Interpretation includes: the nonferrous metals industry, the lead-zinc industry, the rare-earth industry, the tungsten-molybdenum industry, the nickel industry, and the tin-antimony industry.

 

 

Analysis and Forecast of Industry Development in 2017

 

　 Affected by improvements in supply and demand and a rebound in prices, the nonferrous metals industry performed better than expected in 2016. In December, the China Economic Research Center’s Nonferrous Metals Industry Prosperity Index stood at 31.1, up 1.3 points from the previous month, returning to the “normal” range and continuing its upward trend. Looking ahead to 2017, although the global oversupply situation for major nonferrous metals has yet to be fundamentally reversed and the market environment remains challenging, the most difficult phase of this cycle has already passed, and the industry as a whole is now in a weak but stabilizing bottoming-out phase.

　　I. Current Supply and Demand Situation in Domestic and International Nonferrous Metal Markets

　　Since 2016, China’s stable economic growth has enabled domestic consumption of major nonferrous metals to maintain its upward momentum, significantly improving market expectations and demonstrating that China remains a key driver of global economic development. From an international perspective, the occurrence of “black swan” events such as Brexit and the election of Trump has triggered international financial turmoil, prompting capital to shift back from virtual markets to the real economy. As a result, the situation in the commodity markets has undergone a dramatic reversal, with prices halting their decline and beginning to rebound. Against this backdrop, “shorts” in the global major nonferrous metal markets have been hit hard, while “longs” have regained vigor. In the domestic market, the average annual spot price of copper was 38,126 yuan per ton, down 6.9% from the previous year—a decline that narrowed by nearly 10 percentage points compared to the previous year’s rate of decline. The average annual spot price of aluminum was 12,529 yuan per ton, up 3.0% from the previous year; the average annual spot price of lead was 14,571 yuan per ton, up 11.3% from the previous year; and the average annual spot price of zinc was 16,866 yuan per ton, up 9.0% from the previous year. The magnitude of the price rebound exceeded market expectations.

　　Copper: In 2016, global monthly copper production from mines remained stable above 1.7 million tons, and annual output is expected to exceed 20 million tons, representing an increase of about 5% over the previous year. Due to ample supply, smelting and processing costs rose, stimulating copper smelting production. Global monthly refined copper production exceeded 2 million tons, and annual output is forecast to approach 24 million tons, up roughly 4% from the previous year. This has exacerbated the global oversupply situation and restrained price recovery.

　　Despite oversupply in the market, falling prices, and operational difficulties faced by companies, global copper mining enterprises have not engaged in large-scale production cuts. On the contrary, major companies are adopting measures to increase production and reduce costs, striving to maintain or even expand their market share. The rebound in copper prices is largely driven by rising prices of other metals; copper itself lacks strong intrinsic upward momentum and still has some room for further decline.

　　Aluminum: In 2016, both global aluminum production and consumption showed steady growth. Currently, the world’s monthly primary aluminum output has stabilized above 4.8 million tons, with annual production expected to reach nearly 58 million tons—a 1.2% increase over the previous year. Monthly consumption has remained stable at around 4.8 million tons, and annual consumption is projected to exceed 57.6 million tons, up 0.5% from the previous year. Production slightly exceeds demand, keeping the market broadly in balance.

　　Driven by the rebound in aluminum prices, China has begun ramping up production capacity from newly built and restarted facilities. As supply has noticeably increased, the shadow of oversupply has started to loom over the market, causing aluminum prices to surge and then fall back.

　　Lead: In 2016, the world’s monthly production of refined lead was approximately 900,000 tons, and the annual output is expected to reach around 10.8 million tons, representing a 6.6% increase over the previous year. Monthly consumption exceeded 900,000 tons, with annual consumption totaling roughly 10.9 million tons. This created a supply-demand gap that will need to be filled by existing inventories. As of the end of 2016, refined lead inventories on the London Metal Exchange stood at 195,000 tons, roughly unchanged from the end of the previous year, indicating an overall tight balance in the market.

　　Zinc: In 2016, global mine-produced zinc output averaged around 1.1 million tons per month, while monthly refined zinc production was approximately 1.2 million tons. Annual mine-produced zinc output is projected to reach 13.2 million tons, and refined zinc output is expected to exceed 14.3 million tons, indicating a relatively tight supply of raw materials. On the consumption side, global monthly zinc consumption averaged about 1.15 million tons, with annual consumption forecast to surpass 13.8 million tons, suggesting a relatively ample supply.

　　Nickel: In 2016, global monthly refined nickel production remained roughly stable between 150,000 and 160,000 tons, with annual output reaching approximately 1.86 million tons—a 1.6% increase over the previous year. Monthly consumption hovered around 155,000 tons, and annual consumption totaled about 1.9 million tons, leaving a slight supply-demand gap that was partly offset by existing inventories. As of the end of 2016, nickel stocks on the London Metal Exchange stood at 370,000 tons—though down by 80,000 tons from the beginning of the year, they still remained at a relatively high level. Coupled with about 200,000 tons of inventory in the Shanghai region of China, the situation of oversupply in the market remained severe.

　　II. Assessment of the Domestic and International Nonferrous Metals Markets in 2017

　　Looking ahead to the trends in domestic and international non-ferrous metal markets in 2017, we have the following key observations:

　　First, the situation of oversupply will not improve significantly. Over the past period, China’s sustained growth in demand has driven the continuous expansion of global production capacity for major nonferrous metals. However, as China’s economy enters a “new normal,” the pace of demand growth has slowed, bringing the contradiction of oversupply in the world’s major nonferrous metals into sharp relief. Although India’s production and consumption of nonferrous metals have both shown marked growth in recent years, they still fall far short of becoming a new driving force for industrial development. Therefore, the global oversupply situation in major nonferrous metals will continue to affect China—and indeed the entire world—for an extended period.

　　Second, prices of major nonferrous metals continue to fluctuate at low levels. Currently, both domestic and international market prices for major nonferrous metals are only slightly above the average production cost line. Supported by cost factors, most metal prices have limited room for further substantial declines. However, given the slow progress in the global nonferrous metals industry’s structural adjustment aimed at reducing overcapacity, the large inventories accumulated over the past several years still need to be digested. Under the shadow of oversupply, the upward momentum for most metal prices remains insufficient.

　　Third, the turbulent international political landscape has increased uncertainty in the market. The global economy has now reached another critical juncture. The impact of Brexit is gradually unfolding; the inauguration of U.S. President Trump, the upcoming elections in France and Germany, and South Korea’s initiation of a prime minister impeachment procedure will all bring significant uncertainty to the global political and economic spheres. Trade protectionism is intensifying in developed countries, populism and extreme nationalism are on the rise, and the trend toward reversing globalization has become quite evident. As a result, China’s foreign trade environment will become even more challenging. There is an inverse relationship between the U.S. dollar’s performance and the price movements of major nonferrous metals. The U.S. Federal Reserve’s interest-rate hikes are putting downward pressure on bulk metal prices, which will directly affect the trend of nonferrous metal prices in the international market in 2017.

　　Fourth, the new growth drivers are still insufficient to establish a stable supporting force. At present, China’s nonferrous metals industry has seen some new bright spots and generated several new growth drivers. However, compared with the industry’s overall scale, these new highlights and growth drivers account for only a small proportion. For example, high-end products such as aerospace aluminum alloys and power battery materials are developing rapidly, and rare metals like lithium are in short supply with excellent profitability. Yet, the market size of these products remains limited, making it difficult for them to provide strong support for the industry’s development in the short term. Since the industry’s internal driving forces remain weak, once nonferrous metal prices start to rebound persistently, there is a high likelihood of a resurgence in capacity expansion. Moreover, factors such as international trade tensions, rising energy prices, and heightened expectations of banking risks will all pose challenges to the industry’s steady development.

　　Therefore, the outlook for both domestic and international nonferrous metal markets in 2017 is not optimistic. It is expected that in 2017, the production of the nonferrous metals industry will continue to maintain a moderate but stabilizing trend, with the growth rate of value-added industrial output from nonferrous metal enterprises above designated size likely to remain at around 6%–7%. Production of the ten major nonferrous metals is forecast to continue showing a slight upward trend. Investment in fixed assets within the industry is unlikely to improve significantly, and enterprises face considerable ongoing pressure to sustain the recovery of their economic performance.

　　III. Relevant Policy Recommendations

　　Currently, the oversupply of nonferrous metals at the current stage is a global issue. However, this also presents an opportune moment to deepen industrial structural adjustments and accelerate supply-side reforms. To make meaningful progress in the future, we must seize this opportunity and revitalize the real economy of nonferrous metals. To this end, the following policy recommendations are proposed.

　　First, we must effectively reduce corporate tax and fee burdens. It is recommended that we conduct a comprehensive review of electricity price surcharges, and except for adjustments to residential electricity tariffs, other surcharges should be canceled as much as possible. We should also gradually phase out airport construction fees. The implementation of the resource tax on by-products associated with nonferrous metals should be temporarily postponed. Furthermore, the Mineral Resources Law should be revised to discontinue the development and introduction of mechanisms for collecting mineral resource rights fees. We should study and develop effective measures for allowing value-added tax deductions for mining enterprises, or alternatively, directly reduce the value-added tax rate applicable to mining enterprises.

　　Second, we must effectively reduce the financing costs for enterprises. Capital is the lifeblood of enterprises, possessing strong penetrative power and interconnectedness. We need to establish a multi-tiered, diversified, and highly efficient financing system. A single-tier and single-product capital market simply cannot meet the development needs of private enterprises as they strive to grow stronger and larger. We can create a favorable financing environment and conditions for enterprises by actively and steadily developing the corporate bond market, vigorously expanding the investment fund market, and further standardizing the enterprise property rights trading market. At the same time, we should steadily develop the futures market and accelerate innovation in financial instruments, providing nonferrous metal enterprises with opportunities to hedge risks, reduce financial expenses, and preserve and enhance the value of their products. In accordance with the requirements of the Central Economic Work Conference to revitalize the real economy, we should summarize and promote successful cases and actively advance market-oriented debt-to-equity swaps.

　　Third, we must strive to create a favorable market environment. Enterprises expressed their hope that the government would place greater emphasis on demand-driven approaches during the process of streamlining administration and delegating power—taking the satisfaction of the public, enterprises, and the market as the starting point. Where the public is most dissatisfied, more powers should be delegated; where enterprises have the strongest complaints, those powers should be delegated first. This shift from the government “serving up dishes” to society “ordering dishes” will enhance the value of administrative streamlining and delegation, and help remove bottlenecks in the development of enterprises.

 

 

 

 

 

The zinc and lead industry continues to see a sustained recovery in prosperity, while the supply of refined concentrates remains tight.

The latest composite index of the nonferrous metals industry released jointly by the China Nonferrous Metals Industry Association for December stood at 31.1, up 1.3 points from the previous month. This marks the 13th consecutive monthly increase and represents a breakthrough above the upper boundary of the “slightly cold” zone into the “normal” zone. The industry’s recovery trend has now been firmly established.

　　The overall recovery trend in the lead-zinc industry is broadly consistent with the prosperity index for the nonferrous metals sector. As of the end of November, both lead-zinc ore and metal production increased year-on-year, prices continued to rise steadily, and the industry’s main business revenue improved significantly, with profits growing markedly. Overall, downstream consumption in the lead-zinc sector has been better than expected.

　　I. The prosperity of the lead and zinc industry continued to improve in 2016.

　　(1) Mine production increased year-on-year but declined month-on-month.

　　According to data from the National Bureau of Statistics, from January to November 2016, China’s domestic production of zinc concentrate totaled 4.253 million tons, an increase of 1.38% year-on-year. From January to November 2016, China’s cumulative production of lead concentrate reached 2.044 million tons, up 2.9% over the same period last year. However, in November alone, zinc concentrate production amounted to 402,900 tons, a decrease of 0.1% month-on-month. In November, lead concentrate production stood at 203,000 tons, down 7.7% month-on-month.

　　(2) Production of lead and zinc metals increased year-on-year, but showed a different trend compared to the recent month-on-month trend.

　　According to data from the National Bureau of Statistics, from January to November, China’s domestic production of refined zinc totaled 5.739 million tons, an increase of 1.2% year-on-year. In November alone, refined zinc production reached 562,000 tons, up 1.2% month-on-month. From January to November 2016, China’s cumulative production of refined lead totaled 3.952 million tons, representing a year-on-year increase of 5.0%. In November, refined lead production stood at 362,000 tons, down 6.9% month-on-month.

　　(3) The comprehensive price of lead and zinc has risen sharply.

　　Due to factors such as Glencore’s production cuts, the average monthly spot price of refined zinc rose from USD 1,512 per ton in January 2016 to USD 2,568 per ton in November, representing a cumulative increase of 69.8% over the month. In November alone, the average spot price climbed by USD 986, or 62.3%, compared to November of the previous year (USD 1,582 per ton), and increased by USD 254, or 10.9%, from October’s level of USD 2,314 per ton. Prices continued to rise sharply.

　　Since 2016, the monthly average price of London lead has risen from $1,647 per ton in January to $2,174 per ton in November, with a cumulative increase of as much as 69.8% over the months. In November alone, the spot average price rose by $558, or 34.5%, year-on-year compared to November last year’s $1,616 per ton, and increased by $134, or 6.6%, month-on-month compared to October’s $2,040 per ton.

　　(4) Main business revenue and profits continue to improve.

　　Thanks to the sustained recovery in lead and zinc prices, corporate operating conditions have gradually improved, and business sentiment has been boosted. Seasonally adjusted data show that the absolute value of main business revenue has continued to rise month-on-month. In November, main business revenue reached 40.08 billion yuan, an increase of over 59.68% compared to the 25.1 billion yuan recorded in January. The profitability of the lead and zinc industry has significantly improved: from January to November 2016, the industry’s cumulative profits totaled 16.96 billion yuan, representing a substantial year-on-year increase of 30.9%. Specifically, November’s profits amounted to 2.71 billion yuan, more than five times the 450 million yuan recorded in January. Mining enterprises achieved profits of 10.27 billion yuan, exceeding the 6.69 billion yuan earned by smelting enterprises.

　　(5) Investment in mining and smelting shows a slight rebound.

　　According to data from the National Bureau of Statistics, fixed-asset investment in the lead and zinc industry totaled 52.1 billion yuan from January to November, representing a year-on-year increase of 2.1%. Among this, fixed-asset investment in the lead and zinc industry in November reached 4.32 billion yuan, down 6.3% from 4.61 billion yuan in the same period last year.

　　(6) Downstream consumption of lead and zinc is rebounding and performing better than expected.

　　According to data from the National Bureau of Statistics, from January to November 2016, China’s cumulative production of coated steel sheets reached 54.103 million tons, of which galvanized sheet production amounted to approximately 50.31 million tons, representing a year-on-year increase of 13.3%. In November, domestic production of coated steel sheets was about 5.097 million tons, up 18.6% year-on-year but down slightly by 1.3% month-on-month.

　　The lead consumption sector also performed better than expected. From January to November 2016, China’s output of lead-acid batteries reached approximately 197 million kilovolt-amperes, representing a year-on-year increase of 4.8%. Starting in October, as lead prices rose rapidly, prices for power and starting-type lead-acid batteries surged significantly. Terminal battery distributors opted to buy at higher prices rather than lower ones, resulting in robust operational activity among battery manufacturers from October to November.

　　Preliminary assessments indicate that lead and zinc prices in the first quarter of 2017 will likely remain within their recent high range. Excluding the impact of seasonal factors, lead and zinc mine production remains relatively active, while smelters face tight raw material supplies—but this shortage has not significantly affected overall smelter operating rates.

　　As China’s economic development consolidates its stage-specific bottom, the macroeconomic outlook for China’s lead and zinc market continues to improve overall. Solid fundamentals will support the industry’s healthy and sustainable development. In the high-price range, the lead and zinc industry is expected to see continued improvement in its core business revenue and profit levels. Investment in the lead and zinc sector is also likely to keep rising, and industry sentiment may once again experience a slight uptick.

 

 

 

 

The rare earth industry is expected to stabilize and rebound.

 

The recently released Monthly Business Sentiment Index for the China National Economic Research Institute’s Nonferrous Metals Industry shows that in December 2016, the index stood at 31.1, up 1.3 points from the previous month, breaking through the upper boundary of the “slightly cold” zone and moving into the “normal” zone. The Leading Index for the nonferrous metals industry, compiled by the China National Economic Research Institute, reached 86.3, an increase of 1.7 points from the previous month; the Coincident Index came in at 79.7, up slightly by 1.1 points from the previous month. The business sentiment indices indicate that the nonferrous metals industry has rebounded into the “normal” zone; however, the overall upward trend in the industry’s performance still needs further consolidation. In 2016, the performance of China’s rare-earth industry generally lagged behind the monthly business sentiment index for the nonferrous metals industry compiled by the China National Economic Research Institute, exhibiting the following key characteristics:

　　I. The supply-side reform of rare earths has achieved results.

　　Overcapacity and an oversupply of rare earth products have become bottlenecks restricting the development of the rare earth industry and are also major reasons behind the sustained low prices of rare earths in recent years. During the 12th Five-Year Plan period, relevant national authorities and industry enterprises implemented targeted supply-side reforms in the rare earth sector through the following measures, achieving significant results: First, outdated and low-end production capacities were phased out, reducing rare earth smelting and separation capacity from 400,000 tons per year to 300,000 tons per year; second, total mining quotas and overall production control plans continued to be enforced, while management of mining rights was strengthened, further standardizing the order of rare earth mineral resource development; third, special campaigns such as environmental inspections and supervision were carried out to enhance the clean production level of the rare earth industry, with some enterprises failing to meet environmental standards gradually exiting the market; fourth, self-discipline within the industry was further reinforced, and some enterprises proactively adopted measures to reduce or halt production based on market demand, thereby controlling the pace of shipments and improving market expectations to a certain extent. Overall, in 2016, the rare earth supply-side reform made positive progress, with a reduction in product output and a restoration of the supply-demand balance, laying a solid foundation for the stabilization and recovery of the rare earth industry in 2017.

　　II. Import and export trade continues to grow significantly.

　　The substantial two-way growth in import and export trade was a major feature of China’s rare-earth industry in 2016. According to customs statistics, from January to November 2016, China imported 15,500 tons of rare-earth smelting and separation products, an increase of 52.0% year-on-year, and exported 42,100 tons of such products, up 40.9% over the same period. The robust performance of both imports and exports indicates: first, a diversified global supply structure for rare earths has taken shape, with overseas rare-earth smelting and separation industries developing rapidly, and the competitiveness of primary products such as rare-earth salts and oxides is gradually becoming apparent; second, the recovery of overseas rare-earth application sectors has become evident, putting pressure on China’s deep-processing rare-earth industry. In the future, China’s rare-earth industry will increasingly participate fully in market competition and international division of labor. Exports of rare-earth functional materials continued to maintain steady and relatively rapid growth; in the first 11 months, cumulative exports of rare-earth permanent magnets reached 24,400 tons, representing a year-on-year increase of 16.9%.

 

 

　　III. Prices of Major Rare Earth Products Stabilize at Low Levels

　　In 2016, driven by both market factors and industrial policies, rare-earth prices throughout the year exhibited a pattern of low-level fluctuations. In the first quarter, most smelting and separation enterprises suspended production for maintenance, resulting in sluggish market transactions. In the second quarter—particularly in early April—commercial reserves were officially activated, boosting market confidence and prompting a rebound in prices of major rare-earth products. In the third quarter, downstream demand remained persistently weak, sending the rare-earth market into a downward trend. In the fourth quarter, rare-earth prices stabilized at low levels. Our analysis indicates that the primary reasons for this stabilization are as follows: First, affected by environmental inspections and the exhaustion of production quotas, some enterprises began to halt production, leading to a tightening of supply. Second, supported by rising costs, there is very limited room for further declines in rare-earth prices. Third, downstream manufacturers started replenishing their inventories, and coupled with ongoing positive news about national reserves, a mentality of reluctance to sell emerged in the market. Since late November, rare-earth prices have stabilized at low levels and begun showing signs of recovery.

　　Throughout 2016, prices of rare earth oxides and metals all remained below the levels of the previous year. Looking at representative rare earth products, the average prices for neodymium oxide, dysprosium oxide, and terbium oxide in 2016 were RMB 256,000 per ton, RMB 1,247,000 per ton, and RMB 2,650,000 per ton, respectively—down 4.4%, 16.7%, and 15.2% year-on-year. Prices of surplus rare earth elements such as lanthanum oxide, cerium oxide, and yttrium oxide fell by between 5% and 30%. Affected by the substitution of LED phosphors, both the volume and price of domestic trichromatic phosphors declined. Changes in downstream consumption patterns also led to a significant year-on-year drop in the price of europium oxide, with the annual price decline reaching as high as 64%. The persistently sluggish market has placed considerable operational pressure on rare earth enterprises. In the first three quarters, listed rare earth companies such as Northern Rare Earth, China Minmetals Nonferrous Metals, and Guangsheng Nonferrous Metals all saw varying degrees of year-on-year decline in operating revenue, and some companies experienced substantial year-on-year drops in net profits attributable to their parent companies.

　　IV. A dominant structure led by large conglomerates is taking shape in the rare earth industry.

　　Establishing large-scale rare-earth groups and enhancing industry concentration through market-oriented approaches to boost the overall competitiveness of China’s rare-earth sector have become the central theme of China’s current rare-earth industry management system. Since the issuance of the “Several Opinions of the State Council on Promoting the Sustainable and Healthy Development of the Rare-Earth Industry” (Guofa [2011] No. 12), major rare-earth groups have actively carried out integration efforts via methods such as wholly-owned acquisitions, equity participation and controlling stakes, and the establishment of platform companies. From October 2015 to December 2016, the integration projects of six major rare-earth groups—the Chinalco Group, Xiamen Tungsten, Northern Rare Earths, Southern Rare Earths, Guangdong Rare Earths, and China Minmetals Rare Earths—were successively approved. With this, the development pattern dominated by large rare-earth groups in China has been formally established. These six major rare-earth groups have integrated 22 out of the nation’s 23 rare-earth mines and 54 out of the 59 smelting and separation enterprises, fundamentally reversing the long-standing situation of fragmentation, small scale, and dispersion in the rare-earth industry and further strengthening their control over resources and market influence. In the medium to long term, these six major rare-earth groups will continue to leverage assets as a bond, fully harness their advantages in capital, technology, and management, and jointly promote the standardized development of China’s rare-earth industry.

　　V. The intensity of regulating industry order continues to increase.

　　The insufficient degree of standardization in the industry’s operational order is one of the key factors contributing to the continued pressure faced by China’s rare-earth industry. In recent years, relevant national authorities have taken measures—including formulating industry standards, launching joint operations and special campaigns—to drive out “bad money” and support “good money,” thereby regulating market order through such means as constructing mine protection facilities and improving mining supervision systems in major rare-earth resource areas, and have achieved phased results. In particular, in December 2016, the Ministry of Industry and Information Technology issued the “Letter Requesting the Organization of a Special Campaign to Crack Down on Illegal and Non-compliant Activities in the Rare-Earth Sector” (MIIT Office Joint Original Letter [2016] No. 764), and convened a meeting to deploy work for rectifying the rare-earth market order, further unifying understanding and clarifying responsibilities. This special campaign represents an “upgraded version” of previous initiatives, featuring greater intensity and stronger operability, with a primary focus on key areas such as illegal mining, smelting and separation, disguised processing under the guise of “comprehensive utilization,” and low-price exports of rare-earth products. A total of 379 enterprises were included in this verification list, particularly those engaged in rare-earth trading and comprehensive resource utilization, ensuring full coverage across all relevant sectors. The implementation of this special campaign will further standardize the operational order of China’s rare-earth industry, reduce the impact of black (gray) supply chains on the formal market, and further enhance the effective supply capacity of the rare-earth sector.

　　VI. Industry Outlook for the Rare Earth Sector in 2017

　　From the supply-side perspective, in 2017, China will continue to implement the production total control plan and the management of total extraction quotas. As a result, the production structure of rare earth mineral products and smelting & separation products will not undergo major changes and will generally remain stable. With the deepening implementation of the special campaign to crack down on illegal and non-compliant activities involving rare earths, the operational order of the industry—especially the supply order for rare earths—will further improve.

　　From the demand side, domestically, traditional sectors have shown relatively weak performance, with industries such as trichromatic phosphors experiencing a noticeable contraction. In contrast, emerging sectors are developing more rapidly—particularly the rapid growth of new-energy vehicles, which has provided a new growth driver for downstream rare-earth consumption. Internationally, judging from export trends between 2015 and 2016, demand in overseas rare-earth markets has been fairly robust. It is expected that export volumes in 2017 will remain high, though the pace of growth will slow somewhat. Overall, rare-earth demand in 2017 is likely to continue growing steadily.

　　From the perspective of market performance, after several consecutive years of decline, rare-earth prices have now fallen back to levels seen around 2010, essentially reaching a historic low. As a result, enterprises are facing significant operational pressure. However, with the further strengthening of the market influence of the six major rare-earth groups, the continued regularization of industry order, and the subsequent recovery of commodity prices, it is preliminarily expected that the rare-earth market will stabilize and begin to rebound in 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The tungsten and molybdenum industries are rebounding, with prices hitting bottom and starting to recover.

 

According to the China Economic Metals Industry Prosperity Index Report jointly released by the China Nonferrous Metals Industry Association, the Research Center for the China Economic Industry Prosperity Index of the Economic Daily, and the China Economic Prosperity Monitoring Center of the National Bureau of Statistics, in December 2016, the China Economic Metals Industry Prosperity Index stood at 31.1, up 1.3 points from the previous month, breaking through the upper boundary of the “slightly cold” zone and moving into the “normal” zone. The China Economic Metals Industry Leading Index came in at 86.3, an increase of 1.7 points from the previous month; the coincident index reached 79.7, a slight rise of 1.1 points from the previous month. Preliminary assessment suggests that with the metals industry prosperity index having rebounded into the “normal” zone, the sector is showing clear signs of recovery. However, given that the overall development environment has yet to undergo any fundamental improvement, it cannot be ruled out that the index may continue to fluctuate within the “slightly cold” range over the coming period.

　　From the perspective of the operational status and development environment of China's tungsten and molybdenum industries, the trend of the monthly index of prosperity for the non-ferrous metals industry—led by the China National Institute for Economic and Social Research—is generally consistent, primarily reflected in:

　　1. Tungsten and molybdenum production declined slightly, leading to a contraction in supply.

　　According to data from the National Bureau of Statistics, from January to November 2016, domestic production of tungsten concentrate totaled 124,500 tons, down 4.6% year-on-year; during the same period, molybdenum concentrate production reached 2,626,000 tons, a decrease of 5.2% compared to the previous year. As prices for tungsten and molybdenum products remain at relatively low levels, some small- and medium-sized mines have yet to resume normal production.

　　2. Investment is urgently in need of a rebound.

　　From January to November 2016, China’s tungsten and molybdenum industry saw completed investments in mining and beneficiation totaling 7.69 billion yuan, a year-on-year decrease of 8.3%. During the same period, completed investments in tungsten and molybdenum smelting amounted to 4.57 billion yuan, down 17.9% from the previous year. Given that the industry’s production capacity has already exceeded demand and product prices have remained weak in recent years, investment in the tungsten and molybdenum sector continues to be on a downward trend. However, compared with earlier periods, the decline in industry investment has narrowed somewhat.

　　3. Prices of tungsten and molybdenum products have bottomed out and are rebounding.

　　In the fourth quarter of 2016, the average price of molybdenum concentrate on the domestic market was 1,006 yuan per tonne, up 11.2% from the previous quarter and 42.9% higher than in the fourth quarter of 2015. During the same period, the average price of tungsten concentrate (W65 black tungsten) on the domestic market was 71,256 yuan, representing a 29% increase compared to the fourth quarter of 2015. The recovery in the market is closely linked to shrinking supply and a rebound in downstream demand. Data show that, driven by rising production of domestic stainless steel and certain special steels, domestic demand for molybdenum products in 2016 is estimated to have increased by approximately 21% year-on-year.

　　4. Operating conditions for tungsten and molybdenum enterprises have improved, and profits are rebounding.

　　With the recovery of tungsten and molybdenum product prices and the optimization of product structures, domestic tungsten and molybdenum enterprises have seen improved operations and rising profits. From January to November 2016, the total profits of tungsten and molybdenum mining and beneficiation enterprises amounted to approximately 1 billion yuan, an increase of 27.7% year-on-year; during the same period, the total profits of tungsten and molybdenum smelting enterprises reached about 4.73 billion yuan, up 15.7% year-on-year.

　　Since 2016, the main characteristics of China’s tungsten and molybdenum industry have been: the year-on-year decline in industry investment has narrowed; downstream industries have shown signs of recovery, leading to a rebound in demand for tungsten and molybdenum products both domestically and internationally; and tungsten and molybdenum prices have bottomed out and begun to recover, resulting in some improvement in corporate profitability. 2017 will be a crucial year for implementing the 13th Five-Year Plan and for deepening supply-side structural reforms. Fixed-asset investment will continue to be one of the primary drivers of economic growth. Therefore, demand for tungsten and molybdenum products is expected to remain on an upward trajectory, and the tungsten and molybdenum market is likely to experience volatile but steady recovery.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic and international environmental crackdowns boost nickel price trends.

 

In December 2016, the China National Economic Research Institute’s (CNER) Business Sentiment Index for the nonferrous metals industry stood at 31.1, up 1.3 points from the previous month, breaking through the upper boundary of the “slightly cold” zone and moving into the “normal” zone. The leading index for the nonferrous metals industry, also compiled by CNER, reached 86.3, an increase of 1.7 points from the previous month. The coincident index came in at 79.7, up slightly by 1.1 points from the previous month. Preliminary assessment suggests that the nonferrous metals industry’s business sentiment index has rebounded to the “normal” zone; however, the sustained upward trend in the industry’s performance still requires further consolidation.

　　In the fourth quarter of 2016, nickel prices mostly fluctuated between 80,000 and 96,000 yuan per ton, generally remaining higher than the levels seen in the third quarter—a trend consistent with the performance of the LMEX index. London nickel experienced a second significant rally in November, reaching a year-to-date high of US$12,145 per ton on November 11. Subsequently, amid growing market concerns about weakening consumption in 2017, London nickel declined again toward the end of the year, though it still remained above the US$10,000-per-ton mark.

　　I. Operating Status of China’s Nickel Industry

　　In the fourth quarter of 2016, the average LME nickel price was US$10,830 per tonne, up 14% year-on-year and 5% quarter-on-quarter. At the end of December, LME nickel inventories stood at 371,000 tonnes, an increase of nearly 9,000 tonnes compared to the end of the previous quarter. In the fourth quarter, the average price of the most active Shanghai nickel contract was RMB 85,750 per tonne, up 24% year-on-year and 6% quarter-on-quarter. Spot prices in the fourth quarter also rose significantly, following the trend of futures prices. Nickel prices are on an upward trajectory, and Jinchuan Company has been frequently adjusting its prices in line with market conditions and actively selling its products. As of the end of the quarter, Jinchuan’s ex-factory price was RMB 85,300 per tonne, up RMB 5,000 per tonne from the end of the third quarter.

　　(1) Investment in nickel and cobalt mining, beneficiation, and smelting declined year-on-year.

　　From January to November 2016, China had 13 construction projects in the nickel and cobalt mining and beneficiation industry, with an investment totaling 1.63 billion yuan, an increase of 101.87% year-on-year. There were 58 construction projects for nickel and cobalt smelting, with an investment of 8.11 billion yuan, a decrease of 16.05% year-on-year. Despite the decline in domestic investment in nickel smelting projects, there have been continuous reports of new investments in nickel-iron and stainless steel projects in Indonesia, and these projects are gradually entering the production phase.

　　(2) China’s primary nickel production increased by 21.5% year-on-year.

　　In the fourth quarter of 2016, China's primary nickel production was estimated at 164,000 tons, representing a year-on-year increase of 21.5% and a quarter-on-quarter increase of 5.1%. Among these, electrolytic nickel production totaled 42,000 tons, general-purpose nickel production stood at 9,000 tons, nickel salt production reached 7,000 tons, and pig iron containing nickel amounted to 107,000 tons.

　　In the fourth quarter, nickel product imports are expected to reach 105,000 tons, while exports are forecast at 15,000 tons.

　　(3) The global nickel market has experienced a supply shortage for the first time in recent years.

　　From January to October 2016, global nickel ore production totaled 1.652 million tons, a year-on-year decrease of 8.8%. The Asia region experienced the largest decline in nickel ore production, with a reduction of 75,000 tons, representing an 11.7% drop. In the Americas, nickel ore production fell by 7.5% to 406,000 tons; in Oceania, production declined by 2% to 353,000 tons; in Europe, production dropped by 11.6% to 228,000 tons; and in Africa, it fell by 11.9% to 102,000 tons. By country, with the exception of a few countries such as Indonesia, New Caledonia, and Finland, where nickel ore production increased year-on-year from January to October, production declined in all other countries. Among them, the Philippines recorded the largest production cut, with output falling by 98,000 tons—a year-on-year decline of 23.8%. The sharp drop in the Philippines' nickel ore metal content was due, first, to the depletion of high-nickel ore resources in the southern Tawi-Tawi region, and second, to the extreme decline in nickel prices, which led to a dramatic contraction in mine profits and a significant reduction in producers' willingness to sell.

　　From January to October 2016, global primary nickel production totaled 1.6194 million tons, a decrease of 1.9% year-on-year. With the exception of the Americas region, where output increased slightly by 0.1% year-on-year, production in all other regions declined. Specifically, Africa’s output was 68,500 tons, down 6.2% year-on-year; Europe’s output was 3.687 million tons, down 5.6% year-on-year; Asia’s output was 7.565 million tons, down 0.5% year-on-year; and Oceania’s output was 1.738 million tons, down 0.3% year-on-year. In absolute terms, Europe experienced the most significant decline in production, largely due to a drop in Russian output. In 2016, Nornickel’s nickel production fell as downstream smelters underwent reconstruction, leading to an increase in the quantity of raw materials transported but ultimately resulting in lower nickel product output. By country, Indonesia showed the most notable increase in absolute production: from January to October, its primary nickel output totaled 74,000 tons, up 43,000 tons from the same period in 2015—a growth rate of 139%. Following Indonesia’s mining ban in 2014, Chinese-funded enterprises invested and built new facilities over a two-year period, and in 2016, their production ramp-up accelerated significantly, leading to a substantial release of NPI capacity. China’s primary nickel production saw the largest decline, totaling 470,000 tons from January to October—down 46,000 tons, or 8.9%, compared to the same period in 2015. In 2017, uncertainties surrounding the supply of nickel raw materials will continue to constrain China’s primary nickel production, particularly that of NPI. However, it is certain that NPI capacity will gradually shift from China to Indonesia.

　　From January to October 2016, global nickel consumption reached 1.678 million tons, representing a year-on-year increase of 7.2%. In 2016, nickel consumption in all regions grew compared to 2015, with the largest increase coming from Asia. From January to October, Asia’s total nickel consumption amounted to 1.214 million tons, up 9% year-on-year. Europe’s consumption was 289,700 tons, an increase of 1.7% over the previous year; the Americas consumed 147,800 tons, up 2.8%; Africa consumed 24,200 tons, up 19.8%; and Oceania consumed 23,000 tons, remaining unchanged from the previous year.

　　According to statistics released by the International Stainless Steel Forum (ISSF), global crude stainless steel production in the third quarter of 2016 reached 11.48 million tons, a decrease of 2.9% from the previous quarter but an increase of 12.7% year-on-year. Among these, China’s output rose by 17.6% year-on-year; South America saw a 17.6% increase, and Europe recorded a 3.1% rise. For the first three quarters of the year, global stainless steel production totaled 33.58 million tons, up 7.3% year-on-year. It is projected that the stainless steel industry’s primary nickel consumption for the full year 2016 will reach 1.35 million tons, representing a year-on-year increase of 5.4%.

　　Consumption of primary nickel in other non-stainless steel sectors is also maintaining a growth trend, particularly in the aerospace and battery industries. It is estimated that in 2016, primary nickel consumption in non-stainless steel sectors will reach 630,000 tons. Looking ahead, as nickel use in the battery industry continues to grow rapidly, the share of nickel used in the global stainless steel industry is expected to decline to 62.3% by 2025, while nickel consumption in the battery industry will rise to 10%. Although the stainless steel industry will remain the largest consumer of nickel, the battery industry is poised to experience the fastest growth in nickel consumption.

　　According to data from Antaike, China’s stainless steel production in 2016 reached approximately 23.61 million tons, representing a year-on-year increase of 9.5%. Among this total, the proportion of 300-series stainless steel rose to 50.5%. It is expected that the growth rate of China’s stainless steel production will slow down in 2017, primarily because Tsingshan has shifted its incremental capacity to Indonesia, and some domestic enterprises have been forced to halt production due to inspections. In 2016, China’s primary nickel consumption was estimated at 1.06 million tons, up 8.6% year-on-year, marking a rebound in growth rate. Of this total, the stainless steel industry consumed 890,000 tons, accounting for 84%; the electroplating industry consumed 64,000 tons, accounting for 6%; the alloy casting sector consumed 53,000 tons, accounting for 5%; the battery sector consumed 32,000 tons, accounting for 3%; and other industries consumed approximately 21,000 tons. It is projected that China’s nickel consumption will continue to rise steadily to 1.13 million tons in 2017.

　　(4) Imports of electrolytic nickel from nickel ore have all declined, while imports of ferro-nickel have increased.

　　Customs statistics show that from October to November, China imported a total of 6.38 million tons of nickel ore. The cumulative import volume for the first 11 months reached 30.03 million tons. It is estimated that the full-year import volume will reach 33 million tons, a year-on-year decrease of 5.9%. Most of these imports came from laterite nickel ore sourced from the Philippines. From January to July, China’s imports from the Philippines had significantly declined; however, from August to October, imports rose year-on-year. The rise in nickel prices boosted miners’ willingness to sell their products, and the increased operating rates of domestic ferronickel plants also boosted demand for nickel ore. Nevertheless, the full-year import volume did not decline by the expected 20%. In response to environmental inspections of the Philippine mining sector, major companies have diversified their import sources, tapping into new channels such as nickel ore from New Caledonia and Guatemala. From January to November, China imported 390,000 tons of nickel ore from New Caledonia and 110,000 tons from Guatemala.

　　In 2016, China’s imports of unwrought nickel continued to grow, although the growth rate slowed down compared to 2015. From January to November, China’s cumulative imports totaled 345,000 tons, an increase of 33.7% year-on-year. Among these, imports from Russia reached 218,000 tons, up 30% over the same period last year. The increase in imports in 2016 was concentrated mainly in the first half of the year, during which the average monthly import volume was nearly 40,000 tons. The opening of a profitable import window and the state reserves’ low-level purchases of high-quality, inexpensive imported nickel were the primary driving factors. However, as imports suffered prolonged and substantial losses—reaching over 5,000 yuan per ton at one point—and demand for financed nickel declined, import volumes gradually shrank month by month. At the end of the year, with the continued depreciation of the RMB, the market showed a pattern of strong domestic demand and weak external demand. As a result, spot imports became slightly profitable. It is estimated that China’s total imports of unwrought nickel for the full year 2016 will be around 360,000 tons.

　　Affected by the decline in domestic production of nickel-containing pig iron and the smooth commissioning of the Tsingshan Indonesia project, China’s imports of nickel pig iron have surged since 2016. From January to November, China’s cumulative imports of nickel pig iron reached 943,000 tons, an increase of 50.4% year-on-year. It is projected that the full-year import volume will reach 1.03 million tons, setting yet another all-time high. By country, imports from Indonesia totaled 683,000 tons, from New Caledonia 88,000 tons, from Brazil 48,000 tons, from Colombia 47,000 tons, and from Japan 25,000 tons. Thanks to the gradual commissioning of the Tsingshan project and other domestic investment initiatives in Indonesia, the volume of nickel pig iron shipped back to China has increased significantly. Meanwhile, among other major importing countries, with the exception of Brazil, which saw a slight year-on-year increase in imports, the import volumes of all other countries declined. Consequently, from January to November, the imported nickel pig iron, converted into metal equivalent, amounted to approximately 146,000 tons, representing only a 4% year-on-year growth.

　　After nearly 10 months of suspended exports, Myanmar’s nickel-iron began being exported to China again starting in October 2016. In the first 11 months, the cumulative export volume to China reached 20,000 tons, all of which were sold to Tai Steel. It is expected that additional significant quantities of Myanmar’s nickel-iron will continue to be shipped to Tai Steel in the future.

　　(5) The pace of digesting inventories of various nickel materials is accelerating.

　　Over the past several years, the global nickel market has experienced a sustained supply surplus, leading to a significant buildup of inventories. In June 2015, LME nickel inventories reached an all-time high of 470,000 tons. Since then, inventories have begun to decline—particularly since the start of 2016, when LME nickel stocks have steadily fallen from 450,000 tons at the beginning of the year to 370,000 tons by year-end. Meanwhile, SHFE nickel inventories held by the Shanghai Futures Exchange rose from 40,000 tons at the beginning of the year to a peak of 110,000 tons in September, but have since reversed course and are now hovering around 90,000 tons.

　　In 2016, China's nickel plate inventory—including stocks held in bonded zones—rose from about 190,000 tons at the beginning of the year to a peak of 250,000 tons in mid-year. Thereafter, it declined sharply to 200,000 tons by year-end, with nearly 80,000 tons stored in bonded-zone warehouses. Since the second half of the year, China's electrolytic nickel inventories have fallen markedly, primarily due to the continued closure of import channels and the resulting supply-demand gap, which has led to inventory depletion.

　　At the end of the year, the inventory of laterite nickel ore at China's major ports stood at approximately 13.2 million tons (equivalent to about 100,000 tons of nickel metal), a decrease of roughly 3 million tons compared to the beginning of the year. Of this total, 2.1 million tons were high-grade nickel ore, 5.5 million tons were medium-grade nickel ore, and 5.6 million tons were low-grade nickel ore.

　　Domestic inventories of nickel-containing pig iron showed a marked downward trend in 2016. The substantial rise in nickel-iron prices prompted previously stockpiled nickel-iron inventories to gradually enter the market for sale. According to a survey by Antaike, current domestic inventories of nickel-containing pig iron stand at approximately 110,000 tons, halved from the beginning of the year, and are expected to continue declining in the future.

　　(6) Nickel prices in 2017 are expected to be higher in the first half and lower in the second half.

　　Regarding the nickel market in 2017, due to factors such as rising costs, the probability of companies that have already halted production quickly resuming operations is relatively low. As a result, the global nickel market will likely continue to experience a supply shortage, and inventory destocking will persist. However, the pace of inventory reduction will be a key factor determining whether nickel prices can rebound rapidly. If the mining and environmental reviews in the Philippines lead to an escalation of production halts among nickel mining companies, the supply of nickel ore in 2017 could face a significant shortfall, which would also push nickel prices higher. On the other hand, the increase in nickel-iron production in Indonesia deserves close attention, as it may help offset the supply gap caused by ore shortages at domestic nickel-iron enterprises.

　　In 2017, the downstream demand side lacked new bright spots. Real estate purchase restrictions continued, and growth rates in industries such as automobiles and home appliances were likely to slow down. As a result, the growth rate of end-demand in 2017 is expected to moderate. Moreover, environmental inspections have now spread to the stainless steel industry, potentially leading to a reduction in stainless steel production in 2017 and thereby weakening the demand for nickel.

　　We expect nickel prices in 2017 to follow a pattern of higher in the first half and lower in the second half. In the first half, driven by factors such as tight supply of nickel ore and strong downstream demand, nickel prices will continue to rise. However, in the second half, as supply gradually recovers and downstream demand may weaken, the upward momentum for nickel prices will diminish. We forecast that LME nickel prices in 2017 will fluctuate between US$9,000 and US$13,000 per ton, with an average price of US$9,900 per ton. Domestic prices will also track the trend of international nickel prices, with an estimated average price of RMB 78,000 per ton.

 

 

 

 

 

 

 

 

 

 

 

 

The tin-antimony industry is expected to continue its volatile upward trend.

 

The recently released Monthly Business Sentiment Index for the China National Economic Research Institute’s Nonferrous Metals Industry shows that in December 2016, the index stood at 31.1, up 1.3 points from the previous month, breaking through the upper boundary of the “slightly cold” zone and moving into the “normal” zone. The Leading Index for the nonferrous metals industry, compiled by the China National Economic Research Institute, reached 86.3, an increase of 1.7 points from the previous month; the Coincident Index came in at 79.7, up slightly by 1.1 points from the previous month. The Business Sentiment Index for the nonferrous metals industry indicates that the sector has rebounded into the “normal” zone; however, the overall upward trend in industry performance still needs to be further consolidated. In 2016, the overall performance of China’s tin and antimony industries generally followed the same trend as the monthly Business Sentiment Index for the China National Economic Research Institute’s nonferrous metals industry, with key similarities evident in the following aspects.

　　(1) The supply side has tightened somewhat. Regarding antimony, in the first quarter of 2016, affected by the continued sluggish market conditions, antimony production fell sharply year-on-year. Starting from the second quarter, stimulated by a rebound in antimony prices, major antimony producers increased their output. According to data from the National Bureau of Statistics, from January to November 2016, China’s refined antimony concentrate production totaled 96,000 tons, down 2.7% year-on-year; antimony product output reached 187,000 tons, down 1.5% year-on-year. As for tin, driven by the sustained rise in tin prices, domestic tin smelting enterprises have become more active in production. With the exception of some enterprises that temporarily suspended operations due to environmental inspections and routine maintenance, most companies completed their annual production targets as scheduled. According to data from the National Bureau of Statistics, from January to November 2016, China’s refined tin concentrate production totaled 89,000 tons, down 7.2% year-on-year; refined tin production reached 166,000 tons, up 10.5% year-on-year.

　　(2) The bottom prices of tin and antimony have been rising. Driven by multiple factors—including tightening supply, a recovery in the supply-demand balance, and improved market expectations—tin and antimony prices continued to rebound in 2016. Among these, tin was one of the most prominent nonferrous metals to perform well. In 2016, the average annual price of domestic No. 2 antimony ingots was 40,292 yuan per ton, down 8.6% year-on-year. Specifically, the average price in December was 47,833 yuan per ton, up 47.4% from the same month of the previous year. The average domestic price of tin was 118,618 yuan per ton, up 9.6% year-on-year; in December, the average price reached 145,277 yuan per ton, an increase of 63.1% over the same month of the previous year. Thanks to the recovery in prices, the profitability of China’s tin and antimony industries has improved somewhat. In particular, the tin industry saw a year-on-year reduction in losses, while the antimony industry experienced a recovery-driven growth in profitability. According to statistics from the China Nonferrous Metals Industry Association, during the first 11 months of 2016, China’s tin industry suffered a loss of 640 million yuan, a year-on-year reduction of 1.19 billion yuan in losses. Meanwhile, the antimony industry achieved a profit of 140 million yuan, compared to a loss of 90 million yuan in the same period last year.

　　(3) Environmental protection pressures are becoming increasingly prominent. As attention from all sectors of society toward the ecological environment continues to rise, the environmental protection pressures faced by the tin and antimony industries are also intensifying. Therefore, pursuing a path of green development has become an inevitable choice for these industries. The newly revised "Emission Standards for Pollutants from Tin, Antimony, and Mercury Industries" (GB 30770-2014) and the "Normative Conditions for the Tin Industry" have set forth new and higher requirements for environmental protection in the tin and antimony sectors. The "Development Plan for the Nonferrous Metals Industry (2016–2020)" explicitly states: "In antimony smelting, advanced technologies such as oxygen-enriched intensified bath smelting should be adopted to phase out outdated equipment like blast furnaces, thereby reducing energy consumption, harmlessly disposing of arsenic-alkali slag, and improving recovery rates." This calls upon antimony industry enterprises to develop core, critical equipment and clean production processes, elevate the overall level of clean production in the industry, adapt to increasingly stringent environmental protection standards, and enhance the industry's capacity for sustainable development.

　　(4) Export management policies are becoming increasingly market-oriented. Tin and antimony are important minerals subject to protective mining regulations in China. For a long time, export controls have been implemented through quota management and export tariff regimes. However, with the development of China’s tin and antimony industries—especially the rapid growth of downstream application sectors—in recent years, the situation of China’s tin and antimony import and export trade has undergone significant changes. In response, relevant national authorities have made timely adjustments to China’s tin and antimony export policies, as detailed below: In Announcement No. 60 of 2016 issued by the Ministry of Commerce, the total export quotas for industrial products and agricultural products for 2017 were announced, but these quotas did not include allocations for tin and antimony. Furthermore, the Tariff Commission of the State Council issued the “Notice on the 2017 Tariff Adjustment Plan” (Tariff Commission [2016] No. 31), abolishing the export tariffs on scrap and waste tin (80020000), non-alloyed tin (80011000), and other antimony ore and concentrates (26171090). Overall, these adjustments to export management policies reflect the reform direction of allocating resources through market mechanisms, which will facilitate further integration of China with international markets and create a more relaxed and equitable market environment for the development of the tin and antimony industry.

　　(5) Downstream consumption showed steady growth. In terms of tin consumption, preliminary estimates indicate that the total tin consumption for 2016 will reach 158,000 tons, an increase of 2.6% year-on-year. Performance in emerging consumption sectors has been better than in traditional ones. Specifically, tin usage in the soldering sector is estimated at about 98,000 tons, up 4.3% year-on-year; tin usage in the tinplate sector has declined somewhat, while tin consumption in the chemical industry and lead-acid battery sectors has remained relatively stable. As for antimony consumption, overall demand has remained stable. Among key consumption sectors, output of plastic products, synthetic fibers, synthetic rubber, and lead-acid batteries all saw slight increases. In the first 11 months of 2016, national output of plastic products, synthetic fibers, and synthetic rubber rose by 3.9%, 3.6%, and 8.5% year-on-year, respectively.

　　(6) Analysis of Development Trends in the Tin and Antimony Industries in 2017. The macroeconomic environment is a key factor influencing the price trends of tin and antimony. In 2017, the global economy is expected to continue its slow recovery, and commodity prices are likely to keep rising steadily. Against this backdrop, tin and antimony prices may continue their volatile upward trend. Preliminary estimates indicate that in 2017, the March futures price of tin on the London Metal Exchange will range from US$19,000 to US$25,000 per ton, while the spot market price of tin in China will range from RMB 140,000 to RMB 165,000 per ton. On the international market, the average annual price of antimony ingots will be approximately US$7,500 to US$7,800 per ton, and in the domestic market, the average annual price of antimony ingots will be around RMB 53,000 to RMB 55,000 per ton.