【出版时间及名称】：2010年中国基本金属行业前景展望
        【作者】：瑞士信贷
        【文件格式】：pdf
        【页数】：108
        【目录或简介】：
2010 outlook – moderating growth,
the beginning of a new trend
We believe 2010E is the beginning of a new trend in Chinese commodity demand, driven
by moderating construction growth and the start of a long-term uptrend in consumptiondriven
demand, shifting our preference from cement and long steel, to aluminium, copper
and flat steel.
Moderating demand growth, structural shift starts
On a 12-month view, we expect sustained demand from infrastructure projects started in
2009E, the acceleration of the property construction activity and the gradual improvement
in the downstream manufacturing sectors to continue supporting positive growth in the
sector. Nevertheless, we expect deceleration in the growth rate, due to: 1) the slowdown in
new infrastructure projects as the central government “puts strict control on new projects
starts”, and 2) the much lower restocking-driven demand, which has contributed 40% of
Chinese steel demand growth in 2009E, and 70% in copper, according to our estimates.
As a result, our bottom-up working model suggests moderating real demand growth in
construction-related materials (such as steel and cement), while aluminium and copper will
maintain growth at 11-12%. The apparent demand growth is expected to decelerate
sharply for copper and steel, followed by coal and cement, while aluminium sustains. On a
two- to three-year basis, the structural shift in government’s focus to consumption will
trigger a more balanced demand between metals/flat steel and construction-related
materials. China’s much lower metal consumption per capita versus its construction
material demand underpins such structural change in our opinion.
We prefer ‘cheap commodities’
As domestic demand decelerates, we expect most Chinese basic materials to move into a
balance in 2010, with upside risk if ex-China recovery takes place later in the year.
Nevertheless, we reckon that the sweet spot of the recovery has passed in 2009, as
commodity prices rebounded by 50-100% from the bottom. From a risk-reward perspective
(rather than overweight the entire sector), we prefer ‘cheap commodities’ at this point, i.e.,
commodities that are closer to cash cost, such as steel and aluminium. Both sectors are
also at the bottom of their capex cycle, and therefore well positioned for recovery as
improving demand meets stagnant capacity in the coming two years. We believe there will
be a better-than-expected balance for the Chinese steel sector in 2010E, with utilisation
running as high as 88%, and a potential global recovery generating over 15% potential
upside for steel prices from the current level. We view aluminium as a high beta play if
there is a recovery, with an attractive risk-reward given consensus’ low expectation. We
believe the impact of carbon emissions will come sooner rather than later. In 2010, China’s
renewed focus on emission reductions and energy efficiency should translate into a more
determined government action to close old obsolete capacity. With total closure target for
2010-12E accounting for 30% and 18% of the industry capacity for the cement and steel
sectors, respectively, we expect major industry consolidation for the sectors in the coming
three years, with an improving supply/demand balance, and higher supply concentration
driven by the exiting of small players and accelerated M&A activity.
Our top picks
We estimate that the valuation of China’s basic materials sector is close to mid cycle at
present. Yet there is still 45% potential upside for a 2011E bull case, which is driven more
by ex-China factors, in our view. We believe it is probably too early to Overweight the
entire sector at this point, and prefer stocks that still have a valuation gap versus their
peers such as Baosteel (OUTPERFORM with a target price of Rmb12.2), Shanshui
(OUTPERFORM with a target price of HK$8.0), and Yanzhou Coal (OUTPERFORM with
its target price revised up to HK$20.5). We also like Chalco (OUTPERFORM with a target
price of HK$11.5), given the attractive risk/reward profile of aluminium.