Exclusive: China's base metals output in May

Published: Jun 8, 2018 14:48

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This is a roundup of China's base metals output in May. SMM surveyed major producers in the market to obtain information for calculation.

SHANGHAI, Jun 8 (SMM) – This is a roundup of China's base metals output in May. SMM surveyed major producers in the market to obtain information for calculation.

Copper: China's output of refined copperin May grew 1.3% on the month, 19.6% on the year, and came in at 747,300 mt, an SMM survey showed. Output in the first five months of the year gained 13.4% and stood at 3.60 million mt. Output increases at Fuye, Jinchuan and Jinlong smelters accounted for the month on month expansion.

In May, refining charges (RCs) for blister copper continued their declines. As of Thursday June 8, RCs of domestic and imported blister copper stood at 1,600-1,800 yuan/mt and cif $190-220/mt, respectively. The decline in RCs for blister copper did not affect overall May refined copper output. SMM sees further downward room in RCs for blister copper as domestic and foreign smelters undergo maintenance or face suspension. Shorter supplies of scrap copper and intensified environmental efforts limited the output of blister copper that was produced from copper scrap.

SMM estimates June's copper output at 728,900 mt, down 2.5% month on month and up 11.5% year on year. Output in the first half of the year is expected to come in at 4.33 million mt, up 13% on the year. This is based on scheduled productions, equipment failure and maintenance at some smelters as well as environmental protection efforts

Separately, a copper cathode project with an annual capacity of 100,000 mt at Qinghai Copper began trial production on Tuesday May 29. Copper cathode is expected to be produced a month later.

Alumina: China's alumina output came in at 6.06 million mt in May, up 6.7% year on year, SMM data showed. Average daily output rose 1.1% from a month ago and stood at 195,000 mt in May as two plants of East Hope and Guizhou Huajin resumed production. Huiyuan put its furnace under maintenance in May and this affected its alumina production for several days.

SMM estimates June alumina output to stand at 5.9 million mt with average daily output at 197,000 mt, given new capacity in Shanxi Huaqing. New technology adopted by Yunnan Aluminium is also likely to bolster alumina output in June.

Aluminium: China's aluminium output for May declined 3.2% on the year and stood at 3.07 million mt, SMM research found. Output in the first five months of this year dropped 2.7% on the year and came in at 14.79 million mt. The annualised operating capacity grew 280,000 mt from April to 36.18 million mt in May. Growth was higher as capacity resumed in Henan province and as newly-built capacity commenced production in Guangxi and Inner Mongolia.

Operating capacity is expected to rise further in June as new capacity will be commissioned across aluminium plants such as Hualei, Huarun, Huaren, and Baise. However, the commissioning of newly-built capacity and production resumption in the first half of the year are slower than expected. Growth of aluminium supplies in the first half of the year is expected to stand at -2.8%. Aluminium output is likely to fall 3.1% on the year to stand at 3 million mt.

Primary lead: China's primary lead output in May rose over 2.5% on the month to 247,800 mt as some primary lead smelters resumed operation after maintenance or rectification in April. The smelters include Hechi Nanfang, Hunan Shuikoushan, Jiangxi Copper and Henan Xinling. However, the increase fell under expectations as smelters such as Henan Jinli, Hunan Jingui, Chifeng Shanjin and West Mining undertook maintenance in May and some cut output on environmental concerns.

SMM expects that primary lead production will dip to 230,100 mt in June as primary lead smelters in Henan province were required to cut output by 30-50% for the central government's environmental review. Anhui Tongguan will upgrade its equipment and Jiangxi Jinde will conduct maintenance in June. Some smelters, such as Chihong Zinc & Germanium, Hunan Jingui, West Mining and Shaanxi Dongling, will conclude maintenance this month.

Zinc: China produced 423,100 mt of refined zinc in May, down 4.83% month on month and up 0.81% year on year, SMM data showed.

In May, some smelters resumed production after maintenance ended while maintenance continued across Sihuan Zinc & Germanium, Shaanxi Dongling and Shaanxi Zinc Industry. Besides, Yuguang Zinc Industry and Baiying Nonferrous Group began fresh production cuts and maintenance works in May. Production cuts and maintenance affected over 30,000 mt of output in May.

Some smelters began routine maintenance in the second quarter. Some smelters brought forward planned maintenance works or reduced production as falling zinc prices and low processing fees narrowed profit margins.

As maintenance at some smelters is slated to end this month, SMM estimates that refined zinc production will pick up 4.05% from May to stand at 440,300 mt in June. The figure is likely to be down 4.82% from last year.

Nickel: China's nickel production rose 2.5% month-on-month in May to 12,200 mt, with more working days in May than April. Year on year, production shrank 2.1%, showed SMM data.

Output in the first five months of this year declined 8.6% from the same period last year and stood at 59,400 mt.

With fewer working days in June than May, nickel production in June is likely to fall 2.5% from May to stand at 11,900 mt. Operating rates in June are expected to remain flat from May.

Nickel pig iron (NPI): China's NPI output in May, at 37,300 mt in nickel content, declined 8.3% month on month, but rose 36.2% year on year, SMM surveyed. Output in the first five months of 2018 reached 187,300 mt in nickel content and registered a 19.2% year-on-year increase.

High-grade NPI production declined over 7.8% on the month to stand at 33,000 mt in nickel content. Output of low-grade NPI dipped 11.4% month on month to 4,300 mt in nickel content.

Production cuts in Jiangsu, Inner Mongolia, Shandong, and Guangdong accounted for the declines. Plants in these regions had cut production on environmental concerns, SMM learned.

NPI output in June is expected to dip to 33,300 mt, down 10.8% from May, as China's central government launched the first round of environmental reviews on previous rectifications in 10 provinces this month.

Tin: China produced 14,629 mt of refined tin in May, 3% higher than in April as imports of tin ore picked up and tin smelters increased production on rising tin prices in late May. However, the output increase in May was limited due to domestic environmental reviews and low processing fees of tin concentrate.

We expect production in June to register around 14,200 mt, as Guangxi China Tin and some tin smelters in Jiangxi province undergo maintenance.

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Production data

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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