Exclusive: China's metals output in April

SHANGHAI, May 10 (SMM) — This is a roundup of China's metals output in April 2021, from an exclusive survey of key producers by SMM analysts.

Copper

An SMM survey showed that China produced 878,100 mt of copper cathode in April, rising 2.05% from March and 7.29% from a year ago.

Although some copper smelters started maintenance in April, high refining charges (RCs) for domestic blister copper prompted some smelters to purchase large amounts of blister copper and copper anode to produce copper cathode, and some smelters stepped up production, which led to the slight rise in copper cathode output in April. Copper concentrate imports registered a new high in March, and sulphuric acid prices moved higher amid strong demand, which boosted profits of smelters and encouraged them to keep high operating rates which rose 7.29% year on year.

According to smelters’ production schedules, SMM expects China’s copper cathode output to shrink 3.85% on the month and 1.02% on the year to 844,300 mt in May. For the first five months of 2021, output is likely to total 4.21 million mt, up 6.2% from the same period last year.

Alumina

China’s alumina output stood at 6.11 million mt in April. This included 5.9 million mt of metallurgical-grade alumina, with the daily output up 0.45% on the month and 9.4% on the year to 196,800 mt. Metallurgical-grade alumina output totalled 23.22 million mt in the first four months of 2021, up 7.69% on a yearly basis. The impact of environmental inspections on alumina production continued in north China, and a few plants in Henan lowered roasting capacity due to high bauxite prices.

As of early May, the operating capacity of metallurgical-grade alumina stood at 71.6 million mt/year. SMM sees output of metallurgical-grade alumina at 6.14 million mt in May (31 days), with the daily output rising slightly on the month at around 198,000 mt, as newly restarted capacities at Jiaokou Xinfa and GAluminium will contribute some output.

Aluminium

China’s primary aluminium output rose 9.87% year on year to 3.25 million mt in April (30 production days), showed an SMM survey. For the first four months of 2021, primary aluminium output totalled 12.94 million mt, rising 8.6% from the same period last year. Baikuang Debao and Tianlin continued to release output in April, and the average daily output in Inner Mongolia rose slightly by 400 mt from March. As of early May, there was 39.71 million mt among 43.5 million mt per year of existing primary aluminium capacity in operation, while operating rates across Chinese primary aluminium producers stood at 91.3%. The proportion of aluminum water came in at 67.3%, up 4.1 percentage points month on month.

Domestic primary aluminium operating capacity is expected to rise steadily in May. Gansu Zhongrui and Shanxian Hengkang plan to restart production partly in later May, which is expected to bring monthly output to 3.37 million mt and annual operating capacity to 39.68 million mt. Imports of primary aluminium is likely to stand at 80,000 mt in May, and the number of days of social inventories is expected to fall to 9 amid strong demand.

Nickel

China’s refined nickel output dropped 0.21% from March to 13,000 mt in April. Operating rates across nickel smelters remained unchanged on the month at 59%, down 7 percentage points from a year ago. There were only two smelters in China producing refined nickel in April. The Gansu smelter postponed its maintenance to May, and produced 12,000 mt of refined nickel, while the Xinjiang smelter produced 1,014 mt. Smelters in Tianjin and Guangxi continued to produce nickel sulphate, and the Jilin smelter launched its resumption schedule in late April but did not yield any output in the month.

SMM expects China’s refined nickel output to shrink to 12,400 mt in May. The Xinjiang smelter will operate normally in May, while the Gansu smelter is expected to overhaul its furnace in mid-May which is likely to affect output by 1,000-2,000 mt. The Jilin smelter is expected to produce 400 mt, while the smelters in Tianjin and Guangxi will remain suspended.

Nickel pig iron (NPI)

China’s NPI output shrank 11.9% from March to 33,900 mt Ni in April. This included 26,700 mt Ni of high-grade NPI, down 12.87% on the month, and 7,200 mt Ni of low-grade NPI, down 8.16% month on month. Low prices and high costs drove some high-grade NPI plants to reduce output. A large-scale high-grade NPI plant in east China lowered output by 22% on the month. Besides, fewer operating days in April also led to the slide in high-grade NPI output. Compared with the #300 and #400 series, profits of #200 stainless steel were poor, which prompted some steel mills to cut its output. In addition, a low-grade NPI plant in south China suspended production due to local environmental policies. These resulted in the decline in low-grade NPI output in April.

SMM expects China’s NPI output to rise 2.63% on the month to 34,800 mt Ni in May. Output of high-grade NPI is likely to rise slightly to 27,900 mt Ni, while that of low-grade NPI to shrink further to 6,800 mt Ni. Nickel ore prices slid as imports increased, and NPI prices are likely to rebound, which encouraged some high-grade NPI plants to raise output. In addition, an NPI plant in north China will complete maintenance in May, and another one in east China will restart one of two production lines, which will also boost output in the month. Output cuts of #200 stainless steel will further weigh on low-grade NPI output in May.

Nickel sulphate

China’s nickel sulphate output expanded 5.37% from March and 133.19% from a year ago, to 103,800 mt or 22,800 mt in nickel content in April. This included 99,100 mt of battery-grade materials, up 8.68% month on month amid strong demand from the new energy industry, and 4,700 mt of electroplating materials, down 35.84% on the month as a large-scale nickel salts plant in north-east China suspended production for maintenance.

SMM expects China’s nickel sulphate output to increase 0.13% from April and 142.99% from a year ago to 22,900 mt Ni in May, as more plants are expected to use nickel briquette to produce nickel sulphate.

Stainless steel

China’s stainless steel output came in at 2.94 million mt in April, down 2.59%, or 78,200 mt, from March, but up 33.82% from a year ago, according to SMM data.

Output of #200 stainless steel shrank 74,400 mt or 7.58% from March, and totalled 3.51 million mt in the first four months of 2021, rising 37.89% from the same period last year. It is expected to drop 15.31% on the month to 768,000 mt in May as many mills will conduct maintenance or switch to produce other series.

Output of #300 stainless steel expanded 74,100 mt or 5.43% from March to 1.44 million mt in April. This was 27.16% higher on the year. #300 stainless steel output has been increasing since after the Chinese New Year holiday, and is expected to rise further by 1.33% on the month to 1.46 million mt in May.

Output of #400 stainless steel shrank by 77,900 mt or 11.6% from March to 593,400 mt in April, and totalled 2.39 million mt in the first four months of 2021, up 87.9% compared with the same period last year. It is expected to further fall to 572,100 mt in May as inventory pressure prompts steel makers to reduce output.

Zinc

China's refined zinc output stood at 499,300 mt in April, up 0.49% or 2,500 mt on the month and up 4.11% on the year. Output stood at 2.01 million mt in January-April, up 4.25% year on year. Smelters in the survey sample produced 77,400 mt of zinc alloy in April, up 3.06% from the previous month. Output of primary zinc stood at 400,000 mt in April, and secondary zinc output came in at 44,000 mt.

SMM survey showed that the increase in domestic refined zinc supply in April was less than expected. The main reason was that the impact of "dual energy consumption control" continued, requiring that the energy consumption of the refinery should not exceed the same period of last year, leading to the maintenance and shutdown of some refineries. Secondly, Hunan was affected by the presence of the environmental protection inspection team, and some local secondary zinc companies reduced and suspended production. In addition, due to the tight supply of domestic zinc ore in April, TCs for domestic zinc ore were still at a low level, resulting in production losses in some refineries, and refineries continued to control production in response. Some companies in maintenance resumed production in April and contributed to the main increase in production.

SMM expects domestic refined zinc output to rise 9,000 mt month on month to 508,300 in May, and the overall recovery is roughly in line with expectations. The main reason was that under the influence of Inner Mongolia's "dual energy consumption control", some local refineries stopped production for maintenance and some refineries in Henan and Qinghai took routine maintenance in May. Some companies resumed production from maintenance in May, contributing to the main increase. In addition, due to the continuous arrival of imported zinc at port, some refineries increased production.

Primary lead

China produced 265,800 mt of primary lead in April, down 5.4% from March, and up 1.43% from a year ago. For January-April, output rose 8.84% from the same period last year. Production capacities of enterprises involved in the survey stand at 5.48 million mt in total in 2021.

According to the SMM survey, primary lead smelting enterprises have entered the regular maintenance cycle since April. Among them, large smelting companies such as Henan Yuguang, Jinli, Yunnan Chihong, Western Mining and other enterprises are under maintenance. At the same time, the import of lead concentrates was blocked due to overseas pandemics, leading to a decline in TCs for domestic concentrate, rising procurement costs for lead concentrates, and increasing pressure on refinery production. TC quotations of imported ore fell $45/dmt from the previous month to $60/dmt as of the end of April. Domestic ore TCs decreased 150 yuan/metal mt from the previous month to 1800 yuan/metal mt. The second round of central environmental protection inspection teams stationed in Hunan, Yunnan and other regions to conduct inspections in April. The production of some small and medium-sized enterprises also fell slightly during this period. As a result, the overall primary lead output was lower than expectations.

China's primary lead output is expected to increase month on month in May. On the one hand, with the completion of the second round of inspections by the central environmental protection inspection team and successive withdrawals, the impact of environmental protection on the production of primary lead enterprises has been lifted. On the other hand, the maintenance of mainstream delivery brands has ended, and production has resumed in early May. In addition, the tight supply of lead concentrate is difficult to alleviate in the near term. Although it does not affect primary lead production on a large scale, its impact from the mine end to the ingot end, including supply and cost, still should be monitored. SMM expects China's primary lead output to increase over 10,000 mt to 276,000 mt in May.

Secondary lead

SMM data showed that China produced 301,600 mt of secondary lead in April, down 6.92% from March, and up 54.66% from a year ago. For January-April, output surged 146.87% from the same period last year.

SMM survey showed that the output of secondary lead dropped more than expectations in April. On the one hand, environmental protection inspection teams were stationed in Anhui, Jiangxi, Shanxi and other places. The dual energy consumption control policy in Inner Mongolia continued, and the impact of environmental protection control on refinery production far exceeded expectations. Refineries such as Inner Mongolia Taiding, Jiangxi Zhenyu, and Huijin were basically in a state of suspension in April. On the other hand, lead prices continued to fall since the beginning of April, while the supply of battery scrap was tight. Lead prices and the cost of secondary lead were hard to fall with continuous losses, and refineries' enthusiasm for production dropped sharply. At the same time, large-scale refineries such as Anhui Dahua and Luotuo stopped production for maintenance, resulting in a significant reduction in China secondary lead output in April. In addition, Tianjin Toho's newly-expanded capacities were put into production, and Zhejiang Tianneng resumed to increase production from maintenance. Secondary lead refineries resumed slowly due to the release of newly expanded production capacity and the pandemic at the beginning of 2020. The production base is small, leading to a significant year-on-year increase in the output of secondary lead in April.

Environmental inspections will end in May. Coupled with rising lead prices repairing secondary lead profits, secondary lead refineries in Jiangxi, Anhui and other places have resumed normal production, and Anhui camel repairs have resumed production from maintenance, and Anhui Huaxin's new expanded production line is expected to be put into operation. Therefore, despite the continuous production suspension of Inner Mongolia Taiding's environmental management and control and Jiangxi Fengri's renewal and suspension of production, China’s secondary lead output is still expected to rise in May. SMM expects China's secondary lead output to increase over 20,000 mt to 324,000 mt in May.

Tin

China's refined tin output stood at 15,505 mt in April, up 7.41% on month.

Although it was previously expected that smelters in Yunnan and other regions will affect production due to the presence of environmental protection inspection teams in April, the impact is relatively limited from the actual survey. The secondary materials affected by the shutdown of the fuming furnace can be replenished by purchasing more tin concentrate or using raw material inventories, so it has no obvious impact on production. Individual companies said that their use of raw material inventories may affect their output in May. In addition, the output of a large smelter in Yunnan Province increased 18.64% month on month in April, which contributed to the overall increase. The smelters in Yunnan, Guangxi, and Anhui will resume normal production in May. The shortage of raw materials of the smelters in Inner Mongolia is expected to be alleviated as Yinman mining has resumed production. China's refined tin output is expected to rebound accordingly and stand at 16,000 mt in May.

Magnesium

China’s magnesium ingot output dropped 0.01% on the month and 6.3% on the year to 72,400 mt in April, 69% of which was from Shaanxi and 17% from Shanxi.

Producers in Inner Mongolia were suspended in April due to local high coal prices, but restored part of production in early May because of rising magnesium prices. Some plants in Xinjiang conducted maintenance in April, and have already restarted production in May.

According to plants’ production schedules, output in Xinjiang and Inner Mongolia is likely to increase by 2,000 mt in May, while some plants in Shaanxi Fugu halted production for coke oven transformation, which is expected to reduce output by 1,200 mt. Rising magnesium prices and tight spot supply will encourage some plants to ramp up production. SMM expects China’s magnesium ingot output to increase to 74,000 mt in May.

Silicon

SMM data showed that China's silicon metal output stood at 197,000 mt in April, down 2.4% or 5,000 mt from the previous month. The increase in maintenance capacity in Xinjiang and Yunnan, the main production areas, affected the output in April.

Electricity prices in Yunnan Nujiang during the flood season were undecided, and the start time of the local silicon plants was repeatedly postponed. Although Sichuan entered the average flow period, only a few silicon plants opened up. It is expected that the large-scale production resumption time of Yunnan and Sichuan silicon plants will be after the full arrival of the flood season in June, and the restoration of maintenance and production capacity in Xinjiang and Inner Mongolia will also be reflected in June.

China's silicon metal output is expected to increase slightly in May due to the increasing production in Sichuan and the increase in the number of production days in May.

Silver

According to SMM survey, domestic silver output stood at 1262.4 mt (including 1067.9 mt of mineral silver) in April, up 5.61% from the previous month.

Due to the recent major changes in the Fed’s interest rate policy and the mixed results of the US economic data, domestic and overseas market fluctuated sharply in April, and the volatility also accelerated. However, the export spreads narrowed recently, while manufacturers continued to complete the export volume in order to maximize their profits when the quotas were allowed in the previous period. According to the data of this month, the output of some manufacturers has increased significantly, and to a certain extent, it is also for the full production of export silver ingots. In particular, the production operating rates of smelters with export quotas were higher than other smelters. However, the competition for silver-containing materials, including anode mud, was still fierce. Some manufacturers said that the current pricing coefficient of silver-containing materials was still very high, and it was not easy to purchase silver-containing materials. Some manufacturers also continued to take the opportunity to turn into maintenance in April, such as Yunnan Tin Group, Gejiu Lianxing, etc. were still in the maintenance period.

SMM has learned that a small number of manufacturers also have maintenance plans in May. However, it is said that Gejiu Lianxing will start construction soon after the Labour Day holiday, and there should be silver ingot shipments in May. Silver output or the number of processing on behalf of a small number of production companies significantly decreased this month due to the increased difficulty in purchasing silver-containing raw materials. In addition, SMM learned that due to the strict control over the export tax rebate of silver products since the beginning of this year, the recent supervision has also been strengthened. It is expected that China's silver output will remain relatively stable in May.

Cobalt sulphate

China’s cobalt sulphate output stood at 4,373 mt (Co content) in April, up 1.7% month on month and 38% year on year. Some plants stepped up production in April, while producers in Jiangxi reduced operating rates due to environmental inspections, which affected output by 50-70%. China’s cobalt sulphate supply is expected to rise 5% on the month and 68% on the year to 4,609 mt (Co content) in May as operating rates have increased after environmental inspection teams left.

Lithium carbonate

China's lithium carbonate output expanded 10% from March and 38.6% from a year ago to 19,314 mt in April, an SMM survey showed. Operating rates in Sichuan exceeded 95%; output in Jiangxi rose slightly despite local environmental inspections; operating rates across salt lake plants in Qinghai surged by 17% as the weather warms up and are likely to rise further in May.

Cathode materials

China’s ternary materials output stood at about 30,240 mt in April, up 5.3% on the month and 135% on the year. Orders at domestic leading battery makers continued to increase as demand for high-nickel cathode materials from overseas automakers improved. LMO output came in at 8,435 mt in April, down 1.6% on the month. Export orders of digital products, end users of LMO, were affected due to the deteriorating COVID-19 pandemic in India. Besides, output of some portable small devices fell sharply because of chip shortages, and this also weighed on demand for LMO.