Niagara Regional Police say they have charged a Fort Erie man in connection with a stabbing that led to a police shooting.Last month, Niagara Police responded to reports that a man had been stabbed at the urgent care centre of Douglas Memorial Hospital.Police say 29 year-old Brandon Stewart has been charged with attempted murder and assault with a weapon. He is currently in custody awaiting a bail hearing.The Special Investigations Unit says that when officers arrived at the hospital last month they saw a 61 year-old man with knife wounds and were quickly approached by a 29 year-old, who police are identifying as Brandon Stewart. There was some sort of interaction between police and Stewart when an officer shot him.Niagara Police can’t release any other information as the SIU investigation is ongoing.
Macquarie Research Commodities, the research and analysis group, hosted its annual 2009 May China Commodities Conference in China from 18-22 May, with over 40 institutional investors attending the event. As in previous years, more than 20 corporates and industry consultants shared their views on the Chinese macro economy and commodities market outlook (short-/medium-/long-term). Overall, Macquarie believes China will continue to act as the key driver of the commodities market for the next 12 months in terms of demand. China-based analyst Bonnie Liu reported on the big news coming out of the event. Most speakers highlighted the quick recovery of the Chinese economy and commodities demand from the world recession year-to-date, with most of the discussion focusing on the impact of the government stimulus package on Chinese economic growth in 2009. Liu: “It is widely agreed that the government stimulus package is working well year-to-date and that China will spend whatever is required in order to achieve its 2009 growth target. However, to sustain medium-term GDP growth at the annual target of 8% for the next three to five years, China needs to do far more than just issue bank credit. “The recent collapses of world commodities prices have provided China with good opportunities to buy cheap commodities for stockpile purposes, to buy overseas resource companies to ensure future supply sources and to restructure its own domestic resources industry using cheap imported material to close down inefficient and dangerous producers.” The following sections detail the main points on various commodities made by the presenters at the week-long conference.Jim Lennon, Analyst for Macquarie, believes that China will remain the key driver of the world commodities market. Lennon: “Chinese demand for copper represented almost 40% of world demand in Q109, 37% for aluminium, 43% for nickel, 47% for crude steel and 75% for seaborne iron ore. On average, China’s share of world base metal demand represents about 45% of global market share in Q109; steel represented 47% of world demand over the same period.Why has China remained so strong while the rest of the world is in recession? Lennon believes the following four points are the key reasons behind the astonishing growth in Chinese demand of commodities in Q109:Reduced supply of secondary material along with slower business activities in the recession boosting demand for primary metals like nickel and copperConsumer restocking in China in anticipation of sustainable infrastructure demand growth along with government stimulus spendingChinese government buying cheap commodities for strategic reserve purpose and to support the metals and mining industry like copper, aluminium and zincBetter underlying real consumption from the government stimulus package and easier credit conditions.Liu: “Non-Chinese demand is still down at the moment, but we think it is probably nearing the worst due to the imminent end of the destocking cycle in developed countries. However, end-use demand looks to remain quite weak for the next three to six months. Chinese demand bounced back surprisingly strongly in Q109, though we think that is partly due to government/consumer restocking over the period in anticipation of solid demand growth from infrastructure projects supported by the central government and massive policy response from the central banks.”Macquarie on coal and power:Presentations on the coal industry highlighted the Chinese government’s concerted efforts to shut down small coal mines, especially in Shanxi province, with a bigger impact on coking coal supply rather than thermal coal. Of China’s coking coal, 40% comes from Shanxi and 60% comes from small underground mines, which are the focus of the safety-related mine closuresAccording to David Fang from the China Coal Transportation and Distribution Association, Shanxi province coal production in 2009 is expected to fall to 640 Mt from an estimated 657 Mt in 2008. And Shanxi province will have zero growth in coal supply for the next three years in order to phase out all the small and dangerous coal mines within the areaFang reported that Chinese small coal mines accounted for 36% of national output in 2008, with state-owned representing 52% and the remaining 12% occupied by local state-owned mines. However in Q109, the coal mines ownership changed significantly following the Government’s efforts to close down the small coal mines in Shanxi, Henan and Shaanxi provincesFang suggested that by Q109, key state-owned coal mines accounted for 63% of national production, whereas the market share for privately owned small coal mines fell to only 12%. Local state-owned coal mines also increased their production share to 25% of total Chinese production.Liu: “According to Shanxi government regulations, the minimum single mine pit annual production capacity needs to rise from 300,000 t/y to 900,000 t/y by 2011 and single coal producers’ annual capacity must exceed 3.0 Mt in order to stay in operation. The number of coal mines in China that need to be closed is 1,000 by 2011.”Although coking coal production fell dramatically in Shanxi province, thermal coal production from Inner Mongolia has been growing significantly year-to-date, mainly from state-owned companies like Shenhua. According to national statistics, Q109 Inner Mongolia coal production surged 28.4% YoY to 129.8 Mt, compared with 5.2% growth in total national production over the same period.Liu: “Railway transportation for coal delivery will be debottlenecked significantly in the next three to five years along with sizeable government expenditures on railway construction since 2007. New railway lines added from 2009-2011 is expected to be 5,000 km each year, compared with 1,000 km completed each year in the past. We understand that at least 30% of new railway capacity added between 2009-2012 will be used for coal transportations and distribution.”According to Macquarie’s discussion with the Railway Bureau, Chinese railway capacity for coal delivery will reach 1,800 Mt/y by 2010, compared with 1,500 Mt/y in 2008. According to the central government plan, by 2020 Chinese railway transportation facilities for coal delivery will reach 2,300 Mt/y.Coal stocks in China have been falling year-to-date but still remain at high levels by historical standards. CCTD commented that coal stocks at coal mines were 41 Mt at end-March, up 38% YoY but 24% lower than earlier this year. Coal stocks at the top five IPPs were 28 Mt by the end of March, up by 23% YoY but down 35% from the peak in early 2009, equal to 16 days of consumption. Coal inventory at major ports in China reached 13.6 Mt at the end of March, down by 10% YoY but 33% lower from early this year.As for coal consumption in 2009, CCTD believes that thermal coal demand will be up by only 1% YoY, with national power consumption up by 3-5% YoY, compared with 5% growth YoY in 2008 and 15% growth YoY in 2007, reflecting a major slowdown in power consumption from the industrial sector, which accounts for 76% of total Chinese power demand in 2008.Liu: “According to our discussions with the National Grid, from January to April 2009, industry usage of power was down by 8.3% YoY with light industry down by 6.8% YoY and heavy industry down by 8.6% YoY. Whereas for the first four months of 2009, agriculture industry usage of electricity was up by 4.6% YoY and residential sector power demand was up by 9% YoY. Additions to generation capacity will continue to focus on coal-fired stations. According to the Songlin Group, by 2008, thermal coal power stations account for 80% of power generation in China vs 75% of installed power capacity.”On copper, discussions about the market highlighted the strength of government stockpiling this year and the critical tightness of copper scrap in 2009. Ou Yang Wei from China Metals believes that 250,000 t of copper bought by the SRB is the key component of the copper price rally year-to-date. However, he also believes that SRB’s purchase of copper is price-sensitive and that $4,000/t seems to be the critical level for its purchases through the rest of 2009.China Metals commented that in Q109, Chinese production of refined copper was up by 7% YoY, with smelters’ utilisation rates rising to 80% in March 2009 compared with below 70% in 2008, due to higher copper prices. They believe refined copper production from big smelters in China has been maintained year-to-date. However, the output from small secondary producers has been hurt badly this year due to severe shortages of copper scrapAccording to China customs, in Q109, Chinese imports of copper scrap were down by 47% YoY, totalling 732,000 t only due to lower scrap generation because of weaker economic activity. Lower scrap supply in 2009 also restricted Chinese FAI in copper smelting. According to official statistics, in Q109, Chinese investment in copper smelting capacity was up by 22% YoY compared with 50% growth YoY over the same period in 2008. As a result, Chinese expansion in copper smelting capacity should slow dramatically from 2009 onwards.As for refined copper output in 2009, China Metals believes Chinese total output will hit 4.1 Mt, up by 8.5% YoY. By contrast, Li Lan from the Beijing General Research Institute of Mining and metallurgy believes the total output of copper cathodes in 2009 will be only 3.85 Mt, up by 2% YoY. This is in line with Macquarie’s forecast of 3.9 Mt output for the year as a whole due to a severe shortage of copper scrap input feed. It was widely agreed in the conference that Chinese refined copper imports will grow much stronger in 2009, due to the lack of secondary material supply for consumers’ direct usage, according to Macquarie.Lan estimates that Chinese refined copper imports in 2009 will be 1.82 Mt, compared with 1.45 Mt imports for 2008. However Macquarie believes Chinese total imports of refined copper could hit 2.5 Mt this year, including 300,000 t of copper purchased by the SRB with first delivery into China starting from the end of March. The difference for Chinese apparent copper consumption forecast for 2009 ranges from 6.5% to 15% growth YoY.According to Lan, Chinese copper demand in 2009 will be up by 6.5% YoY with zero growth coming from the construction sector, 12% growth from the power sector, 5% decline from whitegoods and durables and 15% growth YoY from the telecom sector. Transportation industry copper demand is also expected to be up by 5% YoY in 2009.According to Lan’s estimates, Chinese exports of copper in finished goods account for 22% of total Chinese copper usage in 2008; in 2009, copper demand from the exports sector is expected to fall by 10-20% YoY due to the collapse in demand from the western world this year. It is generally agreed that copper demand from the power sector in 2009 will remain strong due to the government stimulus plan on power project development. According to the National Grid, its Q109 investment in power T and D projects was Rmb47 billion, up by 35% YoY compared with its annual investment target of Rmb280 billion for the year as a whole.Generally speaking, the National Grid investment in power projects is usually higher in the second half of the year compared with the first half, translating into higher demand growth for copper in the next three to six months from this sector. The power sector accounts for the majority of copper demand in China. As a result, Macquarie believes in 2009, Chinese real copper demand will grow by 15% YoY to 5.9 Mt, compared with 5.15 Mt demand for 2008.Macquarie on Aluminium:“According to Chalco, Chinese aluminium production capacity was 18.6 Mt/y at end-2008, with reported output of only 13.18 Mt. By end-2009, Chinese aluminium production capacity is expected to reach 19.4 Mt. In Q109, Chinese aluminium smelters’ utilisation rate was only 60%, with 5.0 Mt/y of production capacity idled on the ground due to lower prices. Chalco believes most of the idled capacity can be restarted immediately if the price is high enough. [It has] also indicated that about 750,000 t/y of idled capacity has been restarted in China since early April“We do agree on [its] estimation of restarted idled capacity in China since early April. However there is an additional 1.0 Mt/y of new brown/green field projects that have come on-stream over the same period in Guangxi, Ningxia and Henan provinces. As a result, we believe the total aluminium smelting capacity added in China since early April is about 1.8 Mt/y.”Chalco believes that total aluminium production in 2009 will be 12.6 Mt, a 4.4% drop from 2008; whereas Macquarie believes the production of aluminium ingot for 2009 will be at least 13.0 Mt given the recent sizeable restarts of aluminium smelting capacity. Chalco highlighted the importance of SRB buying 590,000 t of refined aluminium from the domestic market in Q109. It believes this is the major driving force behind the price rally of aluminium year-to-date in the domestic market and the premium of the SHFE to the LME in aluminium prices during March and April 2009.Chalco commented that China will become a net importer of aluminium ingot in 2009, from a traditional net exporter, due to increased demand from the domestic market versus the rest of the world (still suffering from the recession). Macquarie does agree on its point of China becoming a net importer of aluminium in 2009; Macquarie’s estimation of Chinese net imports of aluminium is around 800,000 t for the full year – including alloy products.Steel/iron ore:Four speakers joined the conference to discuss the Chinese steel and iron ore market, including Vale, Mysteel, CBI and SteelhomeJian Liangqun from Mysteel believes that Chinese steel production in 2009 will be 520 Mt, versus production capacity of 680 Mt by the end of 2009. It is estimated that steelmakers in China had reduced output by 150 Mt/y between June and October 2008, following a sharp fall in exports and domestic demand. However, since November last year, roughly 100 Mt/y of that capacity has re-openedAccording to Vale’s estimates, small-scale steel mills in China making long products are running at 100% of their production use rate at the moment, compared with 70-80% of operation rates at flat product producersMysteel estimates that Chinese crude steel demand will be up by 14% YoY in 2009, with 45 Mt of extra demand coming from the government stimulus package. Its forecast is in line with Macquarie’s estimates of 13.2% growth in demand (including stocking) this year to 515 Mt (on a crude steel basis), reflecting the impact of the government fiscal stimulus (which will significantly boost infrastructure spending – construction, railways, oil/gas, coal/electricity) as well as the impact of the massive easing in bank lendingAccording to CBI, Chinese steel demand picked up substantially in March from February and continued to grow stronger in April and May due to government spending on infrastructure projects. Chinese steel inventory also started to fall from April. Jia from Mysteel estimates that total steel inventory in China is about 44 Mt at the moment, compared with 50 Mt of stocks level by historical standardIt was generally agreed that Chinese exports of steel will plummet in 2009, due to contracting demand from the rest of the world and higher steel prices in domestic market. Macquarie believes China will be roughly in balance between imports and exports of steel products this year compared with net exports of 20 Mt in 2008.In the case of iron ore, it is estimated that around 20-30% of domestic mining capacity (around 100 Mt/y) has shut over the past six to nine months due to iron ore prices dropping below production costs. According to Mysteel, Chinese usage of imported iron ore in total usage will rise to 62% in 2009 from 58% in 2008. According to Jia, Chinese imports of iron ore in 2009 will be 520 Mt compared with Macquarie’s forecast of 544 Mt this year and 444 Mt in 2008.According to Vale, steel mills in Hebei are now using 80- 90% of imported iron ore for its production, compared with only 30-40% in 2007 and 2008. Although more than 75 Mt of iron ore is stockpiled at Chinese ports, that is equivalent to just over one month of Chinese demand of imported material compared with historical norms of close to two months.Nickel/stainless steel:There were two positive presentations on the nickel market given by Vale and Eramet. According to Vale, it has sold out of nickel in the Chinese market for H109 and has seen some recovery from the European stainless steel market. It expects a substantial rise in the austenitic ratio in stainless steel production this year due to the 400 series’ exposure to the weak automotive sector and lower nickel pricesEramet believes the austenitic stainless steel ratio will rise to 73.6% in 2009 from 72% in 2008, with more than a 2% rise in 300 series products and a 0.5% drop in the 200 seriesLower stainless steel scrap input feed supports primary nickel demand in stainless steel production. According to Eramet’s estimates, the average world stainless steel scrap ratio will fall to 45.3% in 2009 from 47% in 2009, due to a reduced supply of secondary materialsBoth Vale and Eramet have confidence in the Chinese stainless steel sector. Eramet believes Chinese stainless steel production will rise by 2.2% in 2009 to 7.3 Mt from 7.1 Mt output in 2008, due to the rapid ramp-up of production from state-owned mills like Tisco and Baosteel, among others. Chinese major stainless steel mills production are running at record high utilisation rates in Q209Macquarie understands that Tisco and Baosteel are both running at above 90% production utilisation rates in Q2 this year compared with only 50% in the western countriesNickel pig iron was the hot topic in the conference with most of the speakers believing their production would restart if the nickel price goes above $6/lbEramet believes that Chinese production of nickel pig iron in 2009 will be 48,000 t, compared with 68,000 t output in 2008. However, it argues that if the nickel price continues its current rally, it should see much higher levels of nickel pig iron production than their forecast – with no bottleneck on production capacity in China (which could be close to 200,000 t/y)According to Eramet, the world nickel market will be in deficit of 6,300 t in 2009 as a whole. However, that deficit is too small to absorb the sizeable stockpile of nickel that accumulated in 2007 and 2008 (180,000 t+).And on zinc and lead:The only speech about the Chinese zinc and lead markets came from Penfold. It highlighted the quick recovery of Chinese zinc smelting and mine production since early April following higher zinc prices. It estimates that smelters are now running at 85-90% of capacity (production in April was at 4.1 M/y, up from 3 Mt/y in Jan-Feb). Roughly 600-700,000 t/y of small-scale zinc mines have reopenedHowever, demand is still weak in the domestic market and the ramp-up of production at zinc smelters has led to significant stockbuilding. According to official statistics, from January to April 2009, Chinese galvanised steel production was down by 8.6% YoY.According to Penfold, Chinese zinc demand in 2009 will be flat from 2008 due to lagging new construction, which accounted for almost 40% of Chinese zinc demand in 2008.