More copper smelters to cut output in February on sulphuric acid storage capacity shortages

SHANGHAI, Feb 18 (SMM) – Shortages of sulphuric acid storage capacity have prompted a slew of copper smelters in China to scale back operations in February.

This is expected to lower February’s output of copper cathode in China by 5.04% from 725,900 mt in January to 689,300 mt, according to the latest SMM survey.

Compared to the same month of 2019, the estimated output would be down 4.21%, even as 800,000 mt of refining capacity that came on stream last year has ramped up.  

There are still many copper smelters under great pressure from high sulphuric acid inventories, even as they have yet to curtail production.

The survey SMM conducted in the first week after the Lunar New Year holiday suggested that copper cathode production in China was estimated to fall 3.39% month on month and 2.54% year on year to 701,300 mt in February.  

China’s measures to contain the coronavirus (COVID-19) epidemic have caused logistical issues across the nation, especially in road transportation between provinces, disrupting raw material deliveries to smelters and shipments of copper cathode and the byproduct—sulphuric acid leaving smelters.

Sulphuric acid inventory pressure has been the primary drag on copper production, as smelters are running out of storage capacity for the material, which has to be stored in special tanks. Sulphuric acid is shipped mainly by truck, which is restricted by driver shortages and trans-provincial transportation bans. The lockdown of the virus epicentre of Hubei province, meanwhile, has given a hit to demand for sulphuric acid, as the province is a major consuming hub of this material.

Logistical constraints have yet to bring significant impact on raw materials and accessories supply to smelters, as smelters stockpiled sufficient raw materials ahead of the holiday and cargoes could be delivered by rail.   

Copper cathode, meanwhile, could be pledged or delivered to the Shanghai Futures Exchange-approved warehouses, which helped smelters ease in-plant inventory pressure.