SHANGHAI, Aug 7 (SMM) – This is a roundup of China’s base metals output in July. SMM surveyed major producers in the market to obtain first-hand information for calculation.
Copper
China’s output of copper cathode in July grew 0.5% from June and stood at 725,800 mt. This is up 14.7% on the year. Year-to-date output through July increased 13.1% on the year to 5.05 million mt.
Higher productivity at some smelters and new capacities accounted for the growth in July, though maintenance and environmental initiatives affected output across Fuye Group, Minmetals Copper (Hunan), Zhangjiagang United Copper and Yuguang Gold & Lead. A combined 280,000 mt/year of new capacities from Henan Zhongyuan Gold Smelter, Tongling Jinchang Copper Smelter and Yuguang Gold & Lead yielded output. This compared to the 1.23 million mt/year of new refining capacity scheduled this year. While supply pressures are likely to grow, concerns over supplies of raw materials continue to linger.
In August, Fuye Group and Minmetals Copper (Hunan) will return from maintenance. This, combined with the release of new capacities, is likely to grow output to 743,600 mt, up 2.5% from July and 10.3% on the year. Total output in the first eight months of the year is expected to grow 12.8% year on year to stand at 5.8 million mt.
Alumina
China produced 5.91 million mt of alumina in July, up 2.4% from a year ago. Daily average output fell 4.1% from June to 191,000 mt as tight bauxite supplies and lower alumina prices prompted many producers, including Chalco Shanxi, Sanmenxia Kaiman and Shanxi Huaxing, to cut output or undertake maintenance. Alumina prices fell to cost levels in north China.
Output is likely to grow to 6.06 million mt in August, with daily average output likely to expand to 196,000 mt as most producers recover from output cuts or complete maintenance. But Chalco Shanxi and Sanmenxia Kaiman will continue to reduce production.
Aluminium
Chinese output of primary aluminium increased 0.2% on a yearly basis to 3.13 million mt in July. This marked the first year-on-year growth in 2018. In the first seven months of the year, output fell 2.2% from a year ago and stood at 20.94 million mt.
As of the end of July, the annualised operating capacity stood at 37.5 million mt, idled capacity registered at 4.4 million mt, and operating rates stood at 89.5%. Operating capacity in July fell 200,000 mt from June as some high-cost capacity across Henan, Shandong, Shaanxi and Gansu provinces shut or was replaced, and as new capacity in Inner Mongolia and Guangxi province was commissioned slowly.
Operating capacity in August is likely to grow slightly from July as thin profit margins and restrictions on construction of captive power plants affect the commissioning of new capacity.
SMM expects output in August to grow 2.2% on the year to 3.13 million mt as supply-side reforms affected output across Shandong, Xinjiang, Inner Mongolia and other provinces last year.
Nickel
Nickel production rose 4.7% on the month and stood at 12,400 mt in July. This is down 9.7% year on year. More working days and better profitability at smelters in south China accounted for the month-on-month growth.
Output during January-July fell 8.3% from the same period last year, and came in at 83,700 mt.
Domestic nickel production is likely to stand at 12,500 mt in August as operating rates are likely to remain largely flat on a monthly basis, according to an SMM survey.
Nickel pig iron (NPI)
NPI output in July increased 4.5% from June to 34,000 mt in nickel content. Producers resumed production after the first round of environmental reviews, but limited capacity release and extended checks in Jiangsu limited output growth in July. Production dipped 3.5% from a year ago.
In July, high-grade NPI output gained 5.1% month on month to 29,700 mt in nickel content and low-grade NPI output grew 0.6% on the month to 4,300 mt in nickel content.
Overall NPI production during January-July stood at 253,900 mt in nickel content, up 13.4% year on year.
Output in August is expected to expand 8.9% on the month to 37,000 mt, as output resumption continues.
Nickel sulphate
China produced 28,500 mt of nickel sulphate in physical volumes in July. This translates to 6,264 mt in metal content, down 1.6% from June. Output at SMM’s surveyed producers stood at 27,100 mt in physical volumes. Domestic production during January-July registered at 235,300 mt, up 38% year on year.
Output in July might have already fallen to a low of 2018 as environmental probes started to ease. A producer in south China is likely to operate normally in August after it resolved environmental issues and resumed production from mid-July. Other producers that faced environmental restrictions, such as those in Jiangxi, pushed for resumption.
Production is expected to grow to 34,100 mt in August, or 7,503 mt in metal content, driven by output resumption in south China and output ramp-up at a producer in the north.
Zinc
Maintenance lowered output of refined zinc across Chinese smelters to 408,400 mt in July, down 21,700 mt or 5.1% from June. This is down 10.2% from July 2017. Total output in the first seven months of the year stood at 3.1 million mt, up 1.7% on the year.
High temperatures, the low season and losses drove some smelters to undertake maintenance in July, when SHFE zinc prices dipped to 20,000 yuan/mt.
Chihong Zinc & Germanium and Xing’an Copper & Zinc Smelting began maintenance in July, while output continued to decline across Baiyin Nonferrous Metals, Chifeng NFC Zinc Industry and Shaanxi Dongling Industry & Trade Group.
Output of refined zinc in August is expected to grow 18,500 mt or 4.5% from July but fall 4.3% on the year to stand at 426,900 mt. Most smelters will recover from maintenance in August, except several smelters such as Bayannur Zijin Nonferrous Metals. Year-to-date output through August is likely to gain 0.9% on the year.
Lead
China produced 255,500 mt of primary lead last month, up around 8% month on month, but down 10.2% year on year.
Production grew 19,000 mt from June as smelters in Henan’s Jiyuan city resumed operations at the start of July after environmental checks. The end of maintenance works at Jiangxi Jinde, Chifeng Shanjin Silver & Lead and Yunnan Mengzi Mining and Smelting also accounted for the increase.
But growth stood below an estimated 21,000 mt, affected by 15 days of maintenance at Yubei Gold & Lead, product structure adjustment at Zhuzhou Smelter and extended technical upgrading at Anhui Tongguan Nonferrous Metals. Environmental self-checks at smelters in Guangxi and Hunan provinces also lowered production.
We expect output of primary lead to increase further to 265,800 mt in August as the environmental factor eases.
Primary smelters in Jiyuan city resumed operations after environmental probes ended. Maintenance works concluded at Henan Zhicheng Refining, and technical overhauls also ended at Anhui Tongguan Nonferrous Metals. Smelters that were affected by checks in Yunnan and Guangxi are also likely to return online this month. These, and more working days in the month, will further grow lead production in August.
A unit glitch continues to affect production at Chihong Zinc & Germanium. Yubei Gold & Lead Group continues with maintenance works. Western Mining will close for 30 days of maintenance in the middle of August.
Tin
China’s output of refined tin in July remained largely flat from June levels, at 12,206 mt, as environmental probes lasted from June to the first half of July. Producers did not resume production until the second half of July. China Tin Group remained closed in July for annual maintenance and environmental issues.
Output is likely to grow to 13,200 mt in August as production recovers across China Tin Group and other producers. China Tin reopened from August 1.
