Copper Ore and Scrap Supply Both Tight, Copper Cathode Production Hard to Increase [SMM Analysis]

       In August, domestic copper cathode production reached 1.147 million mt, up 1.79% MoM and down 2.09% YoY; the cumulative growth was 356,100 mt. In August, some smelters completed or neared the end of maintenance, with production gradually recovering, but tight supply of copper anodes still resulted in a significant impact from maintenance. The August imported copper concentrate index was -182.81 $/dmt, down 34.53 $/dmt MoM from July. In August, SMM's calculated monthly average profit and loss for smelters (purchasing spot copper concentrates, including by-product revenue) was -2,091.57 yuan/mt. This month, scrap-derived copper anodes remained tight, and scrap-derived copper cathode production continued to decline; this reduction is the main reason why copper cathode production has been slow to rise after the maintenance of ore-derived copper cathode.

       In terms of days of inventories, smelters' copper cathode inventory days in August were only 1.62 days, down 0.44 days MoM. In August, as the export window for copper cathode opened, some smelters prepared stock for concentrated export, leading to a decline in in-factory inventory.

       September domestic copper cathode production is expected to be revised down beyond expectations, with only 1.139 million mt forecast, down 0.67% MoM. In September, there will be unexpected maintenance at smelters, leading to a downward revision in production. Although some smelters resumed production after maintenance in August, the tight supply of ore and scrap-derived copper anodes will be hard to ease, continuing to suppress production from returning to high levels. In September, large smelters will still have concentrated maintenance, with the impact from maintenance expected to exceed 30,000 mt. Moreover, newly commissioned enterprises in September will be ramping up production slowly and will not have contributed significant growth. In terms of days of inventories, smelters' copper cathode inventory days in August were only 1.62 days, down 0.44 days MoM. In August, as the export window for copper cathode opened, some smelters prepared stock for concentrated export, leading to a decline in in-factory inventory.