SHANGHAI, Sept. 19 (SMM) –A recent SMM survey of 21 major domestic copper smelters (total capacity: 4.66 million mt/yr) revealed the following insights:
1) Operating Rates in August Down Slightly
The average operating rate for August at the 21 major domestic copper smelters was 88.74%, down slightly by 1.31% from July levels. Although steep copper price declines in early August and falling TC/RC for spot copper concentrate negatively affected profits at copper smelters, SMM found most copper smelters were maintaining normal production and high operating rates. Some copper smelters using scrap copper as raw materials told SMM the fact that scrap copper prices were higher than refined copper had a negative impact on planned stockpiling, but the impact was limited since most had earlier restocked. However, as raw material inventories are consumed, refined copper output will likely fall in September.
2) Refined Copper Inventories Down, Scrap Copper Supply Tight
Refined copper inventories at the surveyed copper smelters were 55,175 mt in August, down slightly from July. Copper prices fluctuated weakly throughout August, and even without any clear price trends, most copper smelters maintained normal sales. Besides, the growing financial costs also propelled most copper smelters to move goods to generate cash.
Most copper smelters in the survey say copper concentrate inventories are still ample at present. However, supply of copper concentrate is falling as Japanese copper smelters gradually resume production. As a result, spot TC/RCs have also fallen, with mainstream offers reported between USD 60-80/mt or cents 6.0-8.0/lbs. Scrap copper inventories are also down, since higher prices affected copper smelters' plans to stockpile scrap copper.