Exclusive: China's base metals output in Oct

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

Copper

China’s production of copper cathode rose in October, higher than expectations, as major smelters yielded more than originally planned and also new or restarted capacity ramped up.

China produced a total of 783,000 mt of copper cathode last month, up 3.12% from a month ago and 8.66% from a year ago. SMM had expected production to increase to 778,300 mt.

Production of copper cathode across China from January to October amounted to 7.34 million mt, up 1.57% from the same period last year.

Jiangxi Copper, Tongling Nonferrous, Yunnan Copper and Jinchuan Group reported copper production that topped their original plans for October, driven by the rush to meet annual production targets.

Copper production in October was also bolstered by the ramp-up of newly-commissioned or reopened capacity.

Yunnan Copper’s 200,000 mt/year capacity in Chifeng turned out its first batch of copper cathode on October 10, about a week after being commissioned. Zijin Mining’s newly-commissioned 150,000 mt/year capacity in Heilongjiang is ramping up, while Baiyin Nonferrous has recovered its 200,000 mt/year project to normal operations.

Higher copper production came despite continued weakness in treatment charges for copper concentrate and prices of sulphuric acid, which have pushed Chinese smelters to the verge of losses but yet to cause capacity curtailments.

Notably, some smelters who use copper scrap as feedstock are struggling to reach their planned production for this month, due to scrap shortages with tightness in domestic supply and a decline of over 80% in import quotas for the fourth quarter.

This, however, is unlikely to stem the uptrend in overall copper production, as new capacity is still ramping up. SMM expects China’s production of copper cathode to grow to 786,600 mt in November, up 5.43% from a year ago.

Production from January to November will reach 8.13 million mt, with a year-over-year increase of 1.94%.

Alumina

China's output of alumina stood at 5.86 million mt in October, with metallurgical-grade materials accounting for 5.61 million mt.

For the first 10 months of 2019, alumina output amounted to 57.6 million mt, down 0.95% from the same period a year earlier.

Daily average production of metallurgical-grade alumina inched up 0.63% from a month ago to 181,000 mt, as SPIC’s project in Shanxi recovered from technical upgrading.

The reversal of gains in alumina prices kept Xinfa’s refinery in Jiaokou, East Hope’s plants in Sanmenxia and Jinzhong from stepping up operations last month, while domestic bauxite supply shortages affected alumina production at Xiaoyi Xinghua.

China’s alumina output is expected to expand to 5.88 million mt in November, with metallurgical-grade materials taking up 5.63 million mt.

Meanwhile, daily average production of metallurgical-grade alumina is estimated to extend its increase to 188,000 mt, bolstered by a ramp-up at East Hope Sanmenxia and the potential commissioning of Jingxi Tiangui’s first stage.

As of early November, metallurgical-grade alumina capacity in operation rose to 66.09 million mt on an annualised basis.

Aluminium

Domestic production of primary aluminium fell 3.82% from a year ago to 2.3 million mt in October. Output in the first ten months of this year stood at 29.45 million mt, with a year-over-year decline of 2.27%.

Production cuts due to accidents in August and September continued to impact output and capacity in October.

Domestic capacity in operation came in at 35.39 million mt/year at end October, up 340,000 mt from September, but the actual production it generated in October remained 119,000 mt lower than the same period last year.

The pace of capacity recovery and new capacity commissioning failed to accelerate significantly in October, which may extend into November. This may continue to create a year-over-year decline in domestic primary aluminium output in November, which is estimated at 2.92 million mt, down 1.32% from November 2018.

The first 10 months of this year saw an accumulative inventory draw of 416,000 mt for primary aluminium, which translated to a year-on-year decline of 1.75% in the actual consumption of primary aluminium.

Weak property and car sectors kept the consumption of aluminium subdued. The monthly growth in demand remained marginal amid the ongoing restructuring of primary aluminium consumption.

Zinc

China’s monthly production of refined zinc hit a fresh record high October, as high margins encouraged smelters to step up operations following a break through capacity bottlenecks since April.

SMM data showed that about 529,300 mt of refined zinc was produced across China last month, up 2.64% from September and 15.24% from October 2018.

Zinc production from January to October totalled 4.78 million mt, up 7.93% from the same period last year.

The SMM survey showed high capacity utilisation rates across Chinese zinc smelters, with some ramping up feeding or putting off maintenance to chase high margins.

In October, Guangxi Hechi Nanfang and Zhongjin Lingnan Nonfemet saw production recovering to normal levels, while Nonfemet’s plant in Nandanxia and Shanxi Zinc Industry broke capacity bottlenecks.

China’s zinc production is likely to fall 2.21% to 517,500 mt in November, with a year-over-year increase of 13.4%, as Henan Yuguang and Wenshan Zinc & Indium conduct maintenance.

This will bring production in January-November to 5.29 million mt, up 8.44% year on year.

Nickel

China’s production of refined nickel grew 1.5% from September to 13,500 mt in October, as a smelter in Gansu stepped up operations.

Maintenance at a smelter in Jilin continued last month. On a year-over-year basis, refined nickel output dipped 1.64% in October.

SMM expects the production to extend the increase to 14,500 mt in November, as the Gansu smelter will ramp up production further to make up the impact from the previous maintenance.

Nickel pig iron (NPI)

Output of NPI in China dipped 0.64% month on month but rose 30.34% year on year to 52,400 mt in Ni content in October.

Despite the persisting overhaul at a high-grade NPI producer in Jiangsu and power supply controls in Inner Mongolia, the production decline from September was moderate, as healthy profits kept producers in normal operations.

High-grade NPI accounted for 45,800 mt in Ni content last month, down 0.64% from September, and production of low-grade materials slipped 0.65% to 6,570 mt in Ni content as producers held off from fully recovering given the sluggish 200-series stainless steel market.

China’s NPI production is expected to decline 1.81% from October to 51,450 mt in Ni content in November, as output of high-grade materials will shrink 3.19% to 44,400 mt in Ni content.

The recovery from maintenance at some plants will bolster output of low-grade NPI up 7.8% to 7,100 mt in Ni content this month.

Nickel sulphate

China produced 47,500 mt of nickel sulphate in October, up 11.18% month on month and 21.38% year on year. This translated to 10,454 mt in Ni content.

The production expanded from September, as integrated nickel sulphate and precursor plants stepped up production after the premiums of battery-grade nickel sulphate over nickel briquette exceeded 10,000 yuan/mt.

This, together with generally weaker demand from new energy vehicles, hit nickel sulphate producers, driving some plants to the production of refined nickel.

Production of nickel sulphate across China will likely continue to grow in November, rising 9.57% from October to 50,100 mt, or 11,454 mt in Ni content, in anticipation of the ramp-up of newly-commissioned capacity and resumption of some electroplating-grade nickel sulphate producers.

Lead

Primary lead output in China rebounded as expected in October as a slew of smelters recovered from maintenance, which included Jiangxi Copper, Xing’an Silver & Lead and Yunnan Mengzi. The supply growth from resumption exceeded 15,000 mt, SMM assessed.

SMM data showed that domestic output of primary lead stood at 261,000 mt in October, up 4.6% from September and 2.2% from October 2018. Production in the first ten months of this year was 0.7% higher than the same period a year ago.

Emergency alerts for heavy pollution weather at the start and end of October in north China limitedly affected output as major producers had in-plant stocks of crude lead, the feedstock to produce refined lead. SMM learned that some smelters in Hebei and Henan provinces faced production curbs over the smog-alert period last month.

SMM expects domestic production of primary lead to extend a rally in November, as Henan Jinli, Xing’an Silver & Lead and Haicheng Chengxin resume after overhaul.

Greater inflows of seaborne lead concentrate lifted quotes of TCs to $90-120/dmt for Pb 60% lead concentrate for November. This will improve margins at lead smelters and encourage their production enthusiasm despite weakness in lead prices.

SMM assessments indicated that, as of November 8, TCs for domestic 50% Pb lead concentrate stood at 2,000 yuan/mt, with a high of 2,200 yuan/mt, both on a metal content basis.

Scheduled maintenance at Hunan Jingui, Henan Xinling, and Yunnan Chihong will cap the increase in primary lead output in November.

Tin

Production of refined tin in China continued its decline by 17% from September to stand at 9,972 mt in October, due to overhaul at major producer Yunnan Tin and at some smelters in Guangxi.

Some smelters in Jiangxi remained in suspension in October, and smelters across different regions scaled back production amid feedstock supply tightness, SMM learned. 

SMM estimates domestic production of refined tin to stabilise around 10,000 mt in November.

Yunnan Tin will extend its maintenance for less than a month in November. Smelters in Guangxi will resume production this month, but producers in Jiangxi and Yunnan will continue to struggle with ore shortage.