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Metal Processing

Sector China

June 2015



Table of Contents

I. Sector Overview

1. Sector Highlights

2. Main Sector Indicators

3. Sector Revenues and Profits

4. Sector Costs Overview

5. Foreign Trade

6. Investments

7. Employment

8. Prices

9. Government Policy

II. Ferrous Metals Smelting & Pressing

1. Subsector Highlights

2. Subsector Indicators

3. Subsector Revenues and Output

4. Iron & Steel Production

5. Iron & Steel Imports and Exports

6. Subsector Forecast

III.Non-ferrous Metals Smelting & Pressing

1. Subsector Highlights


4. Subsector Revenues and Costs

5. Top Ten Non-ferrous Metals

6. Aluminum Highlights

7. Aluminum Production

8. Aluminum Forecast

9. Copper Highlights

10.Copper Production

11.Lead & Zinc

12.Other Major NF Metals Production

13.Precious Metals

IV.Metal Products Manufacturing


2. Subsector Revenues and Output Value

3. Metal Products Output

4. Ferrous Metals Product Trade

V. Main Players

1. M&A Deals

2. M&A Activity, 2013-2014

3. Baoshan Iron & Steel Co., Ltd.

4. Baoshan Iron & Steel Co., Ltd. (cont’d)



Table of Contents

5. Jiangxi Copper Company Limited

6. Jiangxi Copper Company Limited (cont’d)

7. Aluminum Corporation of China Limited

8. Aluminum Corporation of China Limited (cont’d)

9. Hebei Iron and Steel Co., Ltd

10.Hebei Iron and Steel Co., Ltd (cont’d)

11.Shanxi Taigang Stainless Steel Co.,Ltd

12.Shanxi Taigang Stainless Steel Co.,Ltd (cont’d)

VI.Regional Distribution

1. Regional Distribution



I. Sector Overview



Sector Highlights

China is the world's leader in both production and consumption of most major metals, including steel, aluminum, copper, lead and zinc, for each of

which it accounts for between a third and half of the world market. However the country’s shift from an investment-driven to a consumption-driven

economy has resulted in mounting pressure on the heavy industry, with the metal processing sector facing an increasing number of challenges.

Global position

Besides the country’s shift away from investment as a main growth driver, the slowdown in global demand and falling product prices

coupled with rising labour costs have eaten into the industry’s profitability, further aggravated by structural overcapacity and fierce

competition between market players.

Beijing has long been trying to push forward the process of sector consolidation through mergers and acquisitions in order to tackle the overcapacity problems and achieve a better efficiency and competitive power of industry leaders. While such efforts have met much resistance in recent years, efforts by the central government have proceeded with a renewed strength. Most recently, the government has announced plans for consolidating the rare earth metal industry into six large conglomerates. China has also set a goal that the top 10 steel producers control 60% of the market by 2025.

Enterprises in the sector have been facing tighter credit conditions over the last year following an alleged scam in the port of Qingdao which

resulted in claims for more than USD 1bn. As a result, leading banks have enforced stricter control, higher collateral requirements and more

stringent credit approval procedures. The new situation is expected to further push smaller players to merge with bigger companies.

In spite of the difficult times, the metal sector has retained a strong presence among China's Top 500 listed enterprises of Fortune China for 2014 with 59 companies among the biggest 500, a number unchanged from 2013 and up from 57 in 2012. This is a higher number of companies than any other industry in the country, with the machine manufacturing and real estate industries sharing the second position in 2014 with 40 companies each.

Challenges

Consolidation

Tight Credit

Main players



Source:

Main Sector Indicators

China’s Metal Processing Sector in Figures

Statistics office

2010 2011 2012 2013 2014

GDP, RMB bn 40,890 48,412 53,412 58,802 63,646

Sales revenues, RMB bn 10,331 12,573 14,190 15,570 16,105

Revenues as share of GDP 25.7% 26.6% 27.3% 27.4% 25.3%

Total assets, RMB bn 7,944 9,093 10,570 11,589 12,295

Accounts receivable, RMB bn 541.7 605.7 770.9 883.1 959.3

Total liabilities, RMB bn 4,980 5,845 6,744 7,392 7,731

Product Inventories, RMB bn 352 441 519 520 563

Number of employees, average, mn 8818.6 8440.5 9411.6 n/a n/a

Number of enterprises 41,784 30,080 36,391 37,136 37,445

Number of loss making enterprises 4,494 3,449 5,206 5,217 5,305



Comments

Source:

Sector Revenues & Profits

The metal processing sector revenues have grown for a fifth year in a row in 2014, yet the growth rate has been slowing down for a forth

consecutive year. Oversupply woes, falling prices and rising costs have weighed on the sector’s overall performance. Meanwhile aggregate

profits have grown for the first time since 2011 amid a trend of major companies spinning off their losing assets and expanding into other

businesses.

Sales Revenues Profit From Sales Revenue

Statistics office

10,331

12,573 14,190

15,570 16,105 28.5%

21.7%

12.9%

9.7%

3.4%

0%

5%

10%

15%

20%

25%

30%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2010 2011 2012 2013 2014

Revenues, RMB bn Growth, % y/y

513.4

585.3

530.2

501.9

514.2

62.5%

14.0%

-9.4% -5.3%

2.5%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

460

480

500

520

540

560

580

600

2010 2011 2012 2013 2014

Profit, RMB bn Change, % y/y



Source:

Sector Costs Overview

Cost of Sales Other Costs

Statistics office

9,278

11,297

12,859

14,249 14,751

27.8%

21.8%

13.8%

10.8%

3.5%

0%

5%

10%

15%

20%

25%

30%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2010 2011 2012 2013 2014

Cost of sales, RMB bn Growth, % y/y

2010 2011 2012 2013 2014

Sales taxes & surcharges,

RMB bn 44.3 43.1 53.4 56.7 60.4

Selling & distribution

costs, RMB bn 118.2 131.4 160.2 174.6 191.1

Administration expenses,

RMB bn 307.2 344.4 382.2 371.0 375.6

Financial expenses, RMB

bn 112.1 150.1 191.5 189.2 216.0

Financial expenses:

interest expenses, RMB

bn

103.3 152.5 193.8 182.8 198.9



Comments

Source:

Foreign Trade

The growth of production is steadily outperforming that of consumption thus causing a persistent accumulation of surplus in the sector, in a

trend that will hardly be reversed in the short to medium term. Therefore, producers continue seeking new channels to access foreign markets

for their production. However, when trying to expand their market abroad, Chinese companies are often accused of dumping and suffer from

import tariffs, which constitutes a serious risk as far as future exports are concerned.

The weakening of China’s currency over 2014 is partially responsible for the accelerated exports growth throughout that year.

Exports, USD mn Imports, USD mn

General Administration of Customs

39,583 55,511 53,882 54,724

72,291

17,945

23,490 21,687 22,663

25,442 53,154

66,250 73,202 78,358

85,960

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2010 2011 2012 2013 2014

Metalproducts

Nonferrousmetals

Iron andsteel 25,033 27,192 22,842 21,486 22,498

49,171 56,230

55,075 51,542 49,847

12,607

14,534 14,467

14,812 16,485

0

20,000

40,000

60,000

80,000

100,000

120,000

2010 2011 2012 2013 2014

Metalproducts

Nonferrousmetals

Iron andsteel



Source:

Comments

Investments

While investment growth has been slowing down over the last two years, it has stayed on the positive side in all three major segments of the

industry. Mills are scrapping their outdated equipment in compliance with Beijing’s environmental campaign, but the addition of new capacity

was put on hold, since metal giants often play a key role in local economies and regional governments often favour their development and

disregard what problems they cause.

In 2014, FAI growth has been unevenly distributed among the subsectors as metal products FAI have grown by 21.2% annually, non-ferrous

metals FAI – by 5.6%, while that of the ferrous metals segment dropped by 5.4%.

Fixed Asset Investments, RMB mn

Statistics office

346,502 386,048 505,548 506,049 478,939

292,404 386,127

448,488 546,494 576,988 362,249

504,515

595,501

711,434 861,972

21.4%

27.5%

21.4%

13.8%

8.7%

0%

5%

10%

15%

20%

25%

30%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2010 2011 2012 2013 2014

Мetal products

Non ferrous metalsmelting & pressing

Ferrous metalsmelting & pressing

Overall growth y/y, %



Comments

Source:

Employment

Reduction of inefficient capacity across the industry is expected to bring about some major challenges to the labour market which is a serious

concern for local governments. Falling product prices and Beijing’s consolidation push are likely to further aggravate the employment situation

in the industry.

The total number of employees of the top ten listed employers in the sector fell to some 413 thousand in 2014 from 424 in the previous year,

or a drop of about 2.7%. Aluminum Corporation of China Ltd. had the largest scaling down of staff with employee numbers lower by about

7,800 than 2013.

Manufacturing Industry Avg Annual Wage (RMB) Biggest Employers Among Listed Companies (2014)

Statistics office, Fortune China

24,404 26,810

30,916

36,665

41,650

46,431 51,369

27,800 31,142

36,386

43,031

47,367

54,094

16,443 17,260 20,090

24,138 28,215

32,035 35,653

2008 2009 2010 2011 2012 2013 2014

Urban, non-private companies State-owned companies

Private companies

Employer Number of employees

Aluminum Corporation of China Limited 90,207

Hebei Iron and Steel Co., Ltd 48,101

Maanshan Iron & Steel Company Limited 41,220

Wuhan Iron and Steel Company Limited 38,857

Baoshan Iron & Steel Co.,Ltd. 37,487

Angang Steel Company Limited 33,520

Xinxing Ductile Iron Pipes Co.,Ltd. 32,635

Hunan Valin Steel Co., Ltd. 32,291

Shandong Iron and Steel Company Ltd 31,738

Shanxi Taigang Stainless Steel Co.,Ltd 26,672



Source:

Prices

Metal Processing Industry PPI, PY = 100

Statistics office, CISA

China Steel Price Index (pts)

Comments

Tightened liquidity, high stock levels and fierce competition have been pushing down prices in the sector, especially in the steel segment. Steel

prices have been falling almost incessantly since early 2013, reaching their lowest levels for the past twelve months in December 2014. Some

upward pressure has been seen in early 2015 from rising raw material costs but no sizable recovery is expected anytime in the near future.

107.9 111.1

107.1 105.8 101.8

98.5 100.5 102.1 100.6 99.3 99.3 99.1 97.7 96.5 94.8 96.0 94.3 93.0 91.9 90.6

86.4 87.0 85.3 83.1 80

100

120

Jan2013

Feb2013

Mar2013

Apr2013

May2013

Jun2013

Jul2013

Aug2013

Sep2013

Oct2013

Nov2013

Dec2013

Jan2014

Feb2014

Mar2014

Apr2014

May2014

Jun2014

Jul2014

Aug2014

Sep2014

Oct2014

Nov2014

Dec2014

8090

100110120

2008 2009 2010 2011 2012 2013 2014

Ferrous metal smelting & pressing Non ferrous metal smelting & pressing Fabricated metal product



Source:

Government Policy

Industry

Plans

China is preparing a series of development plans for the different subsectors of the industry in the near future. A new “Iron and Steel Industry Restructuring and Development Action Plan for 2015-2017″ is expected in June 2015 which is mulled to involve the scrapping of 80 million tonnes of outdated capacity to relieve oversupply, while the number of steel producing companies is to be brought down from 500 to 300.

Another similar plan, for the non-ferrous metal industry development for the 2016-2020 period is also expected to be released soon, but no details have been disclosed yet.

In May 2015, a plan for the rare earth metals industry was approved which aimed at consolidating the segment into 6 large state-owned enterprises before the end of 2016, down from the current approximately 100 companies.

Going Global

The Going Global initiative which the Chinese government has been implementing since the turn of the century is headed

towards its next stage as Beijing would like to boost local companies’ presence in overseas markets. Steps in this direction

include the Silk Road Economic Belt and the 21st Century Maritime Silk Road, aiming to revive the ancient trading routes,

connecting Asia and Europe. These initiatives involve the construction of large-scale infrastructure projects, mostly ports

and railway facilities, with Chinese companies playing the main role in the construction process. The initiatives are

expected to open new markets for China's metal product manufacturers and help relieve the oversupply glut, experienced

by them at home.

Environment

In January 2015, a new environment protection law came into force. The law strengthened environmental legislation and

put a pressure on manufacturers in the metal processing industry to upgrade their facilities under the threat of severe

sanctions. Industry experts have estimated the cost of such upgrades at around RMB 160 per tonne of steel produced.

In March 2015, the industry ministry released a list of priorities for industrial conservation and integrated utilisation of

energies in 2015 with a special focus on industrial water conservation, a policy which is to have a major impact on metal

manufacturers in the country.

China Daily, Xinhua, CCTV



II. Ferrous Metals Smelting and Pressing



Subsector Highlights

Global Share

Between 2000 and 2014, China more than tripled its share of global steel output, becoming the biggest producer in

the world. The country accounted for 49.5% of total output in 2014, up from 15% at the turn of the century, although

marginally lower than the 2013 figure of 49.7%. According to OECD calculations, China is to contribute around 40%

of the global growth in the steelmaking industry in the period between 2012 and 2015.

Policy Shift

For years, China had been producing steel at levels far exceeding demand, thus creating a supply glut. Companies

were forced to export at lower prices, thus doing harm to the global competitors and reducing profitability in the

sector. Current excess capacity is estimated at around 300 million tonnes. However, in line with the current

government’s course towards slower, more sustainable rates of development and bigger concern for the

environment, Beijing has started to shift away from its former policy of supporting high steel production, often by

means of generous subsidies for steelmakers. The government has recently given signals that it was aware of the

unsustainability of the current situation and was planning to reduce excess capacity while implementing more

strenuous regulations.

Going Out

While producing a significant share of global steel, the local industry has so far not been too successful in

establishing a stronger presence abroad. This, however, is probably going to start gradually changing in the near

future as a number of local companies has already begun building steel projects in countries like South Africa, Chile,

Indonesia and Thailand, among others. Projects, related to the One Belt One Road initiative are likely to support

steel exports over the next few years. At the same time, Chinese regulators are rumoured to be preparing an

amendment which would allow foreign investments in the local steel industry.



Source:

Subsector Indicators

China’s Ferrous Metal Processing Subsector in Figures

Statistics office

2010 2011 2012 2013 2014





Product inventories, RMB bn 179.23 227.05 257.49 267.4 282.66

Number of employees, mn 3.46 3.4 4.04 n/a n/a





Comments

Source:

Subsector Revenues & Output

The 1.7% drop in revenues in 2014 was the first one since 2009 and only the second one since the beginning of the century.

Industrial output has suffered from oversupply in the recent years and has flattened out, with industry watchers expecting the trend to

continue for at least a few more years.

Costs & Revenues Steel Large & Medium Enterprise Gross Industrial Output

Statistics office, China Iron and Steel Association

5,449

6,591 7,156

7,632 7,503

4,982

6,029 6,599

7,069 6,945

215 224 170 170 165

24.1%

21.0%

8.6% 6.6%

-1.7%

-5%

0%

5%

10%

15%

20%

25%

30%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2010 2011 2012 2013 2014

Revenues, RMB bn Cost of sales, RMB bn

Total profit, RMB bn Revenues annual growth

2,069

2,770

3,263

3,020 3,065 2,922

-11.7%

33.9%

17.8%

-7.5%

1.5%

-4.7%

-20%

-10%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2009 2010 2011 2012 2013 2014

GIO, RMB bn Annual change



Source:

Iron & Steel Production

Iron & Steel Production, thou tonnes Purchased Steel Consumption, thou tonnes

China Iron and Steel Association, Statistics office

Product 2010 2011 2012 2013 2014

Iron ore 1,080,161 1,335,025 1,327,300 1,522,129 1,514,240

Pig iron 595,601 645,429 670,102 748,084 711,599

Ferroalloy 24,355 28,005 31,567 36,122 37,860

Crude steel 638,743 701,968 731,040 822,000 822,698

46,820

58,358

50,088 49,140

181,318

2010 2011 2012 2013 (Jan-Nov) 2014



Source:

Iron and Steel Foreign Trade

Exports, thou tonnes

Imports, thou tonnes

China Iron and Steel Association

Product 2009 2010 2011 2012 2013

Coke 159 110 116 76 35

DRI & sponge iron 1,773 1,379 1,381 1,062 606

Ferroalloy 2,566 2,030 2,054 1,894 2,128

Iron ore 627,779 618,645 686,058 743,553 819,414

Pig iron 3,617 873 971 581 298

Scrap steel 13,691 5,848 6,767 4,974 4,465

Steel billet 4,585 637 636 361 552

Steel ingot 65 41 30 41 59

Product 2009 2010 2011 2012 2013

Coke 544 3,346 3,298 1,020 4,673

DRI & sponge iron 5.3 212.7 151 111.7 224

Ferroalloy 925 1,137 935 637 482

Pig iron 237 707 872 302 265

Scrap steel 9.1 372.8 25.1 0.9 0.3

Steel billet 43 142 4.9 4.2 4.0

Steel ingot 0.4 0.9 0.1 0.1 0.3



Source:

Comments

Subsector Forecast

Despite of the poor recent performance, a number of factors are to positively influence the industry’s development, including the ongoing

urbanisation and the rising demand for machinery, appliances and automobiles, as well as a significant number of infrastructure projects which

the government has already initiated. Environmental regulations and overcapacity woes are to continue weighing on growth rates in the short

to medium term.

According to industry giant Baosteel, China's total crude steel capacity will reach 1.19 billion mt/year by end-2015, rising by 2.5% annually,

with capacity utilisation at about 71%.

Market Size

Marketline

1.9%

9.6%

11.7%

2.2%

7.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

100

200

300

400

500

600

700

800

2014 2015 2016 2017 2018

Steel market value, USD bn Annual change



III. Non-ferrous Metal Smelting and Pressing



Subsector Highlights

Development

Not unlike the ferrous sector, nonferrous metal manufacturers have suffered from slower demand as the macro

economy has aligned with the “new normal” development course set by the government, growing at slower rates

than the ones experienced in previous decades and real estate, infrastructure and manufacturing capacity have

stalled. The industry has received some government support by means of increased subsidies, but is still looking for

more sustainable mid- to long-term drivers.

Prices

Prices of nonferrous metals have stayed at low historical levels due to the subdued global demand and the

oversupply from Chinese producers. In 2014, spot prices of copper, aluminum and lead lost respectively 6.8%,

5.2%, 3.9% and 0.5% respectively, while zinc gained 12.8% vs. 2013.

M & A

Amid the ongoing consolidation trend, merger and acquisition deals have become increasingly frequent in the

subsector. According to Xinhua news agency, for the first three quarters of 2014, 32 out of the 93 listed nonferous

companies have resorted to M&A, either by direct participation or by taking part in different funds for this purpose.

Opening Up

The National Development and Reform Commission introduced new regulations in April 2015 which removed the

restrictions on foreign investments in copper, aluminum, lead and zinc smelting. However, restrictions on the

smelting of tungsten, molybdenum, tin, antimony and rare earths are still in place, while mining of tungsten,

molybdenum, tin, antimony and rare earths is altogether forbidden for foreign investors.



Source:


China’s Nonferrous Metal Processing Subsector in Figures

Statistics office

2010 2011 2012 2013 2014



Accounts receivable, RMB bn 142 164 203 235 267


Product inventories, RMB bn 96 129 154 139 154

Number of employees, mn 1,916 1,926 1,908 n/a n/a


Number of loss making enterprises 934 885 1,216 1,281 1,294



Source:

Subsector Revenues & Costs

Revenues & Profit Cost of Sales

Statistics office, China Iron and Steel Association

2,918

3,687

4,127

4,654

5,075

162

207 176 145 149

38.9%

26.4%

11.9% 12.8%

9.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

1000

2000

3000

4000

5000

6000

2010 2011 2012 2013 2014

Revenues, RMB bn Profit, RMB bn

Revenues annual growth

2,613

3,298

3,761

4,329

4,725

37.7%

26.2%

14.0% 15.1%

9.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2010 2011 2012 2013 2014

Cost of sales, RMB bn Annual change



Source:

Comments

Top 10 Non-ferrous Metals

The ten major non-ferrous metals include aluminum, copper, lead, zinc, nickel, tin, antimony, mercury, magnesium and titanium.

Ten Non-ferrous Metals Production

China Nonferrous Metals Industry Association

25,507 26,044

31,360 34,389

36,970 40,288

44,170

23,383 23,518

28,191 31,001

33,580 36,798

40,500

2008 2009 2010 2011 2012 2013 2014

Ten non ferrous metals, tonnes th Ten non ferrous metals: ore, tonnes th



Aluminum Highlights

Development

The country is the global leader in both production and consumption as it currently produces about half of the total

global primary aluminum output. China accounted for 119 out of the 133 aluminum smelters built in the world

between 1985 and 2005. However, the segment has been one of the worst performers in the economy in the recent

quarters.

Capacity Chinese companies have been particularly active in adding new capacitiy since the middle of 2014. According to the

Antaike network, total capacity is to reach 40 million tonnes in 2015, up from 35.64 million for 2014, the latter of

which represented an annual growth of 12.7%.

Expansion About half of newly added capacity in 2014, or some 2 mn tonnes output, was built in the Xinjiang region, which

made it the fastest growing region in the country. In 2015, a smaller figure of 0.5 million tonnes of new capacity is to

be completed there.



Source:

Aluminum Production

Aluminum Production, thou tonnes Aluminum Trade


16,244

18,135 20,251

22,046

24,382 26.0%

11.6% 11.7%

8.9%

10.6%

0%

5%

10%

15%

20%

25%

30%

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014

Aluminium production, tonnes th Annual growth, %

9,734

10,127

11,065

11,916

12,657

13,189

11,255

8,573

5,188

9,183

12,296 11,403

11,895

13,613

2008 2009 2010 2011 2012 2013 2014

Aluminum imports, USD mn Aluminum exports, USD mn



Source:

Comments

Aluminum Forecast

No drastic change is expected in the segment’s overcapacity situation over the next few years as rising demand for automobiles and other

aluminum-related goods is unlikely to offset the increase in supply.

A CAGR of 7.5% is expected over the forecast period.

The shift towards the western part of the country is to intensify further yet as energy, which constitutes a large proportion of aluminum

production cost, is much more affordable in the less developed regions in that part of China.

Market Size

Marketline

10.6%

9.7%

6.5% 6.1%

7.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2014 2015 2016 2017 2018

Aluminum market value, USD mn Annual change



Copper Highlights

Global Role With a 43% share, China was the world’s leading consumer of refined copper in 2013. It was also the second largest

producer of mined copper for the same year with 10% of global total, only behind Chile with 31%.

Slower

investments A total of 196 copper smelting facilities were under construction in China in 2014 with total investments equal to

RMB 23.2bn, down 3.6% from the previous year. Overall investments in the segment fell by 11.9% to RMB 46.3 bn.

Perspectives

BMI Research expects copper output to grow by an average rate of 2.5% annually until 2019, reaching a level of

1.84 mn tonnes. That would be comparable to an annual growth of 8.4% over the last decade. Low product prices

are expected to result in a number of closures of low-level producers, but a weaker RMB versus the USD is likely to

bring down production costs for Chinese players.



Source:

Copper Production

Refined Copper Production Copper Trade


4,540

5,163 5,879

6,839

7,959

12.1%

13.7% 13.9%

16.3% 16.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2010 2011 2012 2013 2014

Refined copper production, tonnes th Annual growth, %

35,720 37,191

57,640

68,660 70,339

68,828 68,332

5,033

3,168

4,194

6,024

6,515

6,451

6,127

2008 2009 2010 2011 2012 2013 2014

Copper imports, USD mn Copper exports, USD mn



Source:

Lead & Zinc

Lead Production

Lead Trade

Zinc Production

Zinc Trade


4,158

4,604 4,591 4,475

4,221

10.2% 10.7%

-0.3% -2.5%

-5.7%

-10%

-5%

0%

5%

10%

15%

0

1,000

2,000

3,000

4,000

5,000

2010 2011 2012 2013 2014

Lead production, tonnes th Annual growth, %

5,209 5,212

4,881

5,302

5,827 21.5%

0.1%

-6.4%

8.6% 9.9%

-10%

-5%

0%

5%

10%

15%

20%

25%

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

2010 2011 2012 2013 2014

Zinc production, tonnes th Annual growth, %

1,774 2,043

2,510

3,178 3,273

2,182 2,236

290 120 169 211

56 151 156

2008 2009 2010 2011 2012 2013 2014

Lead imports, USD mn Lead exports, USD mn

2,053

3,284 3,344 3,347

2,727 3,028 3,142

278 131 179 217 104 96 423

2008 2009 2010 2011 2012 2013 2014

Zinc imports, USD mn Zinc exports, USD mn



Source:

Other Major NF Metals Production

Other Major Non Ferrous Metals Production, thou tonnes


651 675

698

770

874

193 200

242

312

263

159 175

197

279

354

149 156 148 159 187

57 68 82 106 101

2010 2011 2012 2013 2014

Magnesium Antimony Nickel Tin Titanium



Comments

Source:

Precious Metals

China is the world leader in gold production, accounting for some 16% of global total output followed by Australia, Russia and the U.S.

The country is the world’s second largest silver producer in the world, only behind Mexico which produced 5,400 tonnes in 2013.

Exports of precious metals and precious metals jewelry have been growing at a staggering rate, from USD 1.8mn in 2004 to USD10 mn in

2011 and then 48.5 mn in 2014. In 2014 alone, exports have increased by as much as 67.9%.

Gold Production & Consumption Silver Production

China Nonferrous Metals Industry Association, Statista

341 361 403 428 430 516

761 832

1,176

886

8.6%

5.9%

11.7%

6.2%

0.4% 0%

2%

4%

6%

8%

10%

12%

14%

0

200

400

600

800

1000

1200

1400

2010 2011 2012 2013 2014

Gold production, tonnes Gold consumption, tonnes

Production annual growth, %

3,500

3,700

3,900

4,100

4,200

3000

3200

3400

3600

3800

4000

4200

4400

2010 2011 2012 2013 2014

Silver production, metric tons



IV. Metal Products Manufacturing



Source:


China’s Metal Product Manufacturing Subsector in Figures

Statistics office

2010 2011 2012 2013 2014




Total liabilities, RMB bn 724.96 857.73 1062.1 1,143 1,194

Product inventories, RMB bn 77 85 107 114 126

Number of employees, mn 3446.4 3115.1 3467.4 n/a n/a





Source:

Subsector Revenues & Costs

Costs and Revenues Output and Sales Value

Statistics office

1,964

2,295

2,907

3,284

3,527

136

155 184 188 201

26.7%

16.8%

26.7%

13.0%

7.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

500

1000

1500

2000

2500

3000

3500

4000

2010 2011 2012 2013 2014

Revenues, RMB bn Profit, RMB bn

Revenues annual growth

1,684

1,971

2,500

2,852

3,081

26.0%

17.1%

26.8%

14.1%

8.1%

0%

5%

10%

15%

20%

25%

30%

0

500

1000

1500

2000

2500

3000

3500

2010 2011 2012 2013 2014

Cost of sales, RMB bn Annual change



Source:

Metal Products Output

Steel Products Output, thou tonnes (unless specified) Other Metal Products, thou tonnes

China Iron and Steel Association, China Nonferrous Metals Industry Association, Statistics office

Product 2010 2011 2012 2013 2014

Railway use 5,503 4,410 5,154 6,080 5,654

Rod 68,926 69,401 74,102 78,200 79,418

Bar 130,964 154,056 175,377 206,192 215,277

Wire rod 105,528 122,591 136,161 150,893 153,832

Ultra heavy plate 4,817 6,179 5,370 6,637 7,270

Heavy plate 22,236 26,036 23,410 23,988 26,385

Medium plate 42,417 41,237 38,028 38,124 40,009

Hot rolled sheet 6,197 9,670 7,924 7,309 8,158

Cold rolled sheet 22,442 25,923 25,618 30,317 37,100

Medium thick wide strip 102,892 105,038 108,662 119,882 123,008

Cold rolled thin wide strip 37,609 42,432 50,313 55,516 52,968

Hot rolled thin wide strip 29,336 32,534 36,388 39,502 42,596

Hot rolled narrow strip 45,212 46,883 50,932 59,319 59,592

Cold rolled narrow strip 8,245 9,653 9,189 10,251 12,487

Plated sheet, plate, strip 28,466 31,566 37,579 43,378 50,749

Coated sheet, plate, strip 5,538 5,833 7,779 7,590 8,252

Electrical steel sheet,

plate, strip 5,717 6,197 6,588 8,385 8,852

Seamless tube & pipe 25,281 26,490 28,197 29,628 31,369

Welded tube & pipe 32,370 40,487 47,754 50,162 57,611

Product 2010 2011 2012 2013 2014

Steel wire 2,016 3,634 5,305 n/a n/a

Steel wire rope 2,779 3,121 3,727 n/a n/а

Steel strand 2,460 2,862 3,690 3,973 6,047

Metal cutting tool, units mn 4.4 5.6 6.8 7.4 9.6

Metal container cub m th 73,608 90,560 94,965 102,725 130,145

Others 14,595 17,924 18,983 23,585 35,290

Product 2010 2011 2012 2013 2014

Copper product 9,851 10,373 11,014 14,987 17,837

Aluminium product 19,906 23,519 25,941 39,624 48,458

Lead product 9.7 10.1 9.7 n/a n/a

Zinc product 16.8 14.7 14 n/a n/a

Nickel product 6.314 4.542 4.853 n/a n/a

Tin product 38.578 39.719 39.241 n/a n/a

Magnesium product 0.059 0.087 0.112 n/a n/a

Copper coil rod 1,812 2,116 2,305 n/a n/a

Aluminium coil rod 906.8 1,278 1,192 n/a n/a



Source:

Ferrous Metal Products Trade

Ferrous Metal Products Trade, USD mn

China Iron and Steel Association

Product 2010 2011 2012 2013 2014

Import Export Import Export Import Export Import Export Import Export

Steel products 16,429 42,558 15,586 48,904 13,660 55,793 14,077 62,336 14432 93784

angle, shape, section 419 5,187 337 6,690 324 11,783 387 4104.8 380.84 4598.8

rod & bar 1,129 1,927 1,148 2,569 895 3,357 1,027 17,106 1203.2 30863

sheet & plate 13,921 24,812 13,202 26,586 11,666 26,984 11,886 27,642 12081 43670

tube & pipe 480 7,309 524 9,241 426 9,635 425 9,570 476.49 10058

for railway use 189 439 92 533 116 540 111 378 46 593



Source:

Non-ferrous Metal Products Trade

Non-ferrous Metal Product Exports, USD mn Non-ferrous Metal Product Imports, USD mn

China Nonferrous Metals Industry Association, Statistics office

3,872

4,526 4,224 4,177 4,232

7,543

10,362

9,799

10,407

11,948

110 116 37 95 74 33 43 30 35

74 32 60 33 57 37 87 125 139 150 126

2010 2011 2012 2013 2014

Copper products Aluminium products

Lead products Zinc products

Tin products Nickel products

7,600 7,828

6,743 6,446

6,037

3,126

3,593 3,390

3,026 3,018

2 6 6 7 3 89 77 61 55

53 197 239 240 211 211 496 577 605 533 481

2010 2011 2012 2013 2014

Copper products Aluminium products

Lead products Zinc products

Tin products Nickel products



V. Main Players



Source:

M&A Deals

Top 15 M&A15 Deals in China’s Metal Processing Sector (Jan 2014-May 2015)

DealWatch

Date Target Company Deal Type Buyer Seller Deal Value

(USD mn)

Deal Value

Source

Stake

%

3.1.2014 Minmetals Development Co Ltd Minority stake

purchase China Minmetals Corp 1627.11 (Official data) 42.56

31.1.2014 Sulzer Metco Acquisition OC Oerlikon Corporation AG Sulzer Ltd 945.65 (Official data) 100

8.11.2014 Shandong Iron and Steel Co Ltd Minority stake

purchase Institutional investors 813.73 (Official data) 30.03

25.2.2015 Jiangsu Shagang Co Ltd Acquisition

Li Feiwen - private investor; Liu Zhenguang - private investor; Huang Lihou - private investor; Li

Qiang - private investor; Wang Jiman - private investor; Zhu Zheng - private investor; Liu Benzhong -

private investor; Yan Weimin - private investor; Jin Jie - private investor

Jiangsu

Shagang

Group Co Ltd

748.3 (Official data) 55.12

3.4.2014

Xinjiang Production and Construction

Corps Agricultural Division Eight Tianshan

Aluminium Plant Co Ltd

Acquisition Xinren Aluminum Holdings Ltd Private

investor(s) 510.65 (Official data) 30

15.5.2015 Hubei Sanxia New Building Materials Co

Ltd Acquisition

Shenzhen Mengshang Fund Management Co Ltd; Shenzhen Haizhimen Leisure Sports Development

Co Ltd; Shenzhen Qianhai Furong Asset Management Co Ltd; Golden Eagle Asset Management Co

Ltd; Xu Xizhong - private investor; Chen Gengfa - private investor


19.3.2014 Xiamen Tungsten Co Ltd Minority stake

purchase

Nanjing Gaoke Co Ltd; Fujian Investment and Development Group Co Ltd; Fujian Rare Earth (Group)

Co Ltd; Shanghai Rationalize Investment LP; Golden Circle Capital Management (Xiamen) Co Ltd;

Haoxi Equity Investment Management (Shanghai) Co Ltd; Ke Xiping - private investor


10.10.2014 Lianzhong Guangzhou Stainless Steel

Corp Acquisition Anshan Iron and Steel Group Corp

E United

Group 493.11

(Market

estimate) 60

14.4.2015 Hubei Fuxing Science and Technology Co

Ltd

Minority stake


24.12.2014 Jilin Liyuan Precision Manufacturing Co

Ltd

Minority stake

purchase Institutional investors 490.96 (Official data) 25

17.2.2015 Shenzhen Green Eco-manufacture Hi-tech

Co Ltd

Minority stake

purchase

Shenzhen Zhongzhi Chantou Huanbao Investment Partnership LP; Guangzhou Huiyin Aofeng Equity

Investment Fund Management Co Ltd; Shanghai Xinghong Asset Management Co Ltd; Shanghai

Star-Venture Capital Management Center LP; China Post & Capital Fund Management; Ping An

Asset Management Co Ltd; Huaxia Life Insurance Co Ltd; Shanghai Deyi Huiyin Equity Investment

Co Ltd ; Zhongqi Gangerqi Nanjing Venture Capital Fund Center LP


27.11.2014 Changshu Fengfan Power Equipment Co

Ltd

Minority stake


9.6.2015 China Western Power Industrial Co Ltd Minority stake

purchase

Shenzhen CDB Jintai Investment Development Partnership LP; Zhuhai Hengqin Yuancheng Equity

Investment Center LP; Beijing Haihoutai Equity Investment Center LP; Suzhou Haihoutai Equity

Investment Center LP; Zhoushan Venture Investment Partnership LP


10.1.2015 Baocheng Investment Co Ltd Minority stake

purchase

Zhou Zhenke - private investor; Xu Jinguang - private investor; Chen Yueqiang - private investor;

Huang Yongjian - private investor; Chen Shaoda - private investor 402.26 (Official data) 66.03

29.9.2014 Yunnan Aluminium Co Ltd Minority stake




Source:

M&A Activity, 2013-2014

Number and Value of Deals in Metal Processing Sector

Number of Deals by Deal Type (%)

Number of Deals by Deal Value, USD (%)

Number of Deals by Region of Investors (%)

DealWatch

5,75

0

4,12

7

4,05

1 7,72

4

4,43

5

1,74

0

2,76

5

3,17

7

34

42

32 33

27

21 25

18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014

Total value of deals (USD mn) Number of Deals

Acquisition 36.6%

Minority stake purchase

30.2%

Block Trade 27.2%

IPO 2.2%

Open market purchase 2.6%

SPO 1.3%

0-50mn; 53.4%

100.1-500mn; 23.3%

50.1-100mn; 15.5%

500.1-1000; 2.6%

> 1000mn; 2.6%

Undisclosed; 2.6%

China 85.6%

Hong Kong 5.6%

EMEA 4.4%

North & South America 2.5%

Asia 1.9%



Highlights

Source:

Baoshan Iron & Steel Co., Ltd.

Financial Performance

Other Financial Indicators

Baoshan Iron & Steel Co., Ltd., the largest subsidiary of

industry giant Baosteel Group, is active in the

manufacturing and trade of iron and steel products.

The company was incorporated in 2000 and listed on the

Shanghai Stock Exchange later in the same year.

Baoshan is the largest listed steel producer in China,

supplying about half of the nation's auto sheet market.

The drop in profit in FY2014 was attributed to rising income

taxes and the general industry problems including low

profitability and overcapacity.

In early 2015, the company registered its new steel e-

commerce online platform ouyeel.com by borrowing RMB

160bn from 15 leading Chinese banks.

The group’s stated strategic goal is transformation “from

iron and steel to materials, from manufacturing to services

and from China to the world”.

Major local competitors include Hebei Iron & Steel Co., Ltd.,

Angang Steel Co. Ltd., Gansu Jiu Steel Group Hongxing

Iron & Steel Co., Ltd., Handan Iron and Steel Group Co.

Ltd., and Taiyuan Iron and Steel Group.

Company data

2010 2011 2012 2013 2014

Total assets, RMB mn 216,065 242,122 220,912 226,704 228,653

Total liabilities, RMB mn 111,319 117,630 97,016 106,747 104,448

Stockholder equity, RMB

mn 104,746 113,470 117,342 119,957 124,205

Net cash from opera-ting

activities, RMB mn 18,856 12,242 22,202 12,090 28,280

Cost of sales 177,817 203,041 176,879 171,718 168,931

Earnings per share 0.74 0.40 0.58 0.35 0.35

202,413 220,872

191,135 189,688 187,414

17,076

9,260

12,664

8,010

8,278

12,889

7,362

10,090

5,818

5,792

2010 2011 2012 2013 2014

Revenues, RMB mn EBT, RMB mn Net income, RMB mn



Source:

Baoshan Iron & Steel Co., Ltd. (cont'd)

Expenses, RMB mn

Regional Distribution of Revenues (2014)

Revenues from Steel Products, RMB mn

Company data

2013 2014 Change y/y

Sales expenses 1,963 2,200 +12.09%

Administrative expenses 6,881 7,728 +12.32%

Financial expenses -544 488 n/a

R&D expenses 3,430 3,931 +14.61%

China 89.9%

Resf of the World 10.1%

50,883 51,369

31,320 28,816

4,893 4,971

9,830 9,116

7,111

4,849

0

20,000

40,000

60,000

80,000

100,000

120,000

2013 2014

Other ironand steelproducts

Steel tubesand pipes

Heavy plates

Hot-rolledcarbon steelsheets andcoils

Cold-rolledcarbon steelsheets andcoils



Highlights

Source:

Jiangxi Copper Company Ltd.



Jiangxi Copper Company Ltd. is the largest copper producer in China. The company is also a major supplier of gold, silver, selenium, tellurium, rhenium, as well as sulfide chemicals. It is one of the largest Chinese producers of gold and silver.

The Company, established back in 1997, is listed both in Shanghai and Hong Kong.

Its major assets include six mines under production, PRC’s largest blister and copper concentrate smelter and refiner, 8 copper processing plants and two sulphuric acid plants.

JCC’s reuse rate of industrial water surpassed 93% in 2014.

Sales to the five top customers in 2014 accounted for 13.33% of total operating revenues.

Plans for 2015 include the production of 1,220,000 tonnes of copper cathode (from 1,200,000 in 2014) ,25.4 tonnes of gold (26), 560 tonnes of silver (567), 2,900,000 tonnes of sulphuric acid (3,010,000), and 209,500 tonnes of copper contained in copper concentrate (210,000).

The 20% fall in profits in 2014 was mostly due to the weakness in copper prices on the market.

The company has actively been looking for new opportunities to expand its international presence. Most recently, its senior management has been exploring the prospects for outsourcing copper mining and processing in Kazakhstan, in line with the central government’s One Road One Belt policy.

Company data

Indicator 2010 2011 2012 2013 2014

Cost of revenue, RMB mn 68,161 106,981 150,609 168,423 192,225

Total operating costs and

expenses, RMB mn 2,300 2,989 1,672 2,687 2,745



Total stockholders' equity,

RMB mn 34,123 39,303 42,820 44,523 45,734


76,441

117,641

158,556 175,890

198,833

8,047

9,771

7,435

6,532

5,721

4,907

6,549

5,216

3,565

2,851

2010 2011 2012 2013 2014

Revenues, RMB mn Gross profit, RMB mn Net income, RMB mn



Source:

Jiangxi Copper Company Ltd. (cont'd)

Revenues Distribution by Business (2014)

Revenues Distribution by Region (2014)

Expenses, RMB mn

Company data

545 547

1,703 1,846

157

-6

2,328 2,326

-1,000

0

1,000

2,000

3,000

4,000

5,000

2013 2014

ExpensesonresearchanddevelopmentFinancialexpenses

Administrativeexpenses

Sales anddistributionexpenses

Copper cathodes

59.3%

Copper rods and wires

23.3%

Copper processing

products 2.6%

Gold 3.7% Silver 1.3%

Chemical products 0.7%

Rare metals and other non-ferrous metals

7.9% Others 1.2%

Mainland China 87.6%

Hong Kong 4.9%

Others 7.5%



Highlights

Source:

Aluminum Corporation of China Ltd.



Aluminum Corporation of China Ltd. (CHALCO) is active in

the aluminum, alumina, energy and trading segments. It is

China’s largest alumina and primary aluminum producer

and the world’s second largest alumina producer

It was established as a joint stock limited company in 2001

by the Aluminum Corporation of China (CHINALCO),

Guangxi Investment (Group) Co., Ltd. and Guizhou

Provincial Materials Development and Investment

Corporation.

CHALCO shares are listed on New York and Hong Kong

stock exchanges in December 2001. CHALCO is majority

owned by CHINALCO.

The Company owns 10 branches, 1 research institute, and

12 subsidiaries

The huge loss reported in 2014 was attributed to

impairment charges, weak aluminum prices and provisions

for lay-off costs. However, the Company remained hopeful

for the future, expecting "relatively quick consumption

growths in transportation, durable goods and new economic

sectors for the coming decade“.

For 2015, CHALCO vowed to lower its production costs by

5% for alumina and by 3% for aluminum, after having

achieved respectively 5.18% and 4.03% in 2014.

Company data

138,206 143,437 169,431

141,772

7,370

11

2,751

634

691

-8,644

751

-17,049

2011 2012 2013 2014

Revenues, RMB mn 113060.949 Gross profit, RMB mn 7413.145

Profit for the year, RMB mn 969

Indicator 2010 2011 2012 2013 2014

Cost of sales, RMB mn 105,648 130,836 143,426 166,680 141,139

Operating expenses, RMB

mn 6,250 7,165 8,830 10,233 12,549



Stockholers' equity, RMB

mn 51,581 51,826 43,808 44,358 28,276

Earnings per share 0.06 0.02 -0.61 0.07 -1.2



Highlights

Source:

Aluminum Corporation of China Ltd. (cont'd)

Revenues by Business, in RMB mn

Expenses, in RMB mn

The output of alumina in 2014 amounted to 12.02 million tonnes, representing an annual decrease of 1%, the output of alumina chemicals amounted to 1.82 million tonnes, representing an annual increase of 5.81%, and the output of primary aluminum products amounted to 3.38 million tonnes.

In May 2015, the company's parent group announced plans to set up two financial arms with a total capital of RMB 2.8bn to facilitate its financial business and help it deal with the losses suffered in recent years.

Meanwhile, CHALCO has also started spinning off some of its non-core assets in order to reduce losses. In December it announced that it would be selling three fully-owned companies as well as one 72%-owned and one 27%-owned. The subsidiaries in question were engaged in silicon metal, photovoltaic materials and polysilicon production.

In August 2014 CHALCO was approved by the government to integrate rare earth enterprises in the provinces of Guangxi, Jiangsu, Shandong and Sichuan to its wholly owned subsidiary China Rare-earth Corp. In early 2015 it also formed a coalition with eleven other local smelters aiming to boost local aluminium prices.

Recently, the Company was hit by a corruption scandal as its general manager Sun Zhaoxue was charged with soliciting and accepting bribes and was dismissed from his senior position at the Communist Party of China. In another major change in management, chairman Xiong Weiping was replaced by former Chengdu mayor Ge Honglin.

Company data

1,448 1,488 1,834 1,859 1,753

2,450 2,553 2,750 2,947

4,832 2,190

2,917

4,061 5,233

5,670

162 206

185

194

294

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013 2014

Research anddevelopmentexpenses

Finance costs,net

General andadministrativeexpenses

Selling anddistributionexpenses

31,846 33,980 30,706

58,036 49,953 40,423

117,295 137,283

110,108

0 5,159

5,242

332 789

348

0

50,000

100,000

150,000

200,000

250,000

2012 2013 2014

Corporateand otheroperatingsegmentsEnergysegment

Tradingsegment



Highlights

Source:

Hebei Iron and Steel Co., Ltd



Hebei Iron and Steel Co., Ltd. (HBIS) is a Shijiazhuang

based company engaged in smelting, processing and

distribution of iron and steel products. Through its

subsidiaries and affiliates, the company is also involved in

the manufacturing and distribution of coke, industrial gas

and chemical products, among others.

Established in 2008 after the merger of Tangsteel and

Hansteel, the company is listed on the Shenzhen Stock

Exchange. It is the world's second-biggest and China's

largest steelmaker by production capacity.

HBIS is targeting USD 20bn in oversees revenues by 2018,

which would constitute some 30% of the company's total. In

2014, the share of overseas revenues accounted for 3.4%,

up from 1.2% in the previous year. It has stakes in about 70

overseas companies.

In 2013, Hebei acquired a 10% stake in Swiss-based

trading firm Duferco International Trading Holding (DITH)

for USD 78mn.

The following year, Hebei signed an agreement to raise its

stake in DITH to 51%.

In 2014, Hebei announced plans to build a steel mill in

South Africa. The plant will produce 5mn metric tonnes

mostly of construction steel when completed in 2019.

Company data

116,919 133,344

111,630 110,255 98,257

8,349

10,799

9,224

9,371

10,712

1,411

1,383

109

116

697

2010 2011 2012 2013 2014

Revenues, RMB mn Gross profit, RMB mn Net income, RMB mn

Indicator 2010 2011 2012 2013 2014



expenses, RMB mn 6,686 9,022 8,992 9,140 9,774




RMB mn 29,431 42,723 42,542 42,560 43,037




Source:

Hebei Iron and Steel Co., Ltd (cont'd)

Revenues by Product, in RMB mn

Revenues by Region, in RMB mn

Expenses, in RMB mn

Output (tonnes)

Company data

598 649

5,489 5,327

3,285 3,866

1,777 1,742

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2013 2014

Expenses onresearch anddevelopmentFinancialexpenses



89,985 81,790

4,793 4,225

1,052 814

7,210 8,207

0

20,000

40,000

60,000

80,000

100,000

120,000

2013 2014

Others

Vanadiumproducts

Billets

Steelproducts

Region Operating revenue,

RMB mn (2013)

Share of

total

(2013)

Operating

revenue,

RMB mn

(2014)

Share of

total

(2014)

Northern China 75,888 73.6% 69,167 72.8%

South Central China 5,833 5.7% 5,473 5.8%

East China 18,869 18.3% 15,892 16.7%

Northeast China 410 0.4% 452.3 0.5%

Northwest China 430 0.4% 640 0.7%

Southwest China 355 0.3% 223 0.2%

Outside China 1,255 1.2% 3,218 3.4%

Product 2013 2014 Annual

change

Steel products 29,743,630 29,599,312 -0.5%

Chemical products 17,075 14,907 -12.7%



Highlights

Source:

Shanxi Taigang Stainless Steel Co.,Ltd



Shanxi Taigang Stainless Steel Co., a listed subsidiary of

the Taiyuan Iron and Steel (Group) Co. (TISCO), is a

leading maker of stainless steel in terms of production

capacity.

The company, which was ranked 44th in Fortune China's

list of Top 500 listed companies in the country in 2014,

down from 36th in 2013, is listed on the Shenzhen Stock

Exchange.

2014 steel products output of the firm reached 10.72

tonnes, up by 7.35% from 2013. Of those, 3.81 tonnes were

stainless steel, up 18.0% y/y. Both 2014 figures fell short of

the initial plans due to the company’s having to deal with

overcapacity issues. Billets production rose by 6.4% to

10.04 tonnes.

Taigang’s share In the stainless steel market in China has

shrunk in 2014, reaching 17.5% from 19.3% in 2013.

Company data

87,198 96,220

103,515 105,020

86,766

7,741

8,244

7,686

6,659

6,757

1,372

1,805

1,106

630

442

2010 2011 2012 2013 2014

Revenues, RMB mn Gross profit Net income, RMB mn

Indicator 2010 2011 2012 2013 2014



expenses, RMB mn 6,284 6,432 6,684 6,153 6,452




RMB mn 21,843 23,304 24,256 24,630 24,980




Source:

Shanxi Taigang Stainless Steel Co.,Ltd (cont'd)

Revenues by Business, in RMB mn

Revenues by Region, in RMB mn

Expenses, in RMB mn

Company data

1,425 1,707

3,047 2,982

871

1,112

2,252

2,294

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2013 2014

Expenses onresearch anddevelopment

Financialexpenses



34,161 38,395

20,085 16,877

2,973 3,312

47,090 27,584

0

20,000

40,000

60,000

80,000

100,000

120,000

2013 2014

Otheractivities

Plain carbonsteel billets

General steelproducts

Stainlesssteel

Region

Operating

revenue,

RMB mn

(2013)

Share of

total

(2013)

Operating

revenue,

RMB mn

(2014)

Share of

total

(2014)

Northern China 57,156 61.0% 45,241 52.5%

South Central China 13,435 14.3% 8,353 9.7%

East China 8,353 8.9% 15,259 17.7%

Northeast China 3,498 3.7% 1,644 1.9%

Northwest China 1,810 1.9% 1,220 1.4%

Southwest China 1389 1.5% 1,258 1.5%

Outside China 8,046 8.6% 13,193 15.3%



VI. Regional Distribution



Source:

Appendix: Regional Distribution

Steel & Zinc Regional Distribution

China Nonferrous Metals Industry Association, China Iron and Steel Association

North China

Steel products output (2014):

379.6 tons mn (33.7% of total)

Zinc output (2014)


Northeast China



Zinc output (2014)


East China



Zinc output (2014)


South Central China


168.6 tons mn (15% of total)

Zinc output (2014)


Southwest China


67.4 tons mn (6% of total)

Zinc output (2014)


Northwest China



Zinc output (2014):




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