Exclusive: China's base metals output in Feb

SHANGHAI, Mar 8 (SMM) – This is a roundup of China's base metals output in February 2019. SMM surveyed major producers to obtain information for calculation.

Copper

China produced 719,600 mt of copper cathode last month, down 2.25% from January, due to fewer days of production in February. 

Environmental curbs lowered output at Yuguang Gold & Lead, while other smelters maintained regular operation.

On a yearly basis, copper cathode output in February grew 2.19%. Robust prices of sulphuric acid offset some pressure from lower spot concentrate treatment charges (TCs) on domestic copper smelters. Post-CNY recovery of downstream demand slowed from previous years, and this grew in-plant stocks of copper cathode at most smelters, SMM learned. 

While a rebound in prices of refined copper widened its spread with scrap prices after CNY, secondary smelters did not raise consumption of copper scrap, given the current stable supply of scrap materials and environmental factors. 

For March, SMM forecasts China's output of copper cathode to increase by 5.93% on the month, and by 6.85% on the year to 762,300 mt. March maintenance at Jinchuan’s Fangchenggang plant in Guangxi will have limited impact on output. 

Production in the first three months of 2019 will rise 4.7% on the year, to 2.22 million mt. 

Alumina

In February, China's production of alumina (metallurgical grade) registered 5.64 million mt, up 10.93% from a year ago, with average daily output at 201,000 mt. Annualised capacity in operation stood at 73.46 million mt. 

Refineries in Guangxi province completed maintenance in January, and operating rate in Guizhou province picked up as bauxite shortages eased last month. This, together with a smaller impact of production curbs in Henan and excess production in Shanxi, accounted for the higher output in February. 

Last month, Shanxi Zhaofeng retuned online after it shut during CNY on bauxite supply issues. Ore shortages drove Shanxi Xinghua to close some 350,000 mt of capacity. 

SMM expects the average daily output of alumina in March to rise 2,000 mt from February to 203,000 mt, as refineries in Shanxi will restart work after meeting ultra-low emission standards. Resumption of Bosai Minerals’ alumina project in Nanchuan of Chongqing, and Shandong Qixing project will also grow output. The environmental impact is expected to wane from March 15, when heating season curbs are lifted. 

Domestic alumina output is expected to climb 9.83% year on year, to 6.29 million mt in March. 

Aluminium

China produced some 2.68 million mt of primary aluminium in February, down 1.54% year on year. By the end of February, domestic primary aluminium capacity under operation stood at an annualised 35.9 million mt, down 130,000 mt/year from a year earlier. 

Despite new capacity at Inner Mongolia’s Chuangyuan and Guyang smelters, capacity cuts at Shaanxi Hengkang, Shandong Huayu, Shanxi Huasheng, Shanxi Huaze, Jiaozuo Wanfang, and Inner Mongolia Tongshun Aluminum kept operating capacity at lows in February. 

For March, SMM expects China’s output of primary aluminium to fall 1.6% from a year earlier, to 2.98 million mt. By the end of March, domestic primary aluminium capacity under operation is forecasted at an annualised 36.05 million mt, down 350,000 mt year on year.  

Unfulfilled capacity in 2018, as well as new and replacement capacity in Inner Mongolia, Guangxi, and Yunnan will continue to enter operation in March. Some capacity in Shandong will recover this month. 

Nickel

China produced 12,100 mt of refined nickel in February, up 9.32% from a year earlier, but down 0.82% from January. Fewer working days in February accounted for the month-on-month decline. 

Jilin Jien smelter stabilised its output at 500 mt from February. This offset a loss from the closure of refined nickel production lines at Guangxi Yinyi. 

For March, an increase in the number of working days is expected to buoy domestic output of refined nickel by 6% from February, to 12,800 mt. 

Nickel pig iron (NPI)

In February, NPI output in China decreased 4.89% from a month earlier to stand at 40,500 mt in Ni content. This was 17.83% higher from February 2018. 

On a month-on-month basis, output of high-grade NPI dipped 4.89% to 37,200 mt in Ni content last month, dragged by fewer working days. Capacity additions at a large NPI mill in Shandong province offset part of the decline. 

For low-grade materials, output dropped 1% from January, to 3,300 mt in Ni content last month.

Overall output of NPI in China is expected to rise 12.62% from February, to 45,600 mt in Ni content in March, with that of high-grade materials up 10.78% to 41,200 mt in Ni content, in anticipation of the continued release of new capacity in Shandong. 

Output of low-grade NPI is likely to climb to 4,400 mt in Ni content this month. 

Nickel sulphate

In February, China produced 9,647 mt in metal content of nickel sulphate, which translated to 43,900 mt in physical content.

Compared to January, production expanded 1.5% despite fewer working days and CNY closure, as some producers expanded capacity at the end of last year and at the start of this year. Those producers included Jinchuan Group, GEM Cooperation, and Ronbay Lithium Battery Materials.

Even as production rose, a shortage remained in the nickel sulphate market as downstream ternary precursor producers stockpiled actively last month. 

For March, new capacity and resumption from CNY is expected to further increase nickel sulphate output, by 8.44% from February. 

Zinc

Production of refined zinc in China declined 3.19% from January and 8.45% from February 2018 to stand at 420,400 mt in February.

Surveyed capacity held unchanged at 6.085 million mt/year. Since January, dismantled capacity at Zhuzhou Smelter Group, of 250,000 mt/year, were excluded and 150,000 mt/year of capacity at Wenshan Zinc and Indium Smelting and Sihuan Zinc & Germanium Technology were included.

While most large zinc smelters maintained operation during the CNY break, small and medium-sized smelters closed, with some in the west of Hunan shut for up to a month.

Aside from suspending for holidays, a shorter month with fewer working days also contributed to the decline in zinc output. Hechi Nanfang recovered from maintenance last month, but failed to offset the losses in overall production across the nation.

Treatment charges for zinc concentrate climbed to record highs in March, bolstered by sufficient supplies of zinc concentrate and limited growth in demand in the short run. Such healthy profits improved production enthusiasm among smelters.  

While Sihuan Zinc & Germanium Technology and Liuzhou China Tin Group cut production for maintenance in March, smelters in the west of Hunan returned from holidays. Besides, March is longer than February.

SMM learned that most zinc smelters saw their production substantially expand this month. Output of refined zinc in China is expected to grow 6.52%, or 27,400 mt from February to stand at 447,800 mt in March, up 0.42% from a year earlier.

Lead

China's production of primary lead stood at 225,000 mt in February, down 17.8% on the month but up 7.9% on the year.

Fewer working days for the month, holiday suspension across small and medium-sized smelters in Hunan, Yunnan and Henan and maintenance across Hunan Yuteng, Silver Star, Henan Qinling and Yunnan Zhenxing accounted for the month-on-month decline. This came even as large smelters maintained normal production during CNY.

In February 2018, snowstorms drove regions like Jiangxi and Hunan to limit power supplies, resulting in suspension across smelters in the regions. This led to the year-on-year growth in production.

In March, smelters recovered from holidays and have more days of operation. This, combined with the end of maintenance across Hunan Yuteng, Silver Star and Yunnan Zhenxing, is likely to bolster output of primary lead for the month to 264,000 mt.

Tin

China's output of refined tin shrank 23.2% from January to stand at 9,560 mt in February as smelters suspended for the holidays.

While smelters in Yunnan maintained production during the CNY break, smelters in Jiangxi closed. Some small smelters saw no output in the whole month.

Guangxi-based China Tin Group's smelter in Laibin city began to undertake maintenance from January and is expected to return to normal production in the middle of March.

With smelters returning from holidays, output of refined tin in China is expected to rebound to about 12,000 mt in March.