Refined copper output during June was 568,200 mt, unchanged MoM, but up 10.32% YoY. YTD output through June was 3.23 million mt, up 12.84% YoY. Refined copper output in June recorded its highest single monthly output so far this year, but surprised many analysts. According to a recent SMM survey, production cuts or suspensions at some smelters using scrap copper as raw material dragged down overall operating rates for June to 86.56%. Scrap copper imports also continued to fall June on a monthly basis and imports during the first six months of 2013 were down 7.2% YoY. Tight supply of scrap copper caused production at copper smelters using scrap copper as raw material to fall significantly. 

 

According to China Customs, imports of copper concentrate during the first half of 2013 rose 32.02% YoY. Imports of anode copper grew 15.13% YoY, but output of domestic copper concentrate was up 13.47%. This increased supply helped smelters to run at high operating rates, and when coupled with output from new capacity, refined copper output recorded a growth of over 10% during 1H 2013. With the implementation of new policies for the copper concentrate processing trade, copper concentrate imports destined for processing trade grew to 1.14 million mt, or 280,000 mt (copper content). However, it is unclear from customs data how much refined copper under processing trade has been delivered to bonded areas. The SHFE/LME copper price ratio has been positive recently, but Yangshan copper premiums still rose above USD 180/mt, creating more incentives for exports. As a result, despite a double-digit growth of refined copper in China, domestic copper spot market supply was continuously tight during 1H 2013. During the first six months of 2013, SMM premiums for high-quality copper averaged at RMB 101/mt, RMB 5/mt higher than a year ago. Premiums for 2Q were as high as RMB 224/mt. 

 

According to the National Bureau of Statistics (NBS), China’s copper semis output during June was 1.37 million mt, up 23.2% YoY. YTD output through June was 6.85 million mt, also up 21.8% YoY. A record high output in June was partially due to smelters rushing to complete mid-year production targets. The home appliance and electric power sectors showed strong demand for copper during 1H 2013. Completed investment in power grid construction totaled RMB 165.9 billion during this period, up 19.10% YoY. New transformer equipment capacity (220 kva or above) was 106.72 million kva, up 5.96% YoY. The length of new 220 kva or above power lines is now 20,491 kilometers, up 23.82% YoY. In the home appliance sector, output of washing machines, refrigerators, freezers, and air conditioners was also higher on an annual basis and helped increase copper demand.