March Copper Cathode Production Hit a Record High, Q2 Production Will Decline Due to Maintenance

March production was broadly in line with expectations, increasing by 63,700 mt from February on a MoM basis to a record high. Copper concentrate TCs continued to decline in March and have now fallen to $68.85/dmt. The price difference between primary metal and scrap narrowed significantly and inverted, but output of anodes produced from scrap has not yet been affected. Copper cathode production at smelters did not see substantial production cuts in March due to raw material issues. Sulphuric acid prices hit a record high, reaching as much as 1,600 yuan/mt in some regions, allowing smelters to maintain high operating rates despite deeply negative TCs. In March, five enterprises underwent maintenance, three of which extended from March into April, with relatively limited impact from maintenance; for some enterprises, the impact will be reflected in April.

In April, eight smelters are under maintenance, including three that extended from March into April and four that will continue from April into May. The impact from maintenance is expected to be mostly reflected in May. At present, a small number of smelters said anode procurement has become difficult, with relatively tight raw material supply putting pressure on production. April production is expected to decline by 33,000 mt MoM, with limited maintenance impact reflected. In addition, one smelter started operations in April, and its subsequent production will gradually increase.

Judging from days of in-factory inventory of copper cathode at smelters, days of inventories stood at 2.44 days in March, down 1.04 days MoM. It is expected to continue declining in April, partly due to lower production in April and partly because downstream consumption improved after copper prices fell in March. Some copper semis enterprises have already scheduled orders through April, which is expected to further draw down in-factory inventory. Looking ahead to May, the impact from concentrated maintenance at copper cathode enterprises is expected to emerge, and May production is expected to continue declining from April on a MoM basis.