Jiangxi Copper Cut Production, April Copper Imports Down-Shanghai Metals Market

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Jiangxi Copper Cut Production, April Copper Imports Down

SMM Insight 10:27:00AM May 15, 2013 Source:SMM
SHANGHAI, May 15 (SMM) –
 
China Copper Imports Expected to Have Fallen in April
China’s unwrought copper and copper semis imports were down 7% MoM and 21% YoY during April, indicating that China’s April refined copper imports are expected to have fallen 20,000-25,000 mt to 195,000-200,000 mt. 
 
The MoM decline in copper imports could reflect the consumption of SHFE and bonded warehouse inventories, while the sharp YoY decline mainly resulted from massive financing-driven copper trading in China.  
 
China’s copper imports in May are expected to rise as March and April saw more opportunities for arbitrage by importing copper. Signs show that arbitrage has started affecting copper supply and demand outside China, as LME copper inventories stopped falling in the past couple weeks. Overall, market was still relatively positive to copper prices in the short term. 
 
Jiangxi Copper Halts One Smelting Production Line for Raw Material Shortage
China’s largest refined copper producer Jiangxi Copper halted one 100,000 mt/yr smelting line and advanced maintenance cycles for its two facilities with aggregated capacity at 450,000 mt/yr last weekend, due to scrap copper shortage.
 
The closed smelting line is located in Guangdong’s Qingyuan city and mainly produces with scrap copper.
 
The unexpected production halts reflected mounting pressure confronting domestic smelters caused by tight raw material supply. An increasing number of smelters may cut or halt production in the next few months. The supply tightness is mainly a result of low prices. Yantai Penghui Copper, a subsidiary of Jiangxi Copper, and North Copper had already cut production due to shortfalls in scrap copper supplies. 
 
A 367,000 mt/yr facility of Guixi Copper should be closed during May 8-29 and is not expected to return normal production until early June. Maintenance will also be conducted to an 80,000 mt/yr facility in June. The company originally planned to undertake the maintenance in late 2013.  
 
Jinchuan Nonferrous’ 400,000 mt/yr Copper Smelting Project to Come Online in June
The 400,000 mt/yr copper smelting project of Jinchuan Nonferrous will start production in late June, with all necessary preparations expected to be completed before June 25.  
 
Goldman Sachs Bullish to Copper Prices, Hedging Advised 
Analysts of Goldman Sachs reiterated a bullish attitude towards copper prices on May 10, noting that the falling copper inventories globally and improving demand in China will help bolster copper prices.
 
However, analysts also warned that the increasing ore output and slowing consumption growth in China will leaving upward room for copper prices contracting. 
They believe the bullishness will result in overcapacity in 2014. Besides, hedge is advised for copper producers as any copper price increase this year may allow opportunity for hedge. 

Jiangxi Copper Cut Production, April Copper Imports Down

SMM Insight 10:27:00AM May 15, 2013 Source:SMM
SHANGHAI, May 15 (SMM) –
 
China Copper Imports Expected to Have Fallen in April
China’s unwrought copper and copper semis imports were down 7% MoM and 21% YoY during April, indicating that China’s April refined copper imports are expected to have fallen 20,000-25,000 mt to 195,000-200,000 mt. 
 
The MoM decline in copper imports could reflect the consumption of SHFE and bonded warehouse inventories, while the sharp YoY decline mainly resulted from massive financing-driven copper trading in China.  
 
China’s copper imports in May are expected to rise as March and April saw more opportunities for arbitrage by importing copper. Signs show that arbitrage has started affecting copper supply and demand outside China, as LME copper inventories stopped falling in the past couple weeks. Overall, market was still relatively positive to copper prices in the short term. 
 
Jiangxi Copper Halts One Smelting Production Line for Raw Material Shortage
China’s largest refined copper producer Jiangxi Copper halted one 100,000 mt/yr smelting line and advanced maintenance cycles for its two facilities with aggregated capacity at 450,000 mt/yr last weekend, due to scrap copper shortage.
 
The closed smelting line is located in Guangdong’s Qingyuan city and mainly produces with scrap copper.
 
The unexpected production halts reflected mounting pressure confronting domestic smelters caused by tight raw material supply. An increasing number of smelters may cut or halt production in the next few months. The supply tightness is mainly a result of low prices. Yantai Penghui Copper, a subsidiary of Jiangxi Copper, and North Copper had already cut production due to shortfalls in scrap copper supplies. 
 
A 367,000 mt/yr facility of Guixi Copper should be closed during May 8-29 and is not expected to return normal production until early June. Maintenance will also be conducted to an 80,000 mt/yr facility in June. The company originally planned to undertake the maintenance in late 2013.  
 
Jinchuan Nonferrous’ 400,000 mt/yr Copper Smelting Project to Come Online in June
The 400,000 mt/yr copper smelting project of Jinchuan Nonferrous will start production in late June, with all necessary preparations expected to be completed before June 25.  
 
Goldman Sachs Bullish to Copper Prices, Hedging Advised 
Analysts of Goldman Sachs reiterated a bullish attitude towards copper prices on May 10, noting that the falling copper inventories globally and improving demand in China will help bolster copper prices.
 
However, analysts also warned that the increasing ore output and slowing consumption growth in China will leaving upward room for copper prices contracting. 
They believe the bullishness will result in overcapacity in 2014. Besides, hedge is advised for copper producers as any copper price increase this year may allow opportunity for hedge.