Exclusive: China's metals output in March

SHANGHAI, Apr 9 (SMM)—This is a roundup of China's metals output in March 2021, from an exclusive survey of key producers by SMM analysts.

Copper

An SMM survey showed that China produced 860,500 mt of copper cathode in March, rising 4.71% from February and 15.71% from a year ago, as some copper smelters recovered from maintenance and due to more operating days in the month.

Rising refining charges (RCs) for blister copper and fast-increasing sulphuric acid prices in east and south China prompted copper smelters to maintain high operating rates. In addition, as copper prices have steadied and consumption has improved amid a high season, finished product inventory pressure eased across smelters. 

According to smelters’ production schedules, SMM expects China’s copper cathode output to shrink 1.63% on the month, but to rise 12.51% on the year to 846,500 mt in April. For the first four months of 2021, output is likely to total 3.33 million mt, up 14.54% from the same period last year.

Alumina

China’s alumina output stood at 6.28 million mt in March. This included 6.07 million mt of metallurgical-grade alumina, with the daily output down 2.89% on the month but up 11.75% on the year to 195,900 mt. Metallurgical-grade alumina output totalled 17.32 million mt in Q1, up 7.12% on a yearly basis.

As of early April, the operating capacity of metallurgical-grade alumina stood at 71.49 million mt/year. SMM sees output of metallurgical-grade alumina at 6.19 million mt in April (30 days), with the daily output rising slightly on the month at around 206,400 mt, as the GAluminium Group will bring new capacity online.

Aluminium

China’s primary aluminium output rose 10.2% year on year to 3.35 million mt in March (31 production days), showed an SMM survey.

Seven aluminium plants in Inner Mongolia conducted maintenance or reduced output in March due to local energy consumption restrictions, involving about 310,000 mt of annual capacity. Meanwhile, several plants in south-west China continued to raise operating capacity in March. As of early April, there was 39.44 million mt among 43.59 million mt per year of existing primary aluminium capacity in operation, while operating rates across Chinese primary aluminium producers stood at 90.5%. Daily output rose 200 mt from February to 107,900 mt. The proportion of aluminum water came in at 63.2%, up 3.9 percentage points month on month.

Guangxi Debao Baikuang Aluminum brought 100,000 mt of new capacity online earlier this week, Shanxian Hengkang Aluminium is likely to restart production in late April, and aluminium output in Inner Mongolia will continue to fall. Meanwhile, demand from construction aluminium extrusion producers has improved significantly after the Qingming holiday. Domestic aluminum social inventories are likely to shrink to 1.15 million mt at the end of April amid high season.

Nickel

China’s refined nickel output dropped 4.62%, or 632 mt, from February to 13,000 mt in March. Operating rates across nickel smelters only stood at 59% in March, down 9.4% from a year ago. The three smelters in Gansu, Xinjiang and Tainjin produced 12,000, 1,021 mt and less than 20 mt of refined nickel respectively in the month, while all smelters in other regions remained suspended.

SMM expects China’s refined nickel output to remain unchanged at 13,000 mt in April. The Xinjiang and Tianjin smelters will operate normally in April, the Gansu smelter may postpone its furnace maintenance to May, the Jilin smelter will restart production at the end of April, and smelters in Guangxi and Shandong will remain closed in Q2.

Nickel pig iron (NPI)

China’s NPI output increased 1.64% from February to 38,400 mt Ni in March. This included 30,700 mt Ni of high-grade NPI, down 2.26% on the month, and 7,800 mt Ni of low-grade NPI, up 20.6% month on month. Low nickel ore stocks drove some NPI plants to reduce high-grade NPI output in March, while surging output of #200 stainless steel led to the sharp rise in low-grade NPI output.

SMM expects China’s NPI output to drop 0.37% on the month to 38,300 mt Ni in April. Output of high-grade NPI is likely to dip 0.16% on the month to 30,600 mt Ni, while that of low-grade NPI to lose 1.17% to 7,700 mt Ni. NPI output in Q2 is likely to rebound as nickel ore shipments have gradually recovered from April.

Nickel sulphate

China’s nickel sulphate output jumped 43.67% from February and 106.07% from a year ago, to 98,500 mt or 21,700 mt in nickel content in March. This included 91,200 mt of battery-grade materials and 7,300 mt of electroplating materials. Nickel salts plants that suspended or reduced output during the Chinese New Year holiday have basically returned to normal production, and this, together with better economics of nickel briquette and strong demand from the new energy sector, resulted in the steep rise in battery-grade nickel sulphate output in March.

SMM expects China’s nickel sulphate output to increase 1.78% from March and 125.24% from a year ago to 22,100 mt Ni in April, as some nickel salts plants in Zhejiang province launched or expanded nickel briquette dissolving lines. A plant may overhaul production lines in April, which may lower nickel sulphate output by 2,000 mt.

Zinc

China's refined zinc output stood at 496,900 mt in March, up 5.44% or 25,600 mt on the month and up 6.49% on the year. Output stood at 1.51 million mt in January-March, up 4.3% year on year. Smelters in the survey sample produced 75,100 mt of zinc alloy in March, up 5% from the previous month. Output of primary zinc stood at 390,000 mt in March, and secondary zinc output came in at 40,000 mt.

SMM survey showed the recovery of domestic refined zinc supply in March was less than expectations. The main reason was that the impact of "dual energy consumption control" in Inner Mongolia spread to the refined zinc industry. Many refined zinc smelters in Inner Mongolia controlled production and reduced energy consumption for the month. In addition, the supply of domestic zinc ore was still tight, and TCs for domestic zinc ore were low, which led to production losses in some smelters. Therefore, they continued to reduce planned output in March and the final reduction was due to the regular maintenance of the refinery.

SMM expects domestic refined zinc output to rise 6,500 mt month on month to 503,400 mt in April. The overall recovery is still not as good as expectations. The main reason was that the environmental protection inspection team in Hunan Province settled in, and the secondary zinc enterprises in some areas reduced and suspended production in response. In addition, the regular maintenance of some refineries in Yunnan and Xinjiang in April further led to a month-on-month decline in domestic refined zinc production.

Primary lead

China produced 280,900 mt of primary lead in March, up 12.17% from February, and up 17.23% from a year ago. For January-March, output rose 11.57% from the same period last year. Production capacities of enterprises involved in the survey will stand at 5.48 million mt in total in 2021.

According to the SMM survey, the full month of March (natural days) is 31 days, an increase of 3 days compared to February. Due to the increase in working days for refined lead smelting enterprises, lead ingot output rose month on month to varying degrees, ranging from 300-500 mt to 2000-3000 mt. At the same time, Henan Minshan, Hunan Jingui, Huaxin, Xing'an Silver and Lead and other enterprises have completed the equipment maintenance and resumed production. Therefore, primary lead output increased significantly by more than 30,000 mt in March.

In addition, compared with last year, output increased by 17.23% year on year. The production capacities of some primary lead companies expanded compared with previous years. On the other hand, due to the recovery period after the Covid-19 pandemic in March last year, the resumption progress of some smelting companies was slightly delayed.

There are ongoing maintenance and recovery of primary lead smelting enterprises in April. For example, Yunnan Chihong and Western Mining will take a one-month maintenance. Henan Yuguang plans to on maintenance for 20 days. Yunnan Zhenxing plans to take a 40-day maintenance, but only for crude refining inspections, which has relatively limited impact on primary lead output. In addition, some small and medium-sized enterprises in Hunan, Yunnan and other regions have resumed production. If they resume smoothly, a single enterprise can contribute 2,000-3,000 mt of monthly output. SMM expects China's primary lead output to remain at 283,000 mt in April.

Secondary lead

SMM data showed that China produced 334,800 mt of secondary lead in March, up 53.79% from February, and up 194.23% from a year ago. For January-March, output surged 218.51% from the same period last year.

SMM survey showed that March coincided with the first month after the CNY holiday. A large number of secondary lead refining companies resumed work after the holiday. In addition, Jiangsu Xinchunxing, Zhejiang Tianneng and other secondary lead refining companies resumed production from maintenance. In March, China's secondary lead output increased beyond expectations.

However, it should also be noted that Guizhou Taijiang Industrial Park, Jiangxi Huijin, Inner Mongolia Taiding, etc. are affected by environmental protection control and production is restricted. Shandong Zhongqing, Jiangxi Qijin, Anhui Camel and others took maintenance in March, limiting part of the increase. In addition, compared to last year, secondary lead output increased sharply in March 2021. With the release of newly expanded secondary lead production capacity, the overall operating capacity base was higher than the same period last year amid the pandemic in March last year, and the progress of resuming work in the secondary lead refineries after the CNY was much slower than in previous years, which was a very low month in March during historical survey.

There is resumption of production, output increase and environmental maintenance in the secondary lead refineries. On the one hand, Inner Mongolia Taiding resumed work ahead of schedule, and Jiangsu Xinchunxing plans to increase production. At the same time, Zhongqing, Qijin, and Tianneng, which resumed from maintenance, continued to contribute to the increase, and they were all large-scale enterprises. On the other hand, due to the presence of the central environmental inspection team, the production of refineries in Jiangxi and other places was limited, and Anhui Dahua planned to take maintenance. SMM expects China's secondary lead output to increase over 20,000 mt to 356,000 mt in April.

Tin

China's refined tin output stood at 14,436 mt in March, up 22.04% on month. Some producers that stopped production during the CNY holiday resumed operations in March, while some enterprises reduced and stopped production due to equipment maintenance and shortage of raw materials, including some refineries in Guangxi, Jiangxi and Inner Mongolia. In April, some enterprises that stopped production in March have not completed maintenance. In addition, due to the presence of the environmental protection inspection team in Yunnan, a large number of local fuming furnaces have been shut down, which will also affect the normal production of some smelters in Yunnan. China's refined tin output is expected to decrease to 14,000 mt in April.

Magnesium

China’s magnesium ingot output dropped 0.83% on the month and 6.56% on the year to 70,800 mt in March, 68% of which was from Shaanxi and 18% from Shanxi.

Some magnesium plants in Inner Mongolia halted production due to local energy consumption restrictions, while some plants in other areas stepped up production.  

SMM expects magnesium ingot output to rise to 72,000 mt in April, as some small plants will raise output by 500-1,000 mt in April, while large-scale plants do not plan to increase output temporarily.

Silicon

SMM data showed that China's silicon metal output stood at 202,000 mt in March, basically flat from the previous month.

Under the dual control restrictions, most of the Inner Mongolia silicon plants were shut down in March, and only a few companies reduced their load production. Supplemented by the resumption of maintenance and production capacity in Sichuan, Shaanxi, Guangxi, Hunan and other production areas, national supply was basically stable in March from the previous month.

The start time of the Yunnan Nujiang silicon plant has not been negotiated due to the unresolved electricity price. Most of the silicon plants in other parts of the province plan to reduce production and take maintenance from April to May to ensure normal production after the June flood season. Some Xinjiang silicon plants also have maintenance plans. After Sichuan entered the average flow period, the resumption of production of silicon plants will increase, and the restoration of production capacity in Inner Mongolia will supplement the supply. SMM expects China's silicon metal output to remain at about 200,000 mt in April.

Silver

According to SMM survey, domestic silver output stood at 1182.4 mt (including 1014.4 mt of mineral silver) in March, down 0.91% from the previous month.

Due to the fact that the price gap between domestic and foreign prices still existed in March, with quotas allowed, manufacturers' export willingness remained stable. Some manufacturers fully produced silver ingots for export, and smelters with export quotas had higher operating rates than other smelters. The export ratio arbitrage operation even attracted the participation of speculators. The competition for silver-containing materials, including anode slime, also lifted up the pricing coefficient of silver-containing materials, and some manufacturers’ purchasers even said that the profit margins of some foreign mines reduced or even hung upside down after the increase in the pricing coefficients of some foreign mines.

Therefore, some small and medium-sized smelters decreased the purchase of silver-containing materials, and silver-containing materials cannot be purchased or the stock of silver-containing materials was not enough for the lower limit of the furnace, which still led to production cuts and shutdowns of some manufacturers, such as Yunxi, Gejiu Lianxing, etc. Some production companies saw a significant decrease in the number of silver on behalf of processing in March. SMM expected China's silver output to fluctuate slightly and basically remain unchanged in April.

Cobalt sulphate

China’s cobalt sulphate output stood at 4,310 mt (Co content) in March, up 19.2% month on month and 22.6% year on year. Although some plants reduced output in March due to shortages of raw materials, some switched production lines to cobalt sulphate because of strong demand from their clients.

SMM expects China's cobalt sulphate supply decline in April as some smelters in Jiangxi have lowered operating rates due to local environmental inspections and as demand from the digital 3C market weakens.

Lithium carbonate

China's lithium carbonate output expanded 48.5% from February and 32.5% from a year ago to 17,570 mt in March, and Jiangxi and Sichuan mainly contributed to the rise. Lithium carbonate plants in Jiangxi mainly supply their products to LFP and LMO producers.

SMM expects China’s lithium carbonate output to rise 6.6% on the month to 18,730 mt in April, and Jiangxi and Qinghai will mainly contribute to the increase.

Cathode materials

China’s March ternary materials output stood at about 28,725 mt in March, up 7.5% on the month and 130% on the year, and LMO output came in at 8,700 mt, up 131.7% from a month ago. LFP output rose 5% month on month to 23,000 mt amid strong demand from the motive battery market, and LFP plants basically operated at full capacity.