Exclusive: China's base metals output in Jun

SHANGHAI, Jul 5 (SMM) – This is a roundup of China's base metals output in June 2019, from an SMM survey of major producers.

Copper

Copper cathode production expanded 14.96% from May to stand at 728,300 mt in June, as maintenance at some smelters ended and new, expanded capacity ramped up.

Output in June, some 0.8% higher than a year ago, beat SMM’s previous expectations, as Zhongyuan Gold Smelter and Fuye Group produced more than planned.

China’s output of copper cathode came in at 4.28 million mt in the first half of the year, down 1.18% from the same period last year, dragged by slower-than-expected ramp-up of new, expanded projects and concentrated maintenance at smelters.

Unexpected developments at some smelters, such as cash flow issues, safety checks, equipment failure and environmental woes, also weighed on production in the first six months.

SMM research found that low spot copper concentrate treatment charges and sulphuric acid prices, and tightness in cold charge supplies have yet to significantly impact production at smelters.

Secondary copper smelters did not report sharply lower production, either.

Smelters remain cautious about capacity curtailments or suspension, as those actions are likely to have a greater impact than thinner profits or losses.

Yunnan Tin, Baiyin Nonferrous, Tongling Aolu and Fuye Group will conduct maintenance in July. Impacted capacity by maintenance would be much smaller than that in the second quarter.

Output of copper cathode across China is expected to rise to 747,100 mt in July, up 2.93% from a year ago. This will bring output in January-July to 5.02 million mt, with a smaller year-over-year decline of 0.59%.

Alumina

With 70.12 million mt of capacity on an annualised basis in operation, China's output of metallurgical-grade alumina came in at 5.76 million mt in June, down 3.42% year on year, with a daily average of 192,000 mt.

Production in May was revised down to 5.86 million mt from the previously reported 5.97 million mt. This brought output in January-June to 34.8 million mt, up 1.33% from the same period last year.

Output received a boost from Bosai Shuijiang, Chalco Huaxing, Chalco Mining, Xinghua Technology, SPIC Shanxi and Liulin Senze, but Xinfa’s Jiaokou plant and East Hope’s Jinzhong plant took a toll.

With 246,000 mt of output of non-metallurgical grade alumina, overall alumina capacity that ran in June stood at 73.1 million mt on an annualised basis.

Output of metallurgical-grade alumina is expected to rise to 5.94 million mt in July, up 0.55% from a year ago, with daily average output barely changed.

Greater production from the capacity ramp-up at East Hope’s Jinzhong plant and Bosai Shuijiang is expected to be offset by the return to normal production at refiners who stepped up operations in June when prices were high.

Aluminium

China’s production of primary aluminium shrank 2.91% from a year ago to stand at 2.93 million mt in June. This brought output in the first six months to 17.5 million mt, with a year-over-year decline of 1.6%.

Output received a boost from Baise Mining’s No. 2 plant in Suyuan, Yunnan Aluminium’s Haixin Aluminium in Zhaotong and Shanxi Zhongrun, but plants in the north-east such as Guangxi Xinfa and Henan Shenhuo weighed on overall output.

As of the end of June, built capacity of primary aluminium totalled 40.3 million mt, with 36.48 million mt in operation. Operating rates averaged 90.5% last month, barely changed from May.

Primary aluminium production is expected to stand at 3.03 million mt in July, down 3.3% from July 2018.

A ramp-up of newly-commissioned projects such as Shanxi Zhongrun and Mengtai Aluminium as well as a recovery at Weiqiao will grow output, but declines are likely to be seen across north-east China.

Nickel

Production of refined nickel in China lost 2.56% from May to stand at 12,600 mt in June. Output stood 5.82% higher than June 2018.

Annual maintenance at some smelters, likely to last for two months from July, will affect production of refined nickel by 900-1,000 mt/month.

However, poorer consumption of nickel sulphate is likely to prompt a smelter to restart production of refined nickel, by using 1,000 mt in Ni content of nickel sulphate. Output is likely to be generated in the first half of July, and will cap the decline in refined nickel production. SMM expects output in July to stand 1.83% lower from June, at 12,300 mt.

Nickel pig iron (NPI)

NPI output rebounds 3.44% from May to 49,500 mt in Ni content in June, up 51.93% from June 2018.

On a month-on-month basis, output of high-grade NPI rose 2.87% to 42,200 mt in Ni content, driven by smelters resumption from May maintenance, higher operating rates at some mills, and release of new capacity. Environmental curbs in Shandong province offset ramp-up production at a local large plant, keeping output of the area flat in June.

For low-grade materials, output grew 6.91% to 7,300 mt in Ni content last month, bolstered by the recovery from maintenance across steel mills in the north and the reopening of mills in the east, which outdid the impact from maintenance in the south.

SMM expects China’s NPI output to expand 5.37% month on month to 52,100 mt in Ni content in July.

Fewer maintenance works and a reprieve from environmental pressure are expected to boost output of high-grade materials by 5.93% to 44,700 mt in Ni content in July, while the recovery from maintenance across steelmakers in the south will grow output of low-grade materials by 2.11% to 7,400 mt in Ni content.

Nickel sulphate

In June, China produced 10,263 mt in Ni content of nickel sulphate, which translated to 46,700 mt in physical content, down 10.29% on the month but up 58.14% on the year.

Subsidy cuts for new energy vehicles (NEVs) dragged on downstream consumption and demand for nickel sulphate, a raw material for batteries. Poor orders for battery-grade nickel sulphate drove producers to lower output in June, with further cuts expected in July.

Integrated producers of nickel sulphate, precursor also slashed their production of nickel sulphate solution, due to losses by using nickel briquette as feedstock. They favoured procured nickel sulphate. Fewer orders also depressed production on the integrated lines of nickel sulphate and precursor.

Stable demand for electroplating-grade nickel sulphate kept production of the materials unchanged in June.

For July, domestic output of nickel sulphate is expected to extend its declines, by 16.93% on the month to stand at 38,800 mt in physical content. This translates to 8,500 mt on Ni content basis, falling below 10,000 mt for the first time since March.

Zinc

Production of refined zinc in China maintained its growth in June as high profits kept smelters in high gear after they overcame capacity bottlenecks.

About 496,200 mt of refined zinc was produced across China last month, up 3.34% from May and 15.37% from June 2018. Surveyed capacity remained unchanged at 6.085 million mt/year.

A production ramp-up after the relocation of Zhuzhou Smelter and the resolution of environmental woes at Hanzhong Zinc Industry, combined with a recovery from maintenance at West Mining and Sihuan Zinc & Germanium boosted output in June.

Output also grew as smelters stepped up operations and used higher-grade feedstock.

Those increases offset output declines caused by maintenance at Anhui Tongguan, the suspension of Chengzhou Mining & Metallurgical as well as lower production at Chihong Zinc & Germanium’s smelter in Yunnan.

In July, Zhuzhou Smelter is expected to reach full capacity, while production at Anhui Tongguan, Chihong Zinc & Germanium and Sihuan Zinc & Germanium will recover.

Northern smelters such as Henan Yuguang and Zhongse Zinc will begin routine maintenance in summer, while Chengzhou Mining & Metallurgical is unlikely to recover.

China’s output of refined zinc is expected to increase by 2.41% month on month to 508,200 mt in July.

Lead

Primary lead production across China shrank more than expected in June, as concentrated maintenance across primary lead smelters and environmental curbs affected production. 

Output of primary lead came in at 220,000 mt in June, down 12.69% from May and down 7.07% from June 2018.

This brought production in the first half of the year to 1.49 million mt, with a year-over-year increase of 3.77%, down from an increase of 5.4% in January-May.

Primary smelters that underwent maintenance in June were mostly large and medium-sized ones, and this considerably lowered production. At the end of June, intensified air pollution triggered environmental cutbacks in Jiyuan city of Henan province. This, together with equipment issues, drove smelters of Henan Yuguang and Minshan into maintenance and dragged on overall output in June.

However, the environmental impact on primary smelters waned from the same period a year ago, as China avoided a uniform approach to deal with pollution and as environmental awareness improved across major industrial enterprises. In June 2018, Beijing-led inspection teams reviewed the rectification works across smelters in Henan, Hunan, and Yunnan provinces. Jiyuan of Henan also imposed cuts of 30-50% on mills, which significantly hampered local operation.

SMM expects production of primary lead to only nudge up to 226,000 mt in July, as the impact of maintenance caps production recovery. Overhaul at Henan Yuguang and Minshan will last through July. Hunan Jingui, Chifengshan Gold, Silver & Lead, West Mining, and Shandong Hengbang will end maintenance in July, but a sluggish market will keep some other primary smelters from resuming fully.

Tin

Production of refined tin in China shrank 6.6% on the month to stand at 12,833 mt in June, accelerating from a decline of 1.27% in May, as the summer break and a continued shortage of feedstock cut production across nearly half of the Chinese tin smelters.

SMM learned that maintenance lowered output in Yunnan province in June, while overhaul works, ore shortages, and poor weather deterred production in Jiangxi province.

Tightness of raw materials are unlikely to ease in July. This, together with scheduled maintenance across smelters, will continue to cut refined tin output to 12,000 mt in July, SMM estimates.