China’s Commodities Output More Potent, Standard Chartered Says

China is becoming increasingly powerful as a supplier of raw materials including iron ore, aluminum, nickel and coal as it boosts output from local mines and smelters, according to Standard Chartered Plc.

Gold and copper are among the raw materials that are least vulnerable to China’s growing capacity, the bank said in a report dated June 21. Other commodities cited as insulated from the trend were platinum and diamonds, while tin was reported to be somewhat resilient.

This poses a risk to BHP Billiton Ltd. (BHP), Rio Tinto, Vale SA and Glencore Xstrata Plc, Standard Chartered said. The bank has reduced its recommendations on BHP, Rio and Vale to underperform and Glencore to neutral.

Gold output in China is poised to rise almost 10 percent this year to a record 440 tons, the nation’s mining association said last week.

“Although it is the world’s largest producer of gold, 40 percent of its production uses imported gold in concentrates,” according to Standard Chartered report. “It is not inconceivable that by 2016 China will be importing nearly 2,000 tons of gold each year, which is 80 percent of global mine supply,”

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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