market. It is estimated that the cobalt consumption in this field is about 1500 tonnes in 2006, increasing by 4.8% y-y

•Meanwhile in the recent tax rebate adjustment, that of glass and ceramic tile had been reduced to 8% and 11% from 13% respectively. The profit of glass and ceramic tile producers will be squeezed, which will bring negative effect on the cobalt consumption in this field.



Consumption

Although China contribute little to cobalt consumption in super alloy field, from 2004-2005, China ordered a number of airplanes from Airbus and Boeing, which stimulate the cobalt consumption indirectly:

On Oct.26th , Boeing forecast China will need 2900 crafts in the coming 20 years, and among all 12000 Boeing crafts operating all over the world, there are more than 4100 crafts with parts made in China,occupied 34%.

On Oct. 27th, , National Aviation Equipment Import and Export Corp.,sighed a MEMO with Airbus in Beijing, to book 170 crafts from Airbus;

All these will support the high grade cobalt metal consumption steadily.



ConsumptionForecast of China cobalt consumption(tonne)

Source: Antaike

2001-2005 2005-2010averagegrowth rate ％

averagegrowth rate％

Total 11031 27 7.6 15947Cementd Carbide 1305 5.8 8 1917Magnet 1080 8.7 3 1252Metallurgical 262 15 5 334Petro catalyst 965 24.6 7 1353

Ceramics & Enamels 1430 12.3 4 1740

Drier 333 35 10 536Diamond catalyst 215 -1.8 -25 51

Battery 5441 61.5 10 8763

2005 2010

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TradeImports of Cobalt Concentrate, 1991-2006(tonnes)

17216951214246914913 494 2,7877,57316,038

29,22241,100

63,000

143594

199146

160000

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

1992 1994 1996 1998 2000 2002 2004 2006

Of course China still import large quantity of cobalt concentrate from Africa to refine, the total refine capacity nearly reach 30,000tonne/a in 2006, due to lack of enough ore or the sales channels to the international market, not all these capacity have been fully run.There are so many Chinese companies which want to import concentrate from Africa, giving the owner the chance to bid up the price. Now some Chinese companies have to cut production to avoid more loss. The imported cobalt concentrate will drop to 160000 tonne in 2006.

Source: Antaike

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TradeImports and exports of cobalt matte,unwrought

cobalt and scraps, powder1992-2006(tonnes)

675350 288

959

377 460 510

1,288

1,987

2,914

146

4,100

236

3500

13461621

1852

2793

1726

3900

2800

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4500

1992 1994 1996 1998 2000 2002 2004 2006

importsexports

•It is obvious that imported cobalt metal has dropped a lot since 2002, notwithstanding, most of which are cobalt Blance among. In the first eight months of 2006,70% is cobaltBlance;•And from the export side,almost 50% are cobalt powder, and the balance is cobalt metal;•Few Chinese companies take cobalt metal to produce cobalt oxide or cobalt powder,instead by processing ore. But due to the high ore price, some producers come back to use cobalt metal to produce powder in 2006.

Source:China Custom

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TradeExports of some kinds of cobalt salts(tonnes)

China import cobalt concentrate and process into many kinds of cobalt salts,which not only meet the domestic demand, but also be exported to the international market. But the exports has begun to reduce because of the decreasing demand for cobalt salts and high ore price.

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2002 2003 2004 2005 2006

cobalt chloride

cobalt carbonatecobalt oxalate

Source:China Custom



CompetitivenessStrength• China owned rather mature hydrometallurgical technology of cobalt production, and can provide whole set equipments and cheap relating assistant raw material; and most cobalt products can find the down stream customers in China;

•After China entering WTO, most of Chinese companies can take part in the global competition according to the international trade rules, and most of them have good credit in the international market;

• China owns a number of low-cost but skilled labors.

China’s refinery cobalt production share in the world

Source:China Custom

0.0740.089 0.098

0.183

0.2760.297

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

2001 2002 2003 2004 2005 2006



Competitiveness

Weakness:The most obvious one is lack of enough cobalt resources. So many Chinese companies got raw material at high price, while their products sold at a rather lower price to compete each other, which had hurt their development potential in long term. So there must be some large scaled and powerful Chinese cobalt companies to join the international competition.

Opportunity:China will still keep the GDP growth rate at 7.5% in the “Eleventh Five Years Plan”(2006-2010), accordingly the cobalt consumption will still keep at a steady growing rate, our estimation is 7.6% (average annual growth rate) to 15947 tonnes till 2010, so China continue to be a leading cobalt consumption country;

Risk: To secure enough raw material, some Chinese companies have to dispose a range of cobalt contained scraps,which have some negative affect on the environment;



Threat: China over depends on Africa in importing cobalt concentrate, the political and

economic situation in this region have important affect on the raw material supply.

Competitiveness

Percentage of China imported cobalt concentrate fromAfrica ％

69

57

70

88 8992 92

50

55

60

65

70

75

80

85

90

95

2000 2001 2002 2003 2004 2005 2006

Source: Antaike



Conclusions

•Though China is lack of cobalt raw material, thanks to the factors of market share of production and consumption, technology and the labor cost, China has become and will continue to be the most active factor in world cobalt market;

So many Chinese companies got raw material at high price, while their products sold at a rather lower price to compete each other, which had hurt their development potential in long term. Through fury inner competition, there must appeared some large scaled and powerful companies to join the international competition.

•Cobalt price will keep a rather steady level in near future, so the possibility of substitution of cobalt application is little, which provide more development room for China cobalt industry.



Thank you!



china s role in world cobalt market · battery began to slide since 2004, its market share have...

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