HSBC Bank (China) Co announced on Friday that it has been approved as a member of the Shanghai Futures Exchange, becoming the first overseas bank to engage in China’s gold futures market.

“China is an important producer, user and investor of gold. The access granted for China’s gold futures market is a welcome addition to our existing gold spot trading business with the Shanghai Gold Exchange, and reinforces HSBC’s leadership in the global precious metals market,” said David Liao, managing director and head of Global Markets at HSBC China.

“We look forward to playing a greater contributing role in the development of China’s fledgling gold market, where we see vast growth potential,” Liao added.
HSBC China was one of the first overseas banks to become a member of the Shanghai Gold Exchange in February 2008, and the first overseas bank to obtain approval to start gold trading in June 2008.

The approval “reflects the opening up of China’s futures market,” Wu Jian’gang, researcher at the CEIBS Lujiazui International Finance Research Center, told the Global Times on Sunday.

“Gold is not quite closely related to industrial production, so introduction of foreign companies would not create a big, unmanageable impact on China’s commodity market,” Wu noted.

Gold futures should be in tune with the foreign exchange reform and opening of the financial market, so it is appropriate to open the gold futures market first in the process of foreign exchange reform and yuan internationalization, he added.

“The country would intensify efforts in the futures market, including reducing rates and increasing the liquidity and diversity of investors and agents. The opening up of gold futures is just a start and in the future, not only institutions, but also advanced global technologies and experiences will be introduced,” said Wu.

China is the largest gold producer in the world, with the output increasing to a record high of 340.88 tons in 2010, data from China Gold Association shows.

Australian miner Norton Gold Fields expects its top shareholder, China’s Zijin Mining , to lift its stake to 19.9 percent, using Norton to expand offshore, Norton’s chief executive said.

Zijin, China’s top gold producer, last week agreed to invest $30 million in Norton, buying shares to lift its holding in the company to just under 17 percent.

Norton Chief Executive Andre Labuschagne said he plans to meet Zijin executives in the next few weeks to discuss what their longer term intentions are.

“All indications are we are the Australian arm for potential growth,” Labuschagne told reporters late on Sunday.

Labuschagne told two reporters separately that he expects Zijin will want to raise its stake to 19.9 percent, the threshold above which an investor would have to make a full takeover for the company if it wanted to increase its stake further.

Norton sees Zijin as a useful partner as it has expertise in the heap leaching process of extracting gold.

Norton Gold is considering developing its Navajo Chief lode using by heap leaching, alongside several other expansion opportunities on its tenements spanning 700 square kilometres in the gold belt around Kalgoorlie.

Zijin agreed to buy its stake for A$0.20 a share, a 14 percent discount to the stocks price on Monday.

The company’s shares have been languishing relative to its peers as it has an A$80 million debt load, compared to others who have no debt.

The share sale to Zijin will allow it to cut debt to A$50 million, and its recent sale of coal tenements in Queensland and the planned sale of its Mount Morgan mining leases in Queensland will cut debt to below $30 million by March 2013, if not sooner.

Once its balance sheet is strong enough Labuschagne is keen to get into merger activity which is sweeping the gold sector, and sees Norton as a predator rather than target.

“If I can help it, I’ll do it,” he said, adding that Norton would look at takeover opportunities in Australia and offshore.

“I feel disappointed we can’t at this stage participate in that consolidation process because of where the share price is.”

China Nonferrous Metal Industry’s Foreign Engineering and Construction Co said on Monday that it would increase its stake in Australian miner Terramin Australia Ltd in a deal worth 32.35 million yuan ($5 million).

Terramin will sell 12.3 million shares to China Nonferrous Metal at A$0.37 ($0.406) apiece in a private placement that would increase the holdings of the Chinese developer of non-ferrous metal resources to 19.86 percent from 14.38 percent, according to a statement to the Shenzhen Stock Exchange.

Terramin will use the share sale proceeds to develop two zinc and lead mining projects, the statement said.

Terramin posted a loss of A$9.875 million last year and its assets totalled A$147 million.

Chinese companies have been eager to secure supply of raw materials through overseas acquisitions to meet rising domestic demand in the world’s fastest-growing major economy. ($1 = 6.437 Yuan) ($1 = 0.910 Australian Dollars)

Metals prices pushed upward amid the same unresolved concerns that moved China’s futures markets Tuesday, including the ongoing strike at world’s largest copper mine and the unbroken stalemate in the US over raising the country’s debt limit.

The most active copper contract, for October delivery, rose about 0.6 percent on Wednesday to settle at 72,830 yuan ($11,307.08) per ton on the Shanghai Futures Exchange. The contract jumped 0.8 percent at the market’s opening, following the rise in international copper prices overnight.

The benchmark three-month copper contract on the London Metal Exchange rose 1.7 percent in Tuesday’s session, but then retreated on Wednesday. It was trading at $9,821 per ton, down 0.2 percent, at 3:15 pm Beijing Time on Wednesday.

SHFE gold prices rose steadily on Wednesday, with the most traded contract rising 0.4 percent to settle at 336.84 yuan per gram. The price of gold for immediate delivery hit a record high of $1,624.55 an ounce on the COMEX on Wednesday.

Other SHFE base metals benefited from the rise in international prices overnight, with the most active aluminum contract spiking 1.9 percent to settle at 18,210 yuan per ton. The contract was up more than 3.5 percent for the week due to strong fundamentals, according to Tong Changzheng, an aluminum analyst with Huatai Great Wall Futures.

A bulletin on the China Nonferrous Metal Industry Association website highlighted a rumor that may have influenced aluminum futures, according to an analyst surnamed Yuan with Shanghai East Asia Futures.

The bulletin said that Indonesia may impose export restrictions on aluminum ore to China, though probably not this year.

“China, the largest consumer of aluminum, imports 80 of its aluminum ore from Indonesia, so the change could constrict supply,” Yuan said.

Zinc for October delivery rose 1.3 percent to settle at 19,010 yuan per ton.

The September delivery lead contract gained about 1 percent to settle at 17,740 yuan per ton at close on Wednesday.

National Aluminium Co., India’s third-largest producer, increased its alumina capacity 33 percent to boost exports and tap global demand for the raw material used to make the lightweight metal.
Capacity at the Damanjodi refinery in the eastern state of Orissa was expanded to 2.1 million metric tons from 1.58 million tons, Production Director A.K. Sharma said today in a telephone interview. The additional output will start on Aug. 1 and stabilize in a month, he said.
Rising incomes and public works in China and India, the fastest growing major economies, are driving consumption of aluminum, used in everything from aircraft to beverage cans. Japan, Asia’s largest aluminum importer, is placing more orders as the nation rebuilds from its worst earthquake and tsunami. Alumina prices have risen 20 percent from start of this year until May 27, according to Metal Bulletin.
National Aluminium, based in the eastern city of Bhubaneswar, exported 702,554 metric tons of alumina in the year ended March 31. Shipments fell in the last two years as the company used more alumina to feed a 40 percent increase in smelter capacity. Bauxite is turned into alumina that in turn is refined into aluminum.
National Aluminium shares fell 1 percent to 78.15 rupees at the close of trading in Mumbai. The stock has declined 20 percent this year, compared with a 10 percent drop in the benchmark Sensitive Index.

According to the data for the first six months of the current year, Ukraine’s metal product exports increased by 3.1 percent year on year to 12.587 million mt. In June alone, Ukraine’s metal product exports declined by 2.2 percent compared to May, to 2.43 million mt.

In the given period, Ukraine registered a 9.7 percent increase year on year in its metal product imports to 804,000 mt. In June alone, Ukraine’s metal product imports increased by 7.3 percent compared to May, rising to 152,000 mt.

German aluminum output of 428,369 tonnes between January and May was up 5.3% from the same period a year earlier.

Mr Christian Wellner MD of GDA said that “The outlook for aluminum remains optimistic because customer industries are also continuing to develop positively. Germany’s aluminum industry is confident that production growth will continue in the H2 of 2011.

Preliminary GDA data showed that German January to May production of primary aluminum rose by 21.9% to 180,632 tonnes. Output of secondary aluminum smelters declined by 4.3%. Production of aluminum products is also rising. Output of rolled products increased by about 4.3% to 814,637 tonnes. Extrusion press producers raised output by 11.8% to 255,847 tonnes.

The Shanghai Composite Index rose 0.76 percent or 20.47 points to close at 2,723.49 points today on transaction value of 92.08 billion yuan.

The Shenzhen Component Index was up 0.90 percent or 108.33 points to close at 12,116.86 points today on transaction value of 77.08 billion yuan.

The non-ferrous metals sector extended yesterday’s increase. The share prices of aluminum stocks rose on rising aluminum prices. Two aluminum stocks, Yunnan Aluminium (000807, 9.96, +10.06%) and Jilin Liyuan Aluminum (002501, 29.38, +10.00%) surged by their daily limits. Fujian Minfa Aluminium (002578, 15.40, +7.17%), Shandong Nanshan Aluminium (600219, 9.61, +5.37%) Jiangsu Alcha Aluminium (002160, 15.43, +5.32%) all rose above 5 percent. Aluminum Corporation of China (601600, 10.69, +2.99%) said it will make full impairment provision for the entire carrying value of approximately 340 million yuan in expenditure incurred for the Aurukun development project in its 2011 Semi-Annual report.

Gold stocks all finished with gains today, such as Zhongjin Gold (600489, 29.02, +0.87%), Shandong Gold Mining (600547, 49.84, +1.01%) and Henan Yuguang Gold & Lead (600531, 27.72, +2.02%). Guangdong Orient Zirconic Industry Science and Technology (002167, 43.50, -0.68%) dipped reporting a 184.77 percent year-on-year rise in first half 2011 net profit attributable to shareholders to 58.7 million yuan.

Beijing Trust & Far Technology (300231, 31.12, +10.00%) and Guomai Technologies (002093, 16.47, +10.02%) led gainers from the information technology sector today. Many stocks from this sector rose more than 5 percent, including Beijing Venustech (002439, 39.60, +7.03%), Beijing TRS Information Technology (300229, 20.73, +6.86%), Fiberhome Telecommunication Technologies (600498, 27.74, +5.36%) and China Kejian (000035, 9.82, +5.03%). Zhejiang Dahua Technology (002236, 47.40, +4.87%) reported a 64.32 percent year-on-year increase in net profit to 129 million yuan in the first half 2011.

Suzhou Electrical Apparatus Science Academy (300215, 106.70, +10.00%) surged by its daily limit after it posted a 72.18 percent year-on-year increase in first half 2011 net profit to 43.56 million yuan.

Several rail-related companies stopped declining. Beijing Jiaxun Feihong Electrical (300213, 19.11, +4.08%), Qingdao Tgood Electric (300001, 20.58, +1.48%), CSR Corporation (601766, 5.85, +0.52%) and China CNR Corporation (601299, 5.69, +1.07%) all ended with increases today. Meanwhile, Beijing Century Real Technology (300150, 26.90, -0.96%) and China Railway Group (601390, 3.75, -0.56%) fell less than 1 percent.

Airlines did not continue gains made in the last two days. Air China (601111, 10.07, -2.89%), China Southern Airlines (600029, 8.51, -1.96%), and China Eastern Airlines Corporation (600115, 5.56, -0.71%) all fell today.

Banks continued to fall. China Merchants Bank (600036, 12.26, -0.73%), Bank of Communications (601328, 4.79, -0.62%), China Construction Bank Corporation (601939, 4.71, -0.42%) and the heavyweight Industrial and Commercial Bank of China (601398, 4.28, -0.23%) all traded lower. Shares of Hua Xia Bank (600015, 10.23, -0.68%) had not increased for 8 straight trading days.

Chinese copper industry experts believe that the government’s recent decision to shut outdated copper facilities will be offset by the ongoing expansion of domestic refined copper output capacity, market participants in China said Thursday.

“We see little market impact from the elimination of outdated capacity due to the ongoing copper expansion projects,” a copper analyst with Beijing Antaike, the state-run metals consultancy said, without elaborating on the ongoing projects.

China’s Ministry of Industry and Information Technology said July 12 that it would eliminate total outdated copper smelting capacity of 425,000 mt/year by the end of 2011.

Meanwhile, China last year added refined copper output capacity of 590,000 mt/year, lifting national refined copper capacity to 5.88 million mt/year as of end-2010, figures from Ministry of Commerce showed.

Separately, in Zhejiang, a source with the subsidiary of key Chinese nonferrous metals trader Wanxiang Group said China was expected to add 800,000-900,000 mt/year new copper capacity this year. “It’s big enough to offset the impact from the outdated capacity shuttering,” the source said.

In South China, a source with the subsidiary of a Chinese copper smelter said: “Before the state’s announcement, some companies with outdated facilities had already ceased using theirs, so we see minimal impact from the shuttering news.”

In another development, Chinese copper industry sources said the recent talk in China about using aluminum to replace copper due to rising copper prices would not have a significant impact on the copper market, citing the difficulties in using aluminum to fully substitute copper and lack of market acceptance.

“Due to the performance factor, aluminum has proved unable to replace copper in many cases, so we don’t see a major impact from the substitution talk on the copper market,” the Antaike source said.

The Wanxiang source said that some air-conditioner makers in China were trying to use aluminum to replace copper in the connecting pipes, but as aluminum pipes don’t function as well as copper ones, the replacement was not popular. “As air-conditioners are inexpensive, consumers would rather buy those made using better material,” he said.

The Antaike source said China’s copper consumption was expected to grow 8% to 7.35 million mt in 2011 from 6.8 million mt in 2010. However, other analysts predicted China’s national import volume in 2011 would be less than the 2010 levels, citing rising domestic refined copper output.

“We see China’s copper import volume to rise to around 200,000 mt/month by the fourth quarter of this year, when the boom domestic copper consumption season comes, but annual import volume this year should be less than last year’s on rising domestic refined copper output,” the Wanxiang source said.

China imported 178,638 mt refined copper in June this year, down 16% on year, customs figures showed, while in 2010, China imported 2.92 million mt refined copper in 2010, down 8% from 2009.

China produced 2.644 million mt refined copper in the first half of this year, up 14% on year, figures from State Statistics Bureau showed.

London Metals Exchange three-month copper prices were $9,644-9,805/mt over Monday-Wednesday, much higher than prices of of less than $9,000/mt in December last year.

Chinese stainless steel production could increase by as much as 15% or more this year, Natixis Commodity Markets said in its third-quarter metals review Thursday.

Such a rise would potentially create a similar increase in demand for nickel and would offset an emerging surplus, it added.

NCM believes that rising production of stainless steel in China helps to explain declining LME nickel stockpiles earlier in the year and that rising demand for nickel could see a tighter market than previously forecast.

“As such, we have adjusted our forecast for this year’s market balance, projecting a 16,000 tonne deficit, ie a significantly smaller surplus during the second half of the year than we had initially been expecting. For 2012, the corresponding surplus is similarly diminished,” NCM said.

NCM also believes that the production of higher-quality nickel pig iron is likely to become a competitor to primary nickel production. Chinese producers have started to source higher-quality nickel ores to produce better quality NPI that can be used in a wider application of stainless steels, the report noted.

“This is nothing short of a revolution in the global nickel industry. From importing cheap nickel ores as an input to relatively low-quality stainless steel, Chinese producers are moving towards using more advanced furnaces to process higher-quality ores and produce high-grade stainless steel,” NCM said.

As a result of the better demand forecast, NCM has raised its base price forecast for nickel over 2011 and 2012. However, the report did suggest that if manufacturing in China weakens significantly, this would likely see a larger surplus develop and prices soften. “For 2011, we see an average nickel price of $25,300/mt, followed by an increase to an average price of $26,500/mt in 2012,” NCM stated.

Three-months nickel closed London Metal Exchange floor trade at $24,550/mt Thursday.