Exclusive: China's base metals output in Jul

SHANGHAI, Aug 8 (SMM) – This is a roundup of China's base metals output in July 2019, from an SMM survey of major producers.

Copper

Copper cathode production in China grew more than expected in July as planned maintenance at Yunnan Tin was postponed to August and as affected production by maintenance came in lower than forecasts at Tongling Nonferrous Metals and Jiangtong Fuye Heding Copper.

SMM data showed that domestic output of copper cathode expanded 3.7% on the month and 4.05% on the year to stand at 755,200 mt in July. Production came in at 5.03 million mt in January-July, down 0.43% from the same period a year ago.

Fujian Zijin, Zhongyuan Gold Smelter, and Yanggu Xiangguang resumed in July after maintenance. This, together with ramped-up production at Guangxi Nanguo and phase-one project at Chifeng Jinfeng, contributed to output growth last month.

An SMM survey found that domestic copper smelters showed limited inclination to cut capacity utilization rates even as falling treatment charges (TCs) for concentrate squeezed their margins. A rebound in prices of sulphuric acid in some regions last month eased the production burden at some smelters.

Production is unlikely to be affected by feedstock in the short term as most smelters have finished stockpiling concentrate for the third quarter, SMM learned. Secondary copper smelters, with both traditional scrap and hazardous waste as feedstock, reported stable production last month.

For August, output of copper cathode across China is expected to rise to 772,400 mt, up 4.76% from a year ago, due to resumption at Fujian Zijin, Baiyin Nonferrous Metals, Minmetals Copper, as well as capacity release at Guangxi Nanguo.

This will bring output in January-August to 5.8 million mt, up 0.23% year on year, flipping from a decline of 0.59% in January-July.

Alumina

China's output of alumina stood at 5.93 million mt in July, with metallurgical-grade alumina accounting for 5.7 million mt. Daily average production of metallurgical-grade alumina came in at 183,700 mt, weighed by lower output at Xing’an Chemicals, Henan Huiyuan, Henan Zhongmei, Xiaoyi Xinfa, Tiandong Jinxin, Galuminium, and Guizhou Huafei.

Output of alumina is expected to continue to slip to 5.76 million mt in August, with Zhaofeng Aluminium and Eastern hope Jinzhong cutting output. Environmental cutback across refineries in Xiaoyi of Shanxi province during August 8-20 will also lower production.

As the operating capacity of metallurgical-grade alumina shrank to 66.33 million mt as of August 8, output of metallurgical-grade alumina is expected at 5.54 million mt in August, with a daily average of 178,700 mt.

Aluminium

Domestic production of primary aluminium decreased 2% from a year ago to stand at 3.07 million mt in July, with a daily average of 98,900 mt. This brought output in the first seven months to 20.56 million mt, with a year-over-year decline of 1.66%.

Output received a boost from new, resumed capacity in Inner Mongolia, Shanxi, and Shandong, but lower supplies in the north-east and the north-west weighed on output from a year ago.

As of the end of July, established capacity of primary aluminium totalled 40.73 million mt, with 36.59 million mt in operation.

Primary aluminium production is expected at 3.09 million mt in August, driven by growth in Guizhou, Shandong, and Inner Mongolia. Overall margins improved the release of new and recovered capacity, but at a slow pace.

Nickel

Production of refined nickel in China came in at 12,650 mt in July, up 0.56% from June and 1.61% from July 2018.

SMM learned that a smelter in the middle of July began annual maintenance on one of its production lines, which would last for about a month. The smelter’s otheri production line will begin maintenance at the start of September. This is expected to impact output by a combined volume of about 2,000 mt.

China’s output of refined nickel, however, is likely to barely change from July in August, as higher output from a smelter in Shandong will offset the losses.

Nickel production is unlikely to receive a boost from smelters who planned to shift from nickel sulphate production to refined nickel, as they may give up the plan in August.

Nickel pig iron (NPI)

In July, output of NPI in China rose 2.57% from June to 50,700 mt in Ni content. This created an increase of 49.13% from a year ago, as environmental pressure suspended producers in June-July 2018.

High-grade NPI accounted for 43,500 mt in Ni content, up 3.18% from a month ago, as new capacity in Jiangsu and Liaoning came online and as output from Shandong recovered.

For low-grade materials, the switch to other production or suspension at northern plants lowered output by 0.97% month on month to 7,200 mt in Ni content.

Overall NPI production is expected to climb 3.49% on the month to 52,500 mt in Ni content in August, bolstered by greater output of high-grade materials, in anticipation of the ramp-up of new capacity in Liaoning and production recovery in Inner Mongolia.

Output of high-grade NPI is expected to rise 4.06% to 45,300 mt in Ni content, while that of low-grade materials will remain barely changed at 7,200 mt in Ni content.

Nickel sulphate

China produced 9,714 mt in Ni content of nickel sulphate in July, which translated to 44,200 mt in physical content.

This was up 45.25% from a year ago, but down 5.35% from a month ago, as continued weakness in demand for battery-grade nickel sulphate prompted a shift to refined nickel production or sizable production curtailments at nickel sulphate producers.

Meanwhile, large nickel sulphate producers refrained from production cuts, and newly-commissioned capacity ramped up. This, together with the recovery at some integrated producers of nickel sulphate and precursor, limited the decline in overall output.

Despite poor demand, output of electroplating-grade nickel sulphate held stable last month.

Output of nickel sulphate is expected to rebound in August, rising 9.98% from July to 48,600 mt in physical content or 10,700 mt in Ni content, as improved demand drives producers to recover production.

Zinc

China’s production of refined zinc in July continued its year-over-year growth, but failed to climb on the month as expected, weighed by concentrated routine maintenance across smelters in the north and output cuts on high-temperature weather.

Hanzhong Zinc Industry failed to further ramp up its output in July, which limitedly support domestic output.

About 490,700 mt of refined zinc was produced across China last month, up 20.15% from July 2018 but down 0.64% from June. Surveyed capacity remained unchanged at 6.085 million mt/year. Production in June was revised down to 493,800 mt.

In July, northern smelters including Henan Yuguang, Chifeng Zhongse, Xing’an Copper & Zinc, and Shaanxi Zinc conducted routine maintenance in summer, while production continued to release at Zhuzhou Smelter and Sihuan Zinc & Germanium.

Domestic output of refined zinc is unlikely to recover considerably in August as maintenance at Xing’an Copper & Zinc and Chifeng Zhongse will continue, even as Henan Yuguang and Shaanxi Zinc will restart after overhaul. Production cut at West Mining could also cap growth in domestic output in August.

SMM expects China’s output of refined zinc to increase by 0.31%, or 1,500 mt, on the month and by 17.56% on the year, to stand at 492,200 mt in August. Output in January-August is expected to expand 5.82% from a year ago.

Lead

Primary lead production across China increased on the month in July but failed to meet SMM’s expectations, as key producers Henan Yuguang, Minshan started maintenance and as lower lead prices below the 16,000 yuan/mt level depressed production at smelters that recovered from overhaul.

SMM data showed that domestic output of primary lead stood at 221,000 mt in July, up 0.24% from June but down 14.78% from July 2018.

This brought production in the first seven months of this year to 1.71 million mt, with a year-over-year increase of 0.93%, slowing from a rise of 3.77% in January-June.

In July, smelters including Hunan Jingui, Chifengshan Gold, Silver & Lead, West Mining, and Shandong Humon resumed from maintenance.

Production in July slipped from a year ago as rising TCs for lead concentrate helped to accelerate resumption at smelters in July 2018, even as lead prices also came off from highs at that time. The monthly TCs for domestic lead concentrate, with 50% Pb, climbed from 1,250 yuan/mt at the start of 2018 to 1,650 yuan/mt in July 2018.

SMM expects production of primary lead to expand significantly to 256,000 mt in August as major smelters, Henan Yuguang and Minshan, will return from maintenance. A rally in lead prices and expectations of a traditional high season in August may drive primary smelters that conclude July’s maintenance into full operation this month. SMM learned that there is virtually no new maintenance planned for August.

Tin

Production of refined tin in China shrank 2.1% on the month to stand at 12,566 mt in July, as raw materials shortage cut production in Yunnan province and limited margins depressed output in Jiangxi province.

Smelters that underwent maintenance in June mostly resumed in July, and this slowed the decline in July’s production from that in June.

SMM learned that most tin smelters suffered losses recently. They are expected to reduce production in the short term if prices of refined tin remain weak amid poor consumption and if supply of feedstock continues to tighten.

SMM estimates domestic production of refined tin to stand at 12,000 mt in August.