[Cu] Refined Copper Output Increased in November With More Risk in Market Outlook

SHANGHAI, Dec. 16 (CBI China) -- National Bureau of Statistics data show that the output of refined copper in November was 330,200 mt, down 2.3% YoY, up 12.35% MoM, the cumulative output from January to November was 3,409,100 mt, up 9.6% YoY. As to the November output of specific enterprises, Yunan Copper and Dongying Fangyuan experienced the most obvious increase in output, up 10,600 mt and 14,000 mt, up 44% and 167% MoM, respectively. Other smelters such as Jiangxi Copper, Daye, Tongling and Jinchuan large-scale smelters increased output by 3% -10% MoM. The output of the producers using scrap copper and crude copper as raw materials declined. 

    Copper prices fell sharply in October, smelters announced production cut plans by the end of October, of which Yunan Copper planed to lower output from 440,000 mt to 380,000 mt, and other enterprises such as Daye also planed to cut productions, so in November the output is expected to be reduced by 294 kt from October levels. From the statistical data and our understanding of the actual situation, we believe that the published statistics exist errors, the actual output was lower than the published data by about 20 kt, that is, the actual output in November was about 310 kt. 

    The stable copper prices and increase in spot copper TC / RC may stimulate the smelters to change their production plans, spot copper prices in November will fluctuate within a narrow range of RMB 31500-34500/mt, with the premium being RMB 1,000-2,000/mt, and the spot prices are relatively stable. From the end of October, the spot copper concentrate TC / RC continued to rise, with the highest closing to USD 88 /mt/ 8.8 cents / lb. 

    November production data raised concern, the smelters had low interest in cutting production under the background of sharp decline in copper price, when demand weakened, supply reduction has lagged far behind, which will not only lead to oversupply and deepen the situation in 2009, but also bring pressures on copper prices.

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