SHANGHAI, Jun 10 (SMM) – Copper cathode production across China in May fell more than expected, as an unexpected facility breakdown, safety checks and credit issues exacerbated the impact from maintenance across smelters.

An SMM survey showed that China produced 633,500 mt of copper cathode in May, down 10.33% from April and 15.23% from May 2018. This brought production in the first five months of the year to 3.55 million mt, standing 1.57% lower than the same period last year.

SMM had expected copper output to fall nearly 70,000 mt on the month to 638,000 mt in May.

A breakdown hit the acid system at Chifeng Jinfeng last month, while local security checks affected copper production at Xinjiang Wuxin. Output at Shandong Eastern Copper shrank due to financial loan issues across the province.

More maintenance works and the slow ramp-up of new and restarted capacities have limited the growth in copper production this year. Affected production in January-May stood close to the amount throughout the whole year of 2018, at 192,000 mt.

Capacity utilisation rate at Chalco’s new smelter in Ningde has yet to reach 80%, while Guangxi Nanguo Copper postponed its next feeding of raw materials to the end of June. Chifeng Jinfeng did not put its first stage into operation until May 18, which delayed the project's commissioning and ramp-up to full capacity.

A smaller discount of copper scrap against copper cathode kept secondary copper smelters operating at a lower rate.

China’s production of copper cathode is expected to recover to 704,900 mt in June, as smelters recover from concentrated maintenance. This would still lower year-on-year output by 2.43%.

Output in the first half of 2019 is estimated to stand at 4.25 million mt, down 1.72% from a year ago.

Shandong Eastern Copper is likely to struggle to recover in June, while Zhongyuan Gold Smelter, Jiangxi Copper at Qingyuan, Fuye Group and Zijin Copper will conduct maintenance. Some smelters told SMM that they planned to extend maintenance and cut production, given tight supplies of copper scrap and concentrate.