SMM Copper Survey: Average Operating Rate in January Down to 87.68%

SHANGHAI, Feb. 25 (SMM) – SMM's most recent survey of 22 major domestic copper smelters (total capacity: 5.5 million mt/yr) yielded the following insights:

1) Average Operating Rate in January Down to 87.68%
The average operating rate during January at the surveyed copper smelters was 87.68%, down 5.18% MoM, and below 90% for the first time since August 2012. Some smelters scaled back production after meeting 2012 output targets and since the Chinese New Year holiday was nearing. In addition, one large smelter planned unit maintenance during January, which also caused the average operating rate to fall. 

2) Refined Copper Inventories Up Slightly, TC/RC for Spot Copper Concentrate Down Marginally
Refined copper inventories during January at the surveyed copper smelters increased to 4.4 days, up slightly from December's 4.1 days. Copper smelters reported lower operating rates and reduced sale volumes during January, but most smelters were still upbeat about future copper prices. In addition, spot copper traded at discounts except for 14-15 January when SHFE 1301 copper contracts were delivered, which depressed smelter interest in moving goods. As a result, refined copper stocks at copper smelters increased marginally in January.  

TC/RC for spot copper concentrate during January fell slightly to USD 70-75/mt (cents 7.0-7.5/lb), but the surveyed copper smelters had already prepared sufficient copper concentrate stocks when TC/RC was higher. In addition, large smelters normally secure long-term contracts, so many had little interest in buying spot copper concentrate.

Scrap copper smelters primarily purchased raw materials during January on an as-needed basis since domestic market supply remained tight and since cargo-holders quoted firm prices as the Chinese New Year holiday neared.