With the Spring Festival holiday approaching, SMM investigated the holiday situation of lithium salt production enterprises. According to statistics, about half of the manufacturing enterprises will continue to produce normally, and the remaining enterprises have vacation plans ranging from one week to one month. According to a large lithium salt production plant, the main reason for its shutdown is to take advantage of the Spring Festival holidays for machine maintenance.

In January, the lithium salt production enterprises basically maintained normal production until the end of the month, and the output did not change significantly compared with December. In February, due to the shutdown of some enterprises during the Spring Festival holidays, lithium carbonate production is expected to be 0.86 million tons, a 23.2% decrease in ring-to-ring ratio, and lithium hydroxide production is expected to be 0.42 million tons, a 34.3% decrease in ring-to-ring ratio.

According to lithium carbonate manufacturers, demand for lithium carbonate is good this week. Although there are few spot transactions, the demand of long-order customers is stable, and orders in February have basically been signed, and prices are expected to remain stable in the near future. Qinghai’s industrial-grade lithium carbonate production enterprises revealed that the logistics in Qinghai is expected to be out of service around January 20, so this week they are actively shipping, with almost no inventory. The downstream cathode material manufacturers also indicated that the upstream lithium carbonate supply was slightly tight.

Compared with lithium carbonate, the market for lithium hydroxide is slightly bleak – unlike lithium carbonate sales, lithium hydroxide has fewer transactions and lower prices than before, according to some companies that produce and sell lithium carbonate and lithium hydroxide. At present, the price of industrial lithium hydroxide is about 80,000 yuan/ton, the price of battery-grade coarse lithium hydroxide is about 100,000 yuan/ton, and the price of battery-grade fine lithium hydroxide is about 110,000 yuan/ton.

We believe that there are two reasons for the recent decline in the price of lithium hydroxide: 1) Battery grade lithium hydroxide is currently mostly used in 622 ternary materials, and the demand for high nickel ternary materials is not yet in the beginning. In the demand of lithium salt for 622 ternary materials, lithium carbonate and lithium hydroxide are substitutes for each other. Because battery-grade lithium carbonate and battery-grade lithium hydroxide have had premiums since last year, downstream cathode material manufacturers are considering costs, reducing the use of battery-grade lithium hydroxide. 2) The new production capacity of upstream lithium hydroxide enterprises has a great impact on the supply and demand of lithium hydroxide.

According to preliminary accounting, the gross domestic product in 2018 will reach 90,030.9 billion yuan, an increase of 6.6% over the previous year in terms of comparable prices, and the expected development goal of about 6.5% has been achieved.

In 2018, the utilization rate of industrial capacity in China was 76.5%, down 0.5 percentage points from the previous year. Among them, the productivity utilization rate of coal mining and washing industry is 70.6%, which is 2.4 percentage points higher than the previous year.

In the whole year of 2018, the value-added of industries above scale increased by 6.2% year on year, and the growth rate dropped by 0.1 percentage points from January to November. In 2018, China produced 3545.91 million tons of raw coal, an increase of 5.2% over the previous year. Among them, 32.038 million tons were completed in December, an increase of 2.1% over the same period last year. The annual output of other major products: power generation 6791.4 billion kWh, an increase of 6.8%, crude steel 928.26 million tons, an increase of 6.6%, steel 115.52 million tons, an increase of 8.5%, coke 438.2 million tons, an increase of 0.8%, flat glass 868.64 million weight boxes, an increase of 2.1%.

On January 22, the inventory of zinc ingots in London LME market was 118825 tons, with a decrease of 1100 tons, representing a decrease of 0.92%.

On January 22, 118825 tons of LME zinc ingots were in stock, including 79 725 tons of registered warehouse receipts and 39 100 tons of cancelled warehouse receipts, accounting for 32.91%.

The environmental protection policy of 2018 has accelerated the development of domestic natural gas market. PetroChina’s research institutes estimate that natural gas consumption will reach 276.6 billion cubic meters in 2018, with an annual increase of more than 39 billion cubic meters, an increase of 16.6%, accounting for nearly 8% of total primary energy consumption.

On January 16, the Institute of Economic and Technological Research of China Petroleum Group issued the Report on the Development of the Domestic and Foreign Oil and Gas Industry in 2018 (hereinafter referred to as the Report). It said that due to the dramatic growth of China’s natural gas consumption demand, China’s external dependence on natural gas increased significantly in 2018. In that year, China’s natural gas import volume was expected to reach 125.4 billion cubic meters, an increase of nearly 30 billion cubic meters, and its external dependence was 45.3 Increase by 6.2 percentage points.

In the whole year of 2018, the “off season is not weak” feature is prominent. In the second quarter, natural gas consumption reached 61.8 billion cubic meters, an increase of 11.5 billion cubic meters. Sun Wenyu, a researcher at the Institute of Natural Gas Market Research, China Petroleum Research Institute, said that this was mainly due to the release of demand for non-residential gas in industry, power generation, chemical industry and a large number of coal-to-gas projects completed at the end of last year after the first quarter of the heating season “pressure non-resident protection” (pressure non-residential gas, protection of people’s livelihood gas).

The report predicts that the domestic demand for natural gas will continue to grow rapidly in 2019, but the growth rate will decline somewhat, and the import volume will continue to grow at a relatively fast rate.

“Coal to Gas” Increment Around Bohai Sea Raises Demand by a Large margin

Sun Wenyu introduced that the growth rate of different regions is different, among which, the Bohai Rim region grew by nearly 23%, mainly driven by coal-to-gas conversion of residents, heating, industry, commerce and public services in “2 + 26 cities”, with an estimated annual consumption of 59 billion cubic meters. Take Hebei Province as an example, the consumption increment exceeds 3 billion cubic meters. The Yangtze River Delta region is mainly driven by natural gas power generation, and its consumption is estimated to be 48 billion cubic meters. Overall, consumption growth in the central and eastern regions is relatively fast, while that in the western regions, especially in the Northwest regions, is slightly slower.

According to the use of natural gas, natural gas for power generation is the gas plate with the largest growth rate. The report predicts that in 2018, the gas consumption for power generation will be 61.5 billion cubic meters (22%) with an increase of 23.4%. Industrial and urban gas consumption will be 91.1 billion cubic meters (33%) and 99 billion cubic meters (35.8%) respectively, with an increase of 20% and 16.2% respectively. Chemical gas consumption is the only declining sector, affected by resource constraints and peak shaving, from ascending to descending by 5.1%, reaching 25 billion square meters.

The report predicts that domestic natural gas consumption will exceed 300 billion cubic meters in 2019, an increase of 11.3% over the same period last year. The government’s action plan of “Blue Sky Defense War” will continue to be implemented, and local governments will strengthen the control of loose coal burning. Environmental protection factors will remain the main driving force to promote domestic natural gas demand in the short term. In addition, due to the comprehensive role of policies in favor of small and medium-sized enterprises and stricter environmental protection, the upgrading of major gas industries such as building materials, metallurgy and chemical industry has also increased the demand for gas. But the growth rate is down 5.2 percentage points from 2018.

External dependence continued to expand

The external dependence of natural gas increased further to 45.3% in 2018, an increase of 6.2 percentage points over the same period last year. According to the report, natural gas imports in 2018 are expected to reach 125.4 billion cubic meters, an increase of nearly 30 billion cubic meters, which is the main source of domestic consumption growth. Central Asian pipeline gas and liquefied natural gas account for 17.2% and 26% of imports, respectively. The growth rate of imported pipeline gas is nearly 21%, expected to reach 52 billion cubic meters, mainly from Kazakhstan and Uzbekistan; LNG import growth is more rapid, due to market demand increases, new LNG receiving stations put into operation, new contracts entering the implementation window and other effects, it is estimated that the annual import volume of LNG will reach 54 million tons (about 73.4 billion cubic meters), an increase of 41.1% over the previous year, mainly from Australia and Kazakhstan. Tar and Indonesia, of which Australia accounts for 42% of LNG’s total imports.

The report predicts that domestic natural gas production will reach 157.3 billion cubic meters in 2018, with an increase of less than 10 billion cubic meters and a growth rate of less than 7%, which is much lower than the growth of consumption. From the point of view of gas separation sources, the production and growth of CBM and CBM are slightly slower, and the production of shale gas has increased significantly. In 2018, the production exceeded 11 billion cubic meters, with a growth rate of 22.2%.

According to the report, domestic natural gas production is expected to exceed 170 billion square meters in 2019, up 8.6% from the same period last year, as oil companies respond to the state’s request to increase investment and workload in exploration and development. The new LNG receiving station production line will be put into operation and the East China-Russia line will be put into operation soon, with imports expected to reach 143 billion square meters, up 14% from the same period last year, and the degree of dependence on foreign countries will continue to increase.

In terms of import costs, in addition to the factors driving up demand, it is also affected by the year-round rise in oil prices. According to the report, the average CIF price of domestic LNG increased by more than 19% from January to November 2018, equivalent to 2.19 yuan per cubic meter. The average CIF price of pipeline gas imports increased by nearly 10%, about 1.49 yuan per cubic meter.

In the international market, LNG prices in the Asia-Pacific market rose significantly in 2018. The average import price of LNG in Northeast Asia was US$9.41 per million British heat units, up 23.3% year on year, mainly driven by demand. The average spot price of LNG in Northeast Asia was $9.87 per million British heat, up 43.3% year-on-year. Especially in October, importing countries replenished their winter stocks in advance, and the average monthly price once rose to $11.6 per million British heat. After the fourth quarter, due to mild weather, adequate inventory and capacity constraints at receiving stations, spot demand was weak and the average price was maintained at $11 per million, which was below market expectations.

The Impact of Sino-US Trade Friction

As one of the fastest growing countries in natural gas demand, China is a major potential buyer of natural gas in the United States. The United States is more demanding to expand exports of energy products such as oil and natural gas to China and reverse the trade deficit, but trade frictions have brought greater uncertainty. Since 2018, trade frictions between China and the United States have been escalating. The United States has imposed tariffs on Chinese imports. China has also taken counter-measures, including a 10% tariff on LNG imports from the United States since September 24, 2018.

North America is the fastest growing region of natural gas production in the world. In 2018, its natural gas production was about 1.1 trillion cubic meters, an increase of 9.1%. Among them, the output of the United States exceeded 900 billion cubic meters, an increase of 11%.

The export scale of liquefied natural gas (LNG) in the United States continues to expand. In 2018, US LNG exports reached 21.15 million tons, up 63.2% year on year.

According to statistics in the Report, China imported 2.26 million tons of LNG from the United States in 2018, accounting for only 4% of China’s LNG imports and 12% of the U.S. LNG exports. China has become the top three destinations for U.S. LNG exports. The export capacity of LNG in the United States will also increase dramatically. It is expected to reach 66.2 million tons/year by 2020. Trade friction will make the United States seek other markets than China. However, the competition of multi-gas sources in Europe will intensify. The development of renewable energy will also bring challenges to the growth of natural gas demand. The demand increment of other Asian countries is limited. It is difficult for the United States to expand the market outside China in the short term, and project financing will face. Challenge.

China Petroleum Group Economic and Technological Research Institute believes that trade frictions may force Chinese enterprises to choose more LNG resources from Qatar, Australia, Russia and Africa. Sino-US enterprises may miss the opportunity period of signing long-term contracts, which will damage the common interests of both countries.

Natural gas practitioners in China and the United States need to wait for the conclusion of the 90-day negotiation period between the Chinese and American governments. However, the biggest source of new natural gas supply in 2019 is the United States and Russia, which are complementary and game-playing between China and the United States and Russia. According to the third-party data cited in the report, the United States will put several LNG export projects into operation, and the export capacity is expected to increase by 160%. Russia has three natural gas pipelines, Beixi 2, Turkish Current and China-Russia Eastern Line, built and put into operation, with a total transmission capacity of 156 billion square meters per year, and the pipeline’s natural gas export capacity will increase by 60%. In the future, Russia’s Yamal LNG project will bring about an increase in exports. 。 The growth of the United States and Russia is expected to have a significant impact on the global natural gas trade pattern.

On January 14, the website of the Ministry of Commerce announced that Zhejiang Petroleum Co., Ltd. had applied for the import qualification of non-state-owned crude oil trade to enter a 10-day publicity period. Following the announcement by the Ministry of Commerce on February 24, 2018, of the qualifications and procedures for enterprises in the China (Zhejiang) Free Trade Pilot Area to apply for imports of crude oil from non-state-owned trade, China National Product University will soon become the first trading enterprise in Zhejiang to obtain import qualifications of crude oil from non-state-owned trade.

The General Plan for China (Zhejiang) Free Trade Pilot Zone issued by the State Council on March 15, 2017, proposes to relax the qualification and quota limits (allowances) of crude oil and refined oil, and support the granting of crude oil import and use qualifications to enterprises in two or three free trade pilot zones that meet the requirements. According to the relevant person in charge of Zhoushan Business Bureau, the application for import qualification of non-state-owned crude oil trade is aimed at non-specific objects, allowing the qualified trading enterprises to declare. Since then, a number of enterprises that have met the application conditions are eager to try.

Industry experts believe that approving the qualifications of non-state-owned trading enterprises for importing crude oil is not only conducive to competition with traditional crude oil importing enterprises, but also a part of oil and gas import and export reform. Increasing the number of non-state-owned trading enterprises qualified to import crude oil can also increase the activity of crude oil futures market and help Shanghai crude oil futures market.

Jin Lianchuang believes that China’s acquisition of import qualifications for non-state trade in crude oil by China National Petroleum Development Corporation will expand the main body of non-state trade and help to enhance market vitality. On the other hand, it will be another major breakthrough since the opening of bonded market in Zhejiang Free Trade Zone. Most importantly, it will promote the development of investment facilitation and trade liberalization of commodities dominated by oil industry chains.

It is understood that the target of Zhejiang FTA is Singapore’s whole oil industry chain. Zhoushan will also undertake the task of reaching 100 million tons of national strategic oil reserves in 2030, that is, 90 days of strategic oil reserves. As far as the land and sea areas under Zhoushan are concerned, up to now, no exploration has shown oil or gas reserves. Some media have marveled that Zhejiang FTA is to build a strategic highland of China’s petroleum in a non-oil-producing area. Achieving such a strategic vision requires not only strategical planning, but also strategically advancing to occupy the commanding heights through innumerable battle victories and tactical combinations. The import qualification of non-state-owned crude oil trade took the lead in breaking the ice in the whole country, which undoubtedly took a solid step towards the goal of building Zhoushan whole oil product industry chain.

Vietnam Economic Times reported on Jan. 15 that Vietnam Customs Bureau statistics showed that in 2018 Vietnam imported 11.43 million tons of refined oil, a decrease of 11% compared with the same period last year; the total imported value was 7.6 billion US dollars, an increase of 8.6% compared with the same period last year. The average price of imported oil is $668.2 per ton.

Malaysia is the largest supplier of oil products in Vietnam. During the year, Vietnam imported 32.8 million tons of oil from Malaysia (28.7% of the total imports) and imported 2.05 billion US dollars, up 25.8% and 64.5% respectively from the same period of last year; Korea ranked second, Vietnam imported 2.42 million tons of oil from Korea (21.2%) and imported 1.79 billion US dollars, down 20% and 6% respectively; Singapore ranked third, imported and imported points. They were 2.4 million tons and $1.53 billion respectively, both of which declined significantly from the same period last year. The other import sources are China (Mainland), Thailand, Russia and Hong Kong, China according to the statistics of import volume. Among them, 1.4 million tons of oil are imported from China (Mainland), with imports of US$1 billion, up 49% and 93% respectively from the same period last year.

Philippine nickel miner Global NiFe Holdings Ltd. said Thursday (January 17) that it plans to ship 5.7 million wet tonnes of nickel ore to China this year, the same as in 2018. Demand is expected to slow down as China’s economic downward pressure increases.

The Philippines is the world’s second largest supplier of nickel ore, after Indonesia. Dante Bravo, president of Global Ferronickel, said that despite the slowdown in China’s growth momentum, his company still expected to make profits this year.

Turquoise Hill Resources (TSX: TRQ), owner and operator of Mongolia’s much-watched OyuTolgoicoppermine, said the copper mine’s copper and gold production targets in the last quarter of 2018 had exceeded expectations.

In a report released Thursday (January 17), the company reported that its Mongolian business exceeded its copper production expectation of 2018 by 2.6% to 159,100 tons and gold production expectation by 1.8% to 285,000 ounces.

Emerald Mountain Resources also released its operational guidance data for 2019. The goal is to achieve copper production of 125,000-155,000 tons and gold production of 180,000-220,000 ounces as the development of the project continues until the end of the year.

“In 2019, horizontal underground development is expected to advance 15 to 16 kilometers.”

Santiago, Jan. 19, Chile’s National Copper Commission (Cochilco) said on Friday that it maintained its forecast of an average copper price of $3.05 per pound this year because of lingering concerns over the Sino-US trade dispute.

China is the largest copper consumer in the world.

Baldo Prokunca, Chile’s mining minister, said uncertainty associated with Britain’s withdrawal from Europe also had an impact on copper prices because the “British withdrawal” would increase volatility in financial markets and reduce investment in commodities.

Chile is the world’s largest producer of copper.

Last week (Jan. 7 – Jan. 11), TRADERS’shipment awareness increased and the price of potassium chloride eased slightly. On January 14, China’s Wholesale Potassium Chloride Price Index (CKPI) was 2321.33 points, down 5.65 points, or 0.24%. It rose 263.39 points, or 12.80%. It fell 969.26 points, or 29.46%, compared with the base period.

Supply Situation: In terms of domestic potassium, Salt Lake units are operating normally, and the start-up rate of small factories in Qinghai maintains a low level; the arrival price of 60% crystal powder of Qinghai Salt Lake benchmark products is 2420 yuan/ton, and the regional turnover price is about 2350-2400 yuan/ton. On the import of potassium, new sources of goods such as North China have arrived at the port one after another, and the port stock has increased to about 1.59 million tons; TRADERS’awareness of cash delivery has increased, and the mainstream quotation of 62% Russian-Belgian potassium in the port has been loosened, falling to about 2550-2580 yuan/ton. As for potassium frontier trade, the market has less supply and general stock. The quotation of 62% Russian-white potassium has stabilized, and maintained at about 2250-2300 yuan/ton.

Demand: Fall fertilizer use in agriculture has ended, spring tillage fertilizer has not yet opened, the demand for potassium fertilizer is cold. Affected by haze and other weather, the start-up of enterprises continued to be limited. The overall start-up rate of compound fertilizer enterprises decreased by 0.89 percentage points to 36.07% from the previous week, which was 6.07 percentage points lower than the same period last year. The downstream demand was weak, the shipment of compound fertilizer enterprises was not smooth, and the demand for raw materials was light.

International market: International potassium chloride prices were basically stable last week. In South America and Southeast Asia, the actual demand for potassium fertilizer is less, and the price is temporarily stable. The off-shore price of potassium chloride in Canada and Russia increased by 3 US dollars/ton at the high end and 3 US dollars/ton at the low end, which were 263-308 US dollars/ton and 244-316 US dollars/ton respectively; the off-shore price of potassium chloride in Jordan increased by 1 US dollar/ton to 273-293 US dollars/ton at the low end; the off-shore price of potassium chloride in Israel dropped by 1 US dollar/ton at the high end and 1 US dollar/ton at the low end, which was 273-317 US dollars/ton in Southeast Asia and Brazil; Prices remained stable, ranging from $300 to $320 per ton and $350 to $355 per ton, respectively.
Table 6: International Potassium Chloride Price Change Table
product                         region     Range of rise and fall(US Dollars/Tons)   Spot price (US dollar/ton)
2019-1-10      2019-1-3
potassium chloride (FOB bulk) Canada       _3-3                                         263-308        260-305
Russian Federation   4-2                                        244-316        240-314
Jordan                     _1-1                                        273-293        272-294
Israel                       _1-1                                       273-317        274-318
CFR Southeast Asia     0-0                                        300-320        300-320
CFR Brazil                  0-0                                        350-355       350-355

Source of data: collated according to relevant materials

Domestic market: The domestic market price of potassium chloride is basically stable in the near future. According to the monitoring data of the association, the wholesale price of domestic potassium chloride in all provinces dropped 45.8 yuan/ton compared with the previous week, while the prices of other provinces remained stable; the wholesale price of imported potassium chloride in all provinces increased 20 yuan/ton in Shanghai compared with the previous week, and the price of Hubei fell 6.4 yuan/ton compared with the previous week, while the prices of other provinces remained stable.
Table 7: Price Change Table of Potassium Chloride in China
Varieties
Province
2019-1-10
(yuan/ton)
2018-1-3
(yuan/ton)
Up and down
(yuan/ton)
Ring ratio
Wholesale price of domestic potassium chloride
Hubei
2,416.7
2,462.5
- 45.8
- 1.9%
Wholesale price of imported potassium chloride
Shanghai
2,230.0
2,210.0
20
0.9%
Hubei
2,693.6
2,700.0
- 6.4
- 0.2%

Data Source: China Agricultural Circulation Association

In the domestic market, port potassium arrived one after another, and large traders increased their shipments. The start-up rate of compound fertilizer enterprises remained low, the demand for potassium fertilizer was weak, and the price of potassium chloride was slightly loosened. With the increase of potash TRADERS’shipment speed and the increase of spot market circulation, the demand of downstream compound fertilizer is weak, the enterprise’s inventory is increasing, and the demand of potash fertilizer is difficult to improve in the short term. In the international market, the demand of Southeast Asia and other regions is delayed, and the international price is temporarily stable. In summary, it is expected that the domestic price of potassium chloride will be slightly loosened in the short term, focusing on the arrival of potassium in ports and domestic demand.