Exclusive: China's base metals output in Sep

SHANGHAI, Oct 11 (SMM) – This is a roundup of China's base metals output in September 2019, from an SMM survey of major producers.

Copper

China’s production of copper cathode fell unexpectedly in September, showed an SMM survey, as tight supply of raw materials, copper anode and scrap led to weaker-than-planned output from some smelters.

China produced a total of 759,300 mt of copper cathode last month, down 1.09% from a month ago but up 5.93% from a year ago. SMM had expected production to increase from 767,700 mt in August to 782,300 mt. 

For the first nine months of 2019, production of copper cathode across China amounted to 6.56 million mt, up 0.79% from the same period last year.

Dongying Fangyuan, Tongling Nonferrous, Baiyin, Wuzhou Jinsheng, Qingyuan Jiangtong and Jinchuan Group all reported production that fell short of their original plans, as blister copper supply tightened after the shutdown of some smelters and a decline in imports. 

Yunnan Copper’s branch in Chifeng, Inner Mongolia, closed 150,000 mt/year capacity on September 23, which also contributed to the production decline.

Prices of sulphuric acid, meanwhile, remained sluggish, and some regions have seen the prices failing to cover production costs. This has yet to impact production at smelters.

Zijin Mining’s newly-commissioned copper smelting project, with annual capacity of 150,000 mt, in Heilongjiang began to turn out copper cathode on October 1. Guangxi Nanguo is ramping up, with capacity utilisation rate exceeding 60%.

Chifeng Yunnan Copper’s 200,000 mt/year capacity began trial operation on October 2, while Baiyin Nonferrous resumed its 200,000 mt/year project in the second half of September.

SMM expects China’s production of copper cathode to grow to 778,300 mt in October, 8.01% higher than the corresponding month of 2018.

This will bring production in January-October to 7.34 million mt, up 1.51% from a year earlier.

Tight supply of copper anode and scrap will continue to weigh on Chinese smelters. Tongling Nonferrous’ Jinguan Copper unit will begin an overhaul from October 10.

Alumina

China's output of alumina stood at 5.65 million mt in September, with metallurgical grade alumina accounting for 5.4 million mt.

Daily average production of metallurgical grade alumina remained unchanged from a month ago at 180,000 mt, as higher production at Xing’an Chemicals, Shanxi Huaqing, Chalco Zhongzhou, and Inner Mongolia Mengxi offset output declines in East Hope’s Sanmenxia plant and SPIC Shanxi Renewable Energy. Delayed or slow resumption amid to a weakened market, pre-holiday environmental curtailments and bauxite shortage impacted output at some refineries.  

SMM expects domestic production of alumina to rise to 6.06 million mt in October, which includes 5.81 million mt of metallurgical grade alumina. 

Daily average output of metallurgical grade alumina will be lifted to 187,000 mt, on the expected resumption of Xinfa's Jiaokou refinery in late October, and greater production at SPIC Shanxi after technical reformation of its two lines. Optimistic outlook on prices will also spur production at some plants. 

As of October 11, capacity of metallurgical grade alumina in operation stood at 65.67 million mt on an annualised basis.

Aluminium

Domestic production of primary aluminium fell 3.7% from a year ago to 2.89 million mt in September. Output in the first nine months of this year stood at 26.46 million mt, with a year-over-year decline of 2.1%.

Accidents at Inner Mongolia’s smelters in September and output cuts in Shandong and Xinjiang in August kept overall primary aluminium capacity in operation at lows last month. By the end of September, capacity in operation came in at 35.05 million mt/year, with suspended and idling capacity standing at 5.25 million mt/year (excluding non-compliant capacity). 

Operating rates across domestic primary aluminium smelters averaged 87% by the end of September, up 1.2 percentage points from a month earlier.

More capacity is expected to come online or recover in October. SMM learned that closed smelters in Gansu and Qinghai showed stronger inclinations to restart on bullish sentiment about prices. Capacity additions will be concentrated to Inner Mongolia in October, with slow commissioning in other areas. Resumption of accident-hit capacity will be closely monitored. 

SMM expects China’s primary aluminium output to reach 3.01 million mt in October, down 3.34% year on year. Domestic inventories of primary aluminium may remain in a downtrend in the second half of October, slipping to 890,000 mt by the end of this month.

Nickel

China’s production of refined nickel grew 4.97% from August to 13,300 mt in September, as a smelter in Gansu recovered from maintenance and also a smelter in Shandong moved up a gear to chase higher margins after refined nickel turned more profitable than nickel sulphate.

The production growth was capped by maintenance at a smelter in Jilin.

On a year-over-year basis, refined nickel output rose 21.81% in September.

SMM expects production to inch up to 13,500 mt in October, in anticipation of greater output from Gansu and stable operations at other smelters.

Nickel pig iron (NPI)

Output of NPI in China dipped 0.79% month on month but rose 27.59% year on year to 52,700 mt in Ni content in September. 

The production decline from August was moderate, as healthy profits kept smelters in normal operations. Authorities did not require major plants in the north to slash production around the National Day holiday, while power supply controls had limited impact on plants in Inner Mongolia.

High-grade NPI accounted for 46,100 mt in Ni content last month, up 0.38% from August, while production of low-grade materials declined 8.26% to 6,600 mt in Ni content as a slew of plants conducted maintenance.

China’s NPI production is expected to decline 2.28% from August to 51,540 mt in Ni content in October, as output of high-grade materials will shrink 2.28% to 44,800 mt in Ni content after a mill in east China suspended for maintenance for several days at the start of the month.

The recovery from maintenance at some plants will bolster output of low-grade NPI up 2.57% to 6,800 mt in Ni content this month.

Nickel sulphate

China produced 42,700 mt of nickel sulphate in September, down 4.79% month on month but up 20.01% year on year. This translated to 9,403 mt in Ni content.

The production shrank from August, as some producers suspended for the National Day holiday and some cut output or turned to refined nickel on poor demand. 

Integrated nickel sulphate and precursor plants made deeper cuts in their nickel sulphate production, as producing the material from nickel briquette or powder continues to incur losses.

Production of nickel sulphate across China will likely extend its decline in October, down 2.11% from September to 41,800 mt, or 9,205 mt in Ni content, as demand from the new energy vehicle sector recovered slower than expected.
But some nickel sulphate producers reported improvement in orders.

Zinc

China's production of refined zinc continued its increases and hit a record monthly high in September, as smelters ramped up raw materials feeding and postponed maintenance to chase higher margins. 

SMM data showed that about 515,700 mt of refined zinc was produced across China last month, up 3.3% from August and up 15.43% from September 2018. Surveyed capacity remained unchanged at 6.085 million mt/year. Production in January-September amounted to 4.25 million mt, up 7.08% from the same period last year. 

Smelting companies of Hanzhong, Hunan Zhuzhou, and Sihuan raised production slightly in September; Hechi Nanfang, Chifeng NFC, and Xing’an Copper & Zinc restarted from maintenance and contributed to a greater share of the output growth. 

With resumed producers further stepping up production, domestic output of refined zinc is expected to grow 1.09% on the month and 13.5% on the year to 521,300 mt in October. Output in January-October will expand 7.75% from a year ago.

Lead

Primary lead output in China fell as expected in September as producers in major production province of Henan faced output controls amid anti-smog alert across Beijing, Tianjin, Hebei and surrounding areas in late September. 

SMM data showed that domestic output of primary lead stood at 249,600 mt in September, down 1.77% from August and 2.74% from September 2018. Production in the first nine months of this year remained 0.52% higher than the same period a year ago. 

Last month, maintenance at large and medium scale smelters of Henan Yuguang, Jiangxi Copper, and Yunnan Mengzi affected production, which offset the output growth from recovery of Hechi Nanfang, Henan Minshan, and Hunan Shuikoushan. 

Smelters that resumed from August’s overhaul accelerated production as elevated treatment charges (TCs) of lead concentrate improved their margins. This capped the decline in overall production in September. SMM assessed that quotes of the monthly TCs for domestic Pb 50% lead concentrate have climbed to 1,900-2,100 yuan/mt on metal content basis. 

For October, China’s primary lead market is likely to see a rebound of around 10,000 mt in production as environmental cutbacks were lifted in Henan and as Henan Yuguang, Xing’an Silver & Lead, and Yunnan Mengzi will conclude maintenance. Scheduled overhaul at Henan Wanyang will limitedly impact production in October.

Tin

Production of refined tin in China lost 3.2% from August and stood at 12,414 mt in September. The decline was due to a production cut across major smelters amid feedstock supply tightness. 

Smelters in Yunnan province lowered output as ore supply tightened up from August, and smelters in Jiangxi province also scaled back production or suspended on raw materials shortage. Smelters in other areas mostly maintained normal operation last month. 

SMM estimates domestic production of refined tin to fall to 12,300 mt in October as the continued ore resource tightness lowers treatment charges and impacts output.