UPDATE 2-China Copper Output Hits All-Time High, July May Ease-Shanghai Metals Market

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UPDATE 2-China Copper Output Hits All-Time High, July May Ease

Industry News 03:49:13PM Jul 16, 2010 Source:SMM

HONG KONG, July 15 (Reuters) - Refined copper output in China hit an all-time record high in June as smelters profitably worked near full steam, a trend that may slow in the second half of the year on maintainence for several units and scarce scrap supplies.

China, the world's top copper producer, said refined output rose 6 percent on the month in June to 422,000 tonnes. The figure was a gain of 26.3 percent from a year earlier and surpassed the previous record 420,700 tonnes seen last November, the National Bureau of Statistics said on Thursday.

China's refined copper production accounts for about 80 percent of actual domestic consumption expected for this year, with the remainder met by imports in an economy which showed growth above 10 percent in the second quarter of the year. 

However the pace of growth in the second half of the year for the economy and refined copper production hinges on the Beijing's macro policies, which typically affect smelter material imports.

"China has a copper deficit but it still tries to make it in balance even though it relies on material imports. Unless smelters can not buy enough materials, they are unlikely to cut production," Grace Qu, Beijing-based copper consultant for U.K.-headquartered consultant firm CRU, said of the record output.
 
Refined copper prices SCFc3 have dropped by 11 percent since the start of the year when the government moved to tighten lending for the key property sector, but domestic smelters are still profitable and able to sell all output, an analyst said.

Qu said a 100,000 tonne-a-year copper plant in northeastern province of Shandong started production in the first quarter.

However, refined copper production will likely ease in July on tight supplies, and higher prices, of scrap and maintenance at some smelters.

Supplies of scrap are also falling following a more than 10 percent decline in metal prices CU-1-CCNMM in the past three months, which discourages scrap selling, traders said.

"Copper production should fall (in July) given supplies of scrap are falling," said Fu Bin, nonferrous metals analyst at Jinrui Futures, a subsidiary of top copper smelter Jiangxi Copper.

Fu said several smelters may have boosted output to the maximum in June before maintenance repairs this month.

Dong Ying Fang Yuan on Sunday started repairs at its 200,000 tonnes a year of smelting facility for one month and Yunnan Copper (000878.SZ), the third biggest copper smelter in China by smelting capacity above 400,000 tonnes year, has shut a unit in the southwest Yunnan province since July 1 for repairs for nine months. 

"June is the last month of the first half and some firms may have boosted output to meet their H1 business targets," Fu said.

Leading base metal user and producer China is also expected to see aluminium and zinc continue a downtrend seen in the June statistics production data as low prices bite.

ALUMINIUM

China's monthly aluminium production dropped 0.7 precent to 1.406 million tonnes in June from May's monthly record of 1.416 million tonnes.

The trends is expected to continue in July.

"More aluminium smelters may proactively cut production if the price stays at the 14,000 yuan level," Fu said, adding low prices may also force smelters to phase out outdated smelting facilities earlier than the end of this year, the deadline set by Beijing to close those facilities.

Costs of production to many smelters in China are estimated at an average around 15,000 yuan ($2,216) per tonne.

Spot aluminium prices AL-A00-CCNMM in China have stayed below 15,000 yuan since mid-May, at 14,660 yuan on Thursday.

Low prices have spurred some smelters, including 13 plants in the top production province of Henan, to cut aluminium production since June.

LEAD AND ZINC

Refined zinc output dropped 5.8 percent from a month earlier to 425,000 tonnes in June for the first time in the past five month with May's output hitting the second-largest monthly output after record 461,700 tonnes seen in last December.

June output was up 15.8 percent from a year earlier.

"(Zinc) production should not be rising in the third quarter. Smelters are suffering -- processing fees are low and metal prices are weak," a trade executive at a large smelter said of fees to turn concentrates into refined metal. "I am sure some small smelters are already cutting production."

China's monthly refined lead output however rose 14.3 percent to 312,000 tonnes in June following increased supplies of hydroelectricity to some provinces such as Yunnan.

But output dropped 10.3 percent from a year earlier.

Lead smelters are also suffering from low processing fees for concentrates, both from local miners and imports, and that may cause a fall in production in the coming two months, said the trade executive whose firm also produces lead. 
 

UPDATE 2-China Copper Output Hits All-Time High, July May Ease

Industry News 03:49:13PM Jul 16, 2010 Source:SMM

HONG KONG, July 15 (Reuters) - Refined copper output in China hit an all-time record high in June as smelters profitably worked near full steam, a trend that may slow in the second half of the year on maintainence for several units and scarce scrap supplies.

China, the world's top copper producer, said refined output rose 6 percent on the month in June to 422,000 tonnes. The figure was a gain of 26.3 percent from a year earlier and surpassed the previous record 420,700 tonnes seen last November, the National Bureau of Statistics said on Thursday.

China's refined copper production accounts for about 80 percent of actual domestic consumption expected for this year, with the remainder met by imports in an economy which showed growth above 10 percent in the second quarter of the year. 

However the pace of growth in the second half of the year for the economy and refined copper production hinges on the Beijing's macro policies, which typically affect smelter material imports.

"China has a copper deficit but it still tries to make it in balance even though it relies on material imports. Unless smelters can not buy enough materials, they are unlikely to cut production," Grace Qu, Beijing-based copper consultant for U.K.-headquartered consultant firm CRU, said of the record output.
 
Refined copper prices SCFc3 have dropped by 11 percent since the start of the year when the government moved to tighten lending for the key property sector, but domestic smelters are still profitable and able to sell all output, an analyst said.

Qu said a 100,000 tonne-a-year copper plant in northeastern province of Shandong started production in the first quarter.

However, refined copper production will likely ease in July on tight supplies, and higher prices, of scrap and maintenance at some smelters.

Supplies of scrap are also falling following a more than 10 percent decline in metal prices CU-1-CCNMM in the past three months, which discourages scrap selling, traders said.

"Copper production should fall (in July) given supplies of scrap are falling," said Fu Bin, nonferrous metals analyst at Jinrui Futures, a subsidiary of top copper smelter Jiangxi Copper.

Fu said several smelters may have boosted output to the maximum in June before maintenance repairs this month.

Dong Ying Fang Yuan on Sunday started repairs at its 200,000 tonnes a year of smelting facility for one month and Yunnan Copper (000878.SZ), the third biggest copper smelter in China by smelting capacity above 400,000 tonnes year, has shut a unit in the southwest Yunnan province since July 1 for repairs for nine months. 

"June is the last month of the first half and some firms may have boosted output to meet their H1 business targets," Fu said.

Leading base metal user and producer China is also expected to see aluminium and zinc continue a downtrend seen in the June statistics production data as low prices bite.

ALUMINIUM

China's monthly aluminium production dropped 0.7 precent to 1.406 million tonnes in June from May's monthly record of 1.416 million tonnes.

The trends is expected to continue in July.

"More aluminium smelters may proactively cut production if the price stays at the 14,000 yuan level," Fu said, adding low prices may also force smelters to phase out outdated smelting facilities earlier than the end of this year, the deadline set by Beijing to close those facilities.

Costs of production to many smelters in China are estimated at an average around 15,000 yuan ($2,216) per tonne.

Spot aluminium prices AL-A00-CCNMM in China have stayed below 15,000 yuan since mid-May, at 14,660 yuan on Thursday.

Low prices have spurred some smelters, including 13 plants in the top production province of Henan, to cut aluminium production since June.

LEAD AND ZINC

Refined zinc output dropped 5.8 percent from a month earlier to 425,000 tonnes in June for the first time in the past five month with May's output hitting the second-largest monthly output after record 461,700 tonnes seen in last December.

June output was up 15.8 percent from a year earlier.

"(Zinc) production should not be rising in the third quarter. Smelters are suffering -- processing fees are low and metal prices are weak," a trade executive at a large smelter said of fees to turn concentrates into refined metal. "I am sure some small smelters are already cutting production."

China's monthly refined lead output however rose 14.3 percent to 312,000 tonnes in June following increased supplies of hydroelectricity to some provinces such as Yunnan.

But output dropped 10.3 percent from a year earlier.

Lead smelters are also suffering from low processing fees for concentrates, both from local miners and imports, and that may cause a fall in production in the coming two months, said the trade executive whose firm also produces lead.