SHANGHAI, Jul 6 (SMM) – This is a roundup of China’s base metals output in June. SMM surveyed major producers in the market to obtain first-hand information for calculation.
China's output of refined copper in June dipped 3.3% on the month but rose 10.5% on the year and came in at 722,500 mt, SMM survey showed. Output during the first half of the year stood at 4.33 million mt, up 12.9% from last year.
Maintenance, equipment failure, and technical upgrades on environmental grounds accounted for the month-on-month decline, which was in line with SMM's expectations. The decline occurred even as Jinchang smelter in Anhui province commissioned new capacity.
Qinghai Copper, which began trial production at its 100,000-mt-capacity project on May 29, has not begun to produce copper cathode. Another copper smelting project with an annual capacity of 400,000 mt at Chinalco Southeast Copper in Ningde of Fujian province started trial production on June 30. This is the largest copper smelting project in China in the last five years.
SMM estimates copper output to dip further in July to around 712,800 mt, as production cuts are scheduled at Jinchuan, Fuye Group, Minmetals Copper, and Zhangjiagang United Copper. Year on year, output will grow 12.6%. Output in the first seven months of 2018 is expected to come in at 5.04 million mt, up 12.8% on the year.
China produced 3.02 million mt of primary aluminium in June, down 2.3% from a year ago. For the first half of 2018, output stood at 17.81 million mt, down 2.7% year on year.
Annualised operating capacity grew 580,000 mt from May to 36.76 million mt in June as production in Henan province resumed and as new capacity in Guangxi, Inner Mongolia and Gansu provinces was commissioned.
We expect output in July to grow 0.2% year on year and stand at 3.13 million mt as domestic aluminium producers cut production on supply-side reform last year and as operating capacity increase in 2018. Capacity swaps are likely to continue to bolster operating capacity, even as some capacity in Xinjiang and Shaanxi provinces would be cut later this year.
SMM lowered our expectations of 2018 output, to 37 million mt. This will be up 1.9% from 2017, slower than the 14.2% growth last year, as new capacity is commissioned and production recovers slowly.
China's alumina output in June rose 5.4% year on year and registered at 5.97 million mt, SMM data showed. Average daily output rose 1.8% from May and stood at 199,000 mt in June as production resumed at Sanmenxia Kaiman and Fusheng Aluminium, and as output increased at Guangxi Huayin and Chinalco Henan. Output also grew as maintenance at Pingdingshan Huiyuan ended and as Shanxi Huaqing commissioned new capacity.
Production for the first half of 2018 gained nearly 2% from 2017 and came in at 35.63 million mt. SMM estimates that alumina output in July will stand at 6.01 million mt with average daily output lower at 194,000 mt. Producers in north China, such as Chinalco Shanxi, Henan Wanji, and Shandong Xinfa, plan to cut production or undertake maintenance in July as prices of alumina fall towards the cost lines. This is likely to account for the daily output decline.
With fewer working days in June than May, nickel production in China dipped 2.5% month-on-month in June to 11,900 mt. Year on year, production shrank 5.3%, showed SMM data.
Output in the first half of the year declined 8% from the same period last year and stood at 71,300 mt.
With more working days in July than June, nickel production in July is likely to stand at 12,300 mt. Operating rates are likely to remain flat from June.
Nickel pig iron (NPI)
China’s NPI output in June fell 12.8% from May to 32,500 mt in nickel content amid a sharp decline in high-grade resources due to environmental probes across Jiangsu, Inner Mongolia, Shandong and Guangdong provinces, etc. The production was 3% higher from the same period last year, however.
In June, high-grade NPI output went down 14.3% from a month ago to 28,000 mt in nickel content and low-grade NPI output dipped 1% to 4,300 mt in nickel content.
In the first half of the year, overall NPI production came in at 219,800 mt in nickel content, up 16.5% year on year.
We expect output in July to increase 7.8% to 35,100 mt in nickel content as some plants would resume their production after the month-long probes come to an end.
China produced 28,900 mt of nickel sulphate, in physical volumes, last month. This translates to 6,357 mt in metal content, down 26% from May. China’s output during the first half of the year registered at 206,800 mt, up 43% from the same period last year.
Last month, plants in Guangdong and Guangxi provinces underwent rectification as environmental probe focused on illegal dumping of solid waste, and producers in Jiangsu and Jiangxi provinces cut production on local environmental policies. These accounted for the month-on-month decrease in output. In addition, demand weakened from downstream ternary precursor industry due to financial pressure, resulting in a pile-up of inventory.
Production is expected to rebound in July as environmental restrictions ease.
China produced 429,800 mt of refined zinc in June, up 1.6% month on month but down 7.1% year on year. The output during January-June came in at 2.69 million mt, up 3.7% from the same period last year.
We expect the output to decrease 11,100 mt, or by 2.6%, to 418,600 mt in July. This would be 8% lower than July 2017. However, the January-July production would see a 2% year-on-year increase.
[Correction: A previous version of this report mistakenly reported a lower production forecast for July. It has since been corrected.]
China produced 236,700 mt of primary lead in June, down 5.5% month on month and 9.6% year on year. In the first six months of this year, the output came in at 1.43 million mt, down 8.7% from a year ago.
In June, inspection teams from the central government settled in Henan, Hunan, and Yunnan provinces to review the rectification works for previous environmental issues across those regions. A 30-50% production cut was also seen in Jiyuan city in Henan, a major lead producing province in China, due to polluted weather.
Technical upgrades at Anhui Tongguan, maintenance at Jiangxi Jinde and Yunnan Mengzi also accounted for the month-on-month decline in output. Smelters that suspended production in May, however, recovered their production last month.
China produced 12,215 mt of refined tin in June, down 16.5% from May as production in major production areas such as Yunnan, Guangxi, Jiangxi and Guangdong provinces was affected by the environmental reviews initiated by the central government. Some medium-sized and small producers across these regions suspended briefly between late June to early July while Guangxi-based China Tin Group stopped production from June 10 for equipment maintenance.
We expect output to further decline to 12,200 mt in July as it remains unclear when China Tin can resume production. Maintenance at China Tin, the largest producer of tin in China, was scheduled to end by July 25.
Production across other producers is likely to gradually recover after month-long environmental checks end.