SMM understood that the China Smelters Purchase Team (CSPT) held a general manager office meeting for the first quarter of 2024 in Shanghai on the morning of March 28. The CSPT group once again proposed a joint production reduction, recommending a production reduction range of 5-10%.
Boosted by this news, the most active SHFE copper contract prices stopped falling and rebounded today, rising by about 0.8% during the session, and as of 14:40, it was trading at 72,360 yuan/ton, up 0.4%. Copper contract prices have continued to surge since March 12 and rose to a new high of 73,900 yuan/ton since April 29, 2022.
The CSPT decided not to set the guidance TC for spot copper concentrate procurement in the second quarter. The TCs of spot copper concentrate in the first quarter of 2024 stood at $80/mt and $0.08/lb, $15/mt or $0.015/lb lower than those of the fourth quarter of 2023.
According to SMM data, spot smelting has been at a loss since 2024. In February, the average loss was 1,417 yuan/ton, which was an extremely low level in history.
Affected by the shortage of copper concentrate and high raw material costs, some smelters plan to conduct early maintenance or reduce the feed amount. In addition, the blister copper market has also been implicated. According to SMM, three companies in the north that supply blister copper and copper anode produced with copper concentrate will undertake maintenance in the second quarter. One company will implement a technical transformation project in the second quarter, resulting in a decrease in output. South China market is immune to copper concentrate supply as it mainly uses blister copper produced with copper scrap. But copper scrap supply is unstable. However, due to the relocation of a smelter in the south-west, its blister copper suppliers sold some of their supplies into the market, but that can hardly stem the reduction in supply. SMM predicts that domestic supply of blister copper may decline in the second quarter.
Based on the production schedules of various companies, SMM estimates that domestic copper cathode output in March will be 970,200 mt, a month-on-month increase of 19,900 mt or 2.09%, and a year-on-year increase of 18,800 mt or 1.98%. The cumulative output from January to March is expected to be 2.89 million mt, a year-on-year increase of 6.55% or 177,800 mt. However, this data should be the highest value in the first half of the year. In the second quarter, smelters will enter a period of intensive maintenance. According to our current survey, 7 smelters will be overhauled in April, involving a smelting capacity of 1.21 million mt. There are 8 smelters that need to be overhauled in May, involving a smelting capacity of 1.84 million mt. In June, there will be 8 smelters that need to be overhauled, involving a smelting capacity of 1.56 million mt.
SMM will continue to follow up the output cuts impact and report in a timely manner.
