Exclusive: China's base metals output in October

SHANGHAI, Nov 9 (SMM)—This is a roundup of China's base metals output in October 2020, from an exclusive survey of key producers by SMM analysts.

Copper

China’s copper cathode output increased month on month in October, as there was basically no maintenance at smelters and as large-scale smelters maintained high production in Q4. Although domestic copper scrap was in short supply in October, smelters kept relatively ample stocks of blister copper. Furthermore, as the new secondary copper policy took effect from November 1, concerns over copper scrap supply were eased.

SMM survey showed that China produced 821,600 mt of copper cathode in October, rising 2.73% from September, and 4.93% from a year ago. For the first ten months of 2020, China’s copper cathode output totalled 7.62 million mt, up 3.75% from the same period last year. (SMM copper cathode output for September was revised as 799,800 mt)

According to smelters’ production schedules, SMM expects China’s copper cathode output to rise 0.35% on the month and 3.21% on the year to 824,500 mt in November, and output for January-to-November is likely to increase 3.7% on the year to 8.44 million mt, as some smelters recover from maintenance and new capacities come online.

Alumina

China’s alumina output stood at 6.16 million mt in October. This included 5.95 million mt of metallurgical-grade alumina, with the daily output up 1% on the month and 5.95% on the year to 192,000 mt. Output of metallurgical-grade alumina over the first ten months of the year totalled 55.74 million mt, 3.23% lower on a year-on-year basis.

As of early October, the operating capacity of metallurgical-grade alumina stood at 68.65 million mt/year. SMM sees output of metallurgical-grade alumina at 5.62 million mt in November (30 days), with the daily output falling to 187,000 mt. SMM will continue to keep an eye on the effect of the heating season on works at construction sites.

Aluminium

China’s primary aluminium output rose 8.5% year on year to 3.25 million mt in October (31 production days), showed an SMM survey. As of the end of October, there was 38.67 million mt among 44.18 million mt per year of existing primary aluminium capacity in operation, while operating rates across Chinese primary aluminium producers stood at 87.5%. With new capacities in southwest China and Inner Mongolia coming online and some producers in Liaoning and Qinghai restoring production, the daily average primary aluminium output rose 1,000 mt from September to 105,000 mt in October. The proportion of aluminum water came in at 68.6%, up 1.7% month on month.

During the first ten months of 2020, China’s primary aluminium increased 4.2% year on year to 30.68 million mt, while consumption rose 8.5% to 31.5 million mt.

SMM expects China’s primary aluminium output to stand at 3.16 million mt in November, up 7.67% year on year.

Nickel

China’s refined nickel output dipped 0.67% or less than 100 mt from September and 9.25% from a year earlier, to 12,300 mt in October. Output at a Gansu smelter held largely unchanged on the month, while output at Xinjiang smelters increased by 18.89% from September after they restored production. Smelters in Jilin commenced annual maintenance and will not resume until after the Chinese New Year, and Guangxi smelters have yet to determine the resumption date.

SMM expects China’s refined nickel output to rise to 13,300 mt in November as the Gansu smelter is expected to return to normal production in mid-November. Smelters in Xinjiang and Shandong are likely to keep output unchanged on the month, while smelters in Tianjin, Jilin and Guangxi will remain suspended.

Nickel pig iron (NPI)

China’s NPI output shrank 5.2% from September to 43,700 mt Ni in October. This included 35,900 mt Ni of high-grade NPI, down 6.9% on the month, and 7,700 mt Ni of low-grade NPI, up 3.87% month on month. Firm high-grade NPI prices prompted stainless steel makers with poor profits to use substitutes, and slightly rising in-plant finished goods inventories and tightened raw material stocks drove NPI plants to reduce output. These led to the sharp fall in high-grade NPI output in October. Longer operating days in October contributed to the increase in low-grade NPI output.

SMM expects China’s NPI output to fall 6.2% on the month, and 22.97% on the year, to 40,900 mt Ni in November. Output of high-grade NPI is likely to shrink 6.9% to 33,400 mt Ni. Nickel ore shipments from the Philippines plunged in October as the country entered a wet season, and high-grade NPI plants had to trim output to maintain constant production. Besides, high-grade NPI profits shrank to near zero as downstream users depressed prices, and this also drove some plants to cut output. Output of low-grade NPI is expected to fall 3.02% to 7,500 mt Ni in November.

Nickel sulphate

China’s nickel sulphate output jumped 22.62% on the month and 45.43% on the year, to 77,400 mt or 17,000 mt in nickel content in October. This included 69,200 mt of battery-grade materials and 8,200 mt of electroplating materials. Total downstream demand for nickel sulphate increased by 8% in October, with demand for battery-grade nickel sulphate from new energy battery makers rising 10% on a monthly basis. Improved demand prompted some nickel salts plants to raise operating rates. Meanwhile, as battery-grade nickel sulphate was in short supply in September, some precursor and materials plants purchased large amounts of nickel briquette/powder to produce nickel sulphate on their own.

SMM expects China’s nickel sulphate output to dip 0.19% or 150 mt on the month to 77,200 mt in November.

Zinc

China's refined zinc output stood at 569,200 mt in October, rising 19,700 mt or up 3.59% on month and up 7.56% on year. For January-October, output totalled 4.99 million mt, up 4.42% from the same period last year. Zinc smelters produced 81,800 mt of zinc alloy in September, up 0.79% from the previous month.

SMM survey showed that China's refined zinc output in October basically met expectations. Treatment charges (TCs) for domestic and imported zinc concentrate have hovered at lows recently, triggering concerns about zinc concentrate supply, and news of output cuts at smelters arose.

However, SMM data showed that smelters other than those in Shaanxi kept relatively stable production in October. Furthermore, some smelters ramped up production at the end of this year to make up for the low output during Q1-2 caused by the COVID-19 pandemic. 

Some smelters are concerned about the shortage of long-term ore supply, so they take the initiative to pile up raw material inventories. However, the raw material inventories of some refineries in Shaanxi and Hunan are still at a low level, and the overall zinc concentrate raw material inventories are 25.21 days, down 1.2 days from the previous month.

Some refineries in Shaanxi and Yunnan have planned to turn into maintenance and reduce production in November. In addition, Xinjiang Zijin started trial production on November 1. However, it will take time for product precipitation, and SMM will keep tracking.

The domestic refined zinc output in November is expected to decrease more than 10,000 mt to 559,200 mt.

Lead

SMM data showed that China produced 264,000 mt of primary lead in October, down 1.4% from September, but up 1.15% from a year ago. For January-October, output increased 4.38% from the same period last year.

SMM survey showed that Haicheng Chengxin and small and medium-sized enterprises in Henan and Yunnan undertook maintenance due to equipment failure in October, while Western Mining and Zhongjin Lingnan resumed production. In addition, the small factories in Xinjiang resumed production after nearly half a year's maintenance. The overall output decreased slightly from the previous month, meeting the expectations of the previous report.

Smelters in maintenance last month will resume production one after another, such as Haicheng Chengxin, Western Mining and Yongning Gold and Lead, as well as small factories in Yunnan. Although the small smelters in Xinjiang stopped production again due to pandemic prevention and control, and some smelters in Hunan were still in a state of production suspension, the impact on the output was small, and although the primary lead output still showed an upward trend in November.

SMM expects China's primary lead output to reach 282,000 mt in November.

Tin

In October, most of the tin smelting plants operated normally during the National Day Holidays, so China’s output of refined tin stood stably.

SMM data showed that China produced 14588 mt of refined tin in October, down 0.37% from September. The output of a smaller plant in Jiangxi decreased due to its two-week maintenance. Recent tin prices moved in a mild range, and smelters are planning the production orderly. The output from most tin smelters was limited due to the tight supply of raw materials and low processing charges, while some of the small plants in Guangdong were restrained by the environmental protection policy. The supply of tin ores are expected to be still tight in November, but some smelters in maintenance will resume production.

China's refined tin output in November is expected to be around 14,700 mt.