Exclusive: China's base metals output in Dec

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

Copper

China produced 761,600 mt of copper cathode in December, up 2.08% from November and up 2.37% from a year earlier. This grew output in 2018 to 8.73 million mt, some 9.1% higher on the year.

High spot concentrate treatment charges (TCs), robust spot premiums and sulphuric acid prices, as well as annual production targets, kept smelters operating in high gear last month. Maintenance had little impact on production. Utilisation rates across newly-commissioned and resumed capacities in 2018 mostly stood above 80%, with some capacities under full operation. This excluded Chalco's Ningde smelter and Wuzhou Jinsheng Copper, whose capacity utilisation rates remained around 30%.

Large smelters will slow production at the start of 2019, according to an SMM survey. SMM forecasts that China’s output of copper cathode in January will dip 3.8% on the month, but rise 4.52% on the year, to stand at 732,600 mt.

Alumina

China produced some 6.18 million mt of alumina in December, up 11.22% from a year ago, with average daily output at 199,000 mt, 1.69% lower on the month. In 2018, China's alumina output totalled 70.48 million mt, 3.01% higher than the same period last year.

Annual production targets drove some alumina producers to accelerate operation in December, but this failed to pull up average daily output. 

Tight supplies of natural gas in the heating season affected production across northern alumina producers. Air pollution warninsg across Henan province deterred operations of local alumina plants in December. Also in the northern province of Shanxi, intensified environmental curbs affected production of roasting furnaces. This, together with renovation on generators at some mills, are expected to affect alumina capacity by 800,000 mt for three months. Maintenance on roasting furnaces at some south-western mills also lowered daily production.

SMM expects average daily output of alumina in January to rise to 200,000 mt, as maintenance in the south-west ends and some capacity resumes in Shanxi mills after renovation works. This is estimated to generate 6.2 million mt of alumina output in January.

Aluminium

China produced over 2.99 million mt of primary aluminium in December, down 0.3% from December 2017. This lowered overall production in 2018 by 0.6% year on year, to 36.12 million mt.

By the end of December, domestic primary aluminium capacity under operation stood at 36.06 million mt/year, down 1.64 million mt/year from a high at the end of June. More aluminium plants cut capacity in December, including high-costs mills in provinces of Shandong, Gansu, Shanxi, Ningxia, and Henan. In 2018, cuts in aluminium capacity exceeded 3 million mt. Established aluminium capacity stood at 42.12 million mt/year by the end of December, with average operating rate at 85.6%.

However, some new capacity continued to commission in January, and capacity expanded further at mills such as Shanxi Meixin, Inner Mongolia’s Chuangyuan and Guyang, Guangxi Baikuang, and Yunnan Aluminium. SMM expects China’s output of primary aluminium to register 3.01 million mt in January, up 0.5% on the month but down 0.1% on the year.

Nickel

China produced 15,800 mt of nickel in December, 4.45% higher than December 2017. Output in January-December came in at 150,200 mt, down 6.08% from a year earlier.

On a month-on-month basis, nickel output gained 6.92% in December as producers stepped up output to meet annual production targets in the last month of 2018.

SMM learned that nickel producers would lower output in January as Chinese New Year and the traditional low season approach. Nickel output is expected to fall some 21% month on month in January.

Nickel pig iron (NPI)

In December, NPI output in China dipped 0.63% from November to stand at 41,500 mt in Ni content, up 2.65% on a yearly basis. This grew output in January-December to 457,000 mt in Ni content, standing 7.92% higher than the previous year.

On a month-on-month basis, output of high-grade NPI held stable in December, standing at 38,100 mt in Ni content, up 0.11% from a month ago. Restrictions on electricity use lowered operating rates across plants in Inner Mongolia while output across Liaoning expanded after environmental probes ended earlier in the month.

For low-grade materials, output decreased by 8.29% to 3,400 mt in Ni content last month as a plant in the south stopped producing low-grade NPI.

Output of NPI is expected to edge up 0.88% to 41,800 mt in Ni content in January with that of high-grade materials up 0.95% to 38,500 mt in Ni content and that of low-grade materials barely changed at 3,400 mt in Ni content.

Nickel sulphate

In December, China produced 9,262 mt in metal content of nickel sulphate, which translated to 42,100 mt in physical content. Production in 2018 came in at 99,200 mt in metal content, or 451,100 mt in physical content.

Compared to a month earlier, production rose 3.57% in December, driven by higher output across precursor plants.

Margins on nickel sulphate that is produced by nickel powder or briquettes and growing precursor output prompted precursor plants to produce nickel sulphate.

Raw material stockpiling across ternary precursor plants for CNY kept demand for nickel sulphate upbeat in December-January, while supplies of nickel sulphate failed to expand significantly. This kept the nickel sulphate market in a tight supply-demand balance.

The first stage of MCC Ramu's nickel sulphate project in Caofeidian, with annual capacity of some 50,000 mt, commissioned in late December and has begun to produce output. Products have not entered the market as the company finetunes product quality.

MCC Ramu's ternary precursor project in Caofeidian remains under construction. The company plans to sell its nickel sulphate in 2019 before ternary precursor capacity comes online.

Zinc

While extended gains in zinc concentrate treatment charges prompted some smelters to step up production, China’s overall output of refined zinc shrank from November in December as the relocation of Zhuzhou Smelter Group’s smelting facility affected output.

Output of refined zinc in China totalled 448,400 mt in December, down 1.74% month on month and 7.29% year on year, SMM data showed. This lowered annual output by 2.43% from 2017 to stand at 5.33 million mt.

As TCs for zinc concentrate extended their gains, some 15 smelters included in SMM’s survey raised December production by up to some 1,000 mt from November.

Production schedules across smelters showed that most smelters are likely to maintain normal production in January. Zhuzhou Smelter Group is likely to see further declines in output due to the relocation of smelting facility. Power issues are also likely to affect output at Hechi Nanfang Non-Ferrous Metals Group in January.

China’s output of refined zinc is expected to decrease by 17,300 mt, or 3.86% month on month to stand at 431,200 mt in January.

Lead

Production targets at the year-end and resumption from maintenance across smelters in Shandong and Henan buoyed December's output of primary lead by 3.74% on the month and 3.49% on the year, to 274,000 mt. However, overall production in 2018 stood 8.57% lower than that in 2017, at 2.995 million mt.

Several primary smelters in Yunnan planned to undergo maintenance at the end of January, and smelters in other regions are expected to slow their operations after going at full production last month. This, coupled with scheduled maintenance at mills in Hunan and Yunnan provinces around Chinese New Year, will lower output of primary lead by over 3,000 mt from December to 271,000 mt in January, SMM expects.

Tin

China’s tin output expanded 6.6% from a month earlier to stand at 12,020 mt in December, as China Tin Group recovered part of its output later in the month, SMM data showed.

Production ramp-ups at some tin producers in Yunnan and Guangxi also bolstered overall output.

Some producers who stepped up production in November, on sharp gains in tin prices, adjusted their production to the normal level in December.

SMM expects tin output to extend its gains to 13,000 mt in January, as China Tin Group continues to recover output.