platts steel & ferroalloys conference - 2005 presented june 14, 15, 2005 by zigong international...
TRANSCRIPT
Platts Steel & Ferroalloys Conference - 2005
Presented June 14, 15, 2005 by Zigong International Marketing, LLC421 High Street, Fairport Harbor, OH 44077, USA
China Tungsten
Today
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Zigong International Marketing, LLCZigong International Marketing, LLC
JV subsidiary of the Zigong Cemented Carbide Company (ZCCC)
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Zigong International Marketing, LLCZigong International Marketing, LLC
JV subsidiary of the Zigong Cemented Carbide Company (ZCCC)
ZCCC is the second largest producer of carbide products in China and in the top 15 world wide
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Zigong International Marketing, LLCZigong International Marketing, LLC
JV subsidiary of the Zigong Cemented Carbide Company (ZCCC)
ZCCC is the second largest producer of carbide products in China and in the top 15 world wide
Exports more than 3,000 mt of tungsten products annually
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Zigong International Marketing, LLCZigong International Marketing, LLC
JV subsidiary of the Zigong Cemented Carbide Company (ZCCC)
ZCCC is the second largest producer of carbide products in China and in the top 15 world wide
Exports more than 3,000 mt of tungsten products annually
4,000 mt carbide capacity, over 3,000 employees
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Tungsten in ChinaTungsten in China
Considered a National Strategic Material
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Tungsten in ChinaTungsten in China
Considered a National Strategic Material
Identified as a “State Trading Commodity” by the WTO
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Tungsten in ChinaTungsten in China
Considered a National Strategic Material
Identified as a “State Trading Commodity” by the WTO
Exports controlled by licenses starting in 2001/APT/AMT/BTO/YTO/W/WC/Cast/scrap/SW/ CaW/W Acid
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Tungsten in ChinaTungsten in China
Considered a National Strategic Material
Identified as a “State Trading Commodity” by the WTO
Exports controlled by licenses starting in 2001/APT/AMT/BTO/YTO/W/WC/Cast/scrap/SW/ CaW/W Acid
Majority of world tungsten supply and resources are from or in China (75%)
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Ran out of licenses in October 2004
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Ran out of licenses in October 2004
First half 2005 12,100 mt vs. 11,500 mt in 2004
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Ran out of licenses in October 2004
First half 2005 12,100 mt vs. 11,500 mt in 2004
Total 2005 to be slightly lower than 2004
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Ran out of licenses in October 2004
First half 2005 12,100 mt vs. 11,500 mt in 2004
Total 2005 to be slightly lower than 2004
We expect a license shortage later in 2005
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
License SituationLicense Situation
17,000 mt in 2001
16,200 mt in 2004
Ran out of licenses in October 2004
First half 2005 12,100 mt vs. 11,500 mt in 2004
Total 2005 to be slightly lower than 2004
We expect a license shortage later in 2005
Only a few companies have access to these licenses – Minmetals/Xiamen/Zhou Zhou/ Zigong/Nanchang are the primary exporters
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Export Statistics: Q1 2004 vs. Q1 2005Export Statistics: Q1 2004 vs. Q1 2005
2004 2005 (mt of material)
APT/AMT/ST 1,502 1,301
YTO/BTO/Acid 2,217 1,921
W/WC/Cast 888 1,071
FeW 1,079 881
Totals 5,686 5,234
(Source: Mr. Fang Jinyun, Minmetals Head Office, Beijing) Thanks Fang.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
3. Purchased by new owners (Minmetals)
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
3. Purchased by new owners (Minmetals)
4. Miners realized they really control the market
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
3. Purchased by new owners (Minmetals)
4. Miners realized they really control the market
5. Need to make money after years of suffering
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
3. Purchased by new owners (Minmetals)
4. Miners realized they really control the market
5. Need to make money after years of suffering
6. Lack of Water
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
1. Demand (oil/coal/global/China growth)/ Supply Balance
Mines:
2. Shut for Environmental Adjustment
3. Purchased by new owners (Minmetals)
4. Miners realized they really control the market
5. Need to make money after years of suffering
6. Lack of Water
7. Lack of Electricity
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
(continued)
8. Few new resources being developed
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
(continued)
8. Few new resources being developed
9. No one believed the warning signs (lean craze)
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Top 10 Reasons Top 10 Reasons Tungsten Price Has IncreasedTungsten Price Has Increased
(continued)
8. Few new resources being developed
9. No one believed the warning signs (lean craze)
10. Speculators, greed
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Consumer inventories are in general, low
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Consumer inventories are in general, low
Speculators still active/traders reenter the market
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Consumer inventories are in general, low
Speculators still active/traders reenter the market
Prices for YTO/BTO over $300 per MTU
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Consumer inventories are in general, low
Speculators still active/traders reenter the market
Prices for YTO/BTO over $300 per MTU
Near by shortage situation should remain until the fall
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Current Supply and Price SituationCurrent Supply and Price Situation
Supply chain from China to west is empty
Consumer inventories are in general, low
Speculators still active/traders reenter the market
Prices for YTO/BTO over $300 per MTU
Near term shortage situation should remain until the fall
No near term reason for prices to decline significantly
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
The DLA & Chinese National StockpileThe DLA & Chinese National Stockpile
The US DLA stockpile of tungsten, while huge, is of declining quality and of little benefit to most global tungsten concentrate consumers.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
The DLA & Chinese National StockpileThe DLA & Chinese National Stockpile
The US DLA stockpile of tungsten, while huge, is of declining quality and of little benefit to most global tungsten concentrate consumers.
Releasing more material from the DLA is not a solution. Few can use it/time to market/no price relief.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
The DLA & Chinese National StockpileThe DLA & Chinese National Stockpile
The US DLA stockpile of tungsten, while huge, is of declining quality and of little benefit to most global tungsten concentrate consumers.
Releasing more material from the DLA is not a solution. Few can use it/time to market/no price relief.
China has a stockpile. Is strategic in nature and not for market interventions.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
The DLA & Chinese National StockpileThe DLA & Chinese National Stockpile
The US DLA stockpile of tungsten, while huge, is of declining quality and of little benefit to most global tungsten concentrate consumers.
Releasing more material from the DLA is not a solution. Few can use it/time to market/no price relief.
China has a stockpile. Is strategic in nature and not for market interventions.
Stockpiles are really bad for markets and producers.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw materialprices into higher finished goods prices. A major increase incemented carbide prices needs to take place.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw material prices into higher finished goods prices. A major increase in cemented carbide prices needs to take place.
Some companies could run out of material. However, where there is a high price, there is a way.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw material prices into higher finished goods prices. A major increase in cemented carbide prices needs to take place.
Some companies could run out of material. However, where there is a high price, there is a way.
As the supply and demand remain close to balanced, price volatility will exists.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw material prices into higher finished goods prices. A major increase in cemented carbide prices needs to take place.
Some companies could run out of material. However, where there is a high price, there is a way.
As the supply and demand remain close to balanced, price volatility will exists.
What goes up must come down- the bubble will burst.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw material prices into higher finished goods prices. A major increase incemented carbide prices needs to take place.
Some companies could run out of material. However, where there is a high price, there is a way.
As the supply and demand remain close to balanced, price volatility will exists.
What goes up must come down- the bubble will burst.
License situation will be critical later in the year.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
Results and ImplicationsResults and Implications
The costs of doing business has tripled. A container of Blue Oxide used to cost $200k, it now cost $600k.
Carbide companies failed to translate increasing raw material prices into higher finished goods prices. A major increase in cemented carbide prices needs to take place.
Some companies could run out of material. However, where there is a high price, there is a way.
As the supply and demand remain close to balanced, price volatility will exists.
What goes up must come down- the bubble will burst.
License situation will be critical later in the year.
LMB and other publications no longer reliable indicators of price.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
SolutionsSolutions
1. Ore prices which justify future resource development.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
SolutionsSolutions
1. Ore prices which justify future resource development.
2. Better Supplier / Consumer relationships.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
SolutionsSolutions
1. Ore prices which justify future resource development.
2. Better Supplier / Consumer relationships.
3. Pricing structures which allow profitability at all levels.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
SolutionsSolutions
1. Ore prices which justify future resource development.
2. Better Supplier / Consumer relationships.
3. Pricing structures which allow profitability at all levels.
4. More accurate mechanism for material pricing besides publication reports.
Platts Steel & Ferroalloys Conference - June 2005
Zigong International Marketing, LLC
SolutionsSolutions
1. Ore prices which justify future resource development.
2. Better Supplier / Consumer relationships.
3. Pricing structures which allow profitability at all levels.
4. More accurate mechanism for material pricing besides publication reports.
5. As the cemented carbide industry consolidates into a few huge global companies and a smattering of regional companies, change will have to come in the supply chain.
Platts Steel & Ferroalloys Conference - 2005
Presented June 14, 15, 2005 by Zigong International Marketing, LLC421 High Street, Fairport Harbor, OH 44077, USA
Thank You!