Exclusive: China's metals output in May

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

Copper

SMM data showed that China's copper cathode output stood at 850,100 mt in May, down 3.1% month on month, but up 10.4% year on year.

Plants entered the peak season for maintenance in May, and the decrease in copper cathode output mainly came from Xiangguang, Jinlong, and China Copper. Some smelters including Chifeng Jinjian Copper and Tongling Jinguan conducted maintenance in May, but the actual output did not decrease as the TCs for blister copper remained high, and they purchased large amounts of blister copper and anode plates. Some plants even saw an increase in output. Copper concentrate imports declined slightly but still stood high in April. TCs bottomed out, and sulphuric acid prices remained high amid strong downstream demand, bringing profits to the smelters, and operating rates stood high. In addition, due to the long-term loss of imports, it is difficult for the market to find sufficient imported goods, and the copper concentrate inventories at smelters continued to decrease.

Judging from the June production schedule, the maintenance of Xiangguang, Jinlong, and China Copper will continue to affect the monthly output, and the impact of China Copper will be expanded. SMM predicts that domestic copper cathode output in June will be 831,400 mt, a decrease of 2.2% month on month and but up 9.5% year on year. SMM estimates output to total 5.04 million mt from January to June, a year-on-year increase of 13.6%.

SMM adjusted the refining capacity of the smelter samples this month, the annual refining capacity was lifted in Fujian Zijin from 320,000 mt to 400,000 mt, in Jiangxi Zili and Lanxi Zili from 160,000 mt to 230,000 mt, in Jinchuan Group from 800,000 mt to 970,000 mt. The capacity of Jiangtong Hongyuan at 100,000 mt/year was added. The total capacity surveyed by SMM increased to 11.16 million mt.

Alumina

SMM data showed that China's alumina output was 6.42 million mt in May, including 6.21 million mt of metallurgical grade alumina. The daily average output of metallurgical grade alumina was 200,300 mt, up 1.80% on the month and 11.26% on the year. China produced 29.43 million mt of metallurgical grade alumina from January to May, a year-on-year increase of 8.42%. The plants affected by environmental protection control in Henan gradually resumed production after the Labour Day long holiday, and the operating capacity of Jiaokou Xinfa and other companies in Shanxi also increased. On the demand side, China's aluminium output was 3.32 million mt in May. The net imports of alumina is estimated to be around 250,000 mt, and China’s alumina surplus was about 85,000 mt in May.

As of early June, China's metallurgical grade alumina production capacity was 73.54 million mt/year. The output kept rising in Jiaokou Xinfa, Guangzhou Aluminium and Chongzuo Longzhou projects. It is estimated that the output of metallurgical alumina in June (30 days) will be higher on the month around 3.07 million mt, with an average daily output of 202,400 mt. However, on the demand side, policy disturbances in Yunnan and Inner Mongolia are expected to continue. Net alumina imports are expected to be around 280,000 mt in June, and China is expected to have a surplus of alumina at 152,000 mt. the progress of the alumina projects in west China will be the focus this month.

Aluminium

China produced 3.32 million mt of aluminium in May, up 7.95% on the year. The output totalled 16.25 million from January to May, an increase of 8.3% on the year. Yunnan's electricity curtailment policy resulted in a reduction of 865,000 mt of annual production capacity in the province. Inner Mongolia’s “dual control” of energy consumption became stricter, and another 130,000 mt of annual production capacity was reduced. Guangxi Baikuang suspended two newly launched projects. On the other hand, the new capacity was smoothly put into production. Shanxian Hengkang is expected to see output in early July, and Gansu Zhongrui have seen output in mid-May. China's operating aluminium capacity stood at 38.79 million mt/year in early June, while existing capacity stood at 43.6 million mt/year, leaving the operating rate at 89.0%. According to SMM survey, molten aluminium accounted for 68.4% of China’s total aluminium output in May, an increase of 1.1 percentage points from the previous month.

Operating capacity is expected to continue decline slightly in June, with domestic aluminium output to drop 3.21 million mt and the annualised operating capacity to rise to 38.99 million mt. The import volume of primary aluminium is expected to be around 160,000 mt in June. The social inventory of aluminium ingots is expected to continue to decline in June, and the number of inventory days is expected to drop to 7.7 days.

Nickel

The national refined nickel output decreased 590 mt or 4.53% month on month to 12,400 mt in May, and operating rates stood at 57%. Among them, Gansu smelter carried out overhaul of the top-blowing furnace, but maintained the overall normal production, with the affected output within 1,000 mt. Xinjiang smelter continued to produce normally, achieving an output of 1,074 mt. Jilin smelter resumed production in May, with the output at 350 mt. The refined nickel production was still in suspension in the smelters in Shandong, Tianjin, and Guangxi.

Output of refined nickel is expected to stand at 13,600 mt in June 2021, as Gansu smelter is expected to resume normal production from the maintenance, and Jilin smelter will recover production at full capacity.

Nickel pig iron (NPI)

Domestic NPI output increased by 5.32% month on month to 35,700 mt (Ni content) in May 2021. Output of high-grade NPI rose 10% to 29,400 mt in metal content, while that of low-grade NPI dropped 12.1% to 6,300 mt in metal content. The increase in the production of high-grade NPI in May was due to the price increase amid tighter supply in April, and the prices of nickel ore declined amid the increase in imports. NPI plants increased production for wider profit margins. On the other hand, the profits of 200 series stainless steel were poor, and some plants reduced 200 series production or switched to common carbon steel production. Low-grade NPI at stainless steel plants with NPI facilities dropped sharply, but the plants in Guangxi that had been suspended under environmental protection control have resumed operation.

National NPI output in June is expected to increase 6.24% to 37,900 mt in metal content, with 32,000 mt of high-grade NPI and 5,900 mt of low-grade NPI (both in Ni content). The output of high-grade NPI is expected to increase in June as most NPI plants will raise operating rates for profits and more new capacities will be put into production. A plant in Guangdong will increase one high-grade NPI production line in June and another line in July, one of which has seen output. The suspended lines in Inner Mongolia will gradually resume production after being rented out. Inner Mongolia and Shandong will also put one new production line into operation respectively in June. Therefore, high-grade NPI output is expected to increase sharply by 9.01% on the month. The output of low-grade NPI will further decrease as the plants in east and south China continue to switch to produce common carbon steel.

Nickel sulphate

China's output of nickel sulphate stood at 97,700 mt or 21,500 mt in metal content in May, down 5.82% from the previous month but up 128.57% year on year. Among them, the output of battery-grade nickel sulphate was 92,400 mt, and that of electroplating-grade nickel sulphate was 5,300 mt. The stocks of intermediate raw materials in the nickel sulphate smelters were limited in May, and the salt plants in south west regions even halted production. The overhaul of overseas MHP smelters for maintenance in mid-May led to the tight market supply, and many users had to cut down production. According to SMM survey, China’s output of nickel sulphate produced with MHP totalled only 6,923 mt in May, the lowest level in a year. However, the output of nickel sulphate produced with refined nickel continued to increase steadily, accounting for about 46% of total output.

The output of nickel sulphate is likely to stand stable as the demand from the new energy industry is stable, and many downstream companies have expansion plans. At present, the domestic supply of nickel sulphate crystals is tight and the prices remain high, so there is still an economic drive for the production of nickel sulphate from self-dissolved nickel briquette or scrap. The nickel briquette dissolution lines will keep increasing in June and July, which will fill the supply gap. Therefore, the national nickel sulphate production will increase 5.53% month on month to 22,700 mt in metal content in June, close to the level in April.

Stainless steel

The domestic stainless steel production in May totalled 2.9 million mt, down 35,100 mt or 1.19% month on month but up 21.49% year on year.

The total stainless steel output declined after breaking through 3 million mt in March. The decrease mainly came from 200 series and 400 series stainless steel. The inventory of 200 series products stood high, but the market transaction was sluggish, and the profits were low. Some steel mills reduced the production of 200 series stainless steel and switched to produce common carbon steel. The production of 400 series stainless steel was high in Q1, and gradually fell back to the normal level. The output of the 300 series kept rising to about 1.49 million mt amid high profits and tight spot supply.

China's total stainless steel output is expected to further decline in June, mainly due to the reduced production of 200 series and 400 series products. The 200 series output is likely to drop by 50,000 mt to 783,000 mt due to the production switch, and the 400 series output may fall 54,000 mt to 523,000 mt amid maintenance. The output of 300 series products is expected to increase slower to about 1.504 million mt.

Zinc

China's refined zinc output stood at 494,600 mt in May, down 2.06% or 10,400 mt on the month and up 4.32% on the year. Output stood at 2.51 million mt in January-May, up 4.51% year on year. Smelters in the survey sample produced 79,200 mt of zinc alloy in May, up 2.32% from the previous month. Output of primary zinc stood at 392,625 mt in May, and secondary zinc output came in at 47,750 mt. In addition, SMM revised China's refined zinc output in April to 505,100 mt, a correction range of 5,000 mt.

SMM survey showed that the increase in domestic refined zinc supply in May was less than expected, and fell sharply by nearly 10,000 mt month on month. The rainy season in Yunnan was delayed, and the power consumption in Yunnan was urgent. To protect power consumption of residents, the government began to require production companies to use power at peak shifts. SMM estimated that the impact of power curtailment on the production of refineries in Yunnan in May stood at more than 8,600 mt and the production conditions of other refined zinc enterprises basically met expectations in April.

Since there is no clear notification of the end of the power curtailment of the refineries in Yunnan, the June output forecast is divided into optimistic and pessimistic forecasts (only including production companies that are uncertain about the specific production schedule in June). Pessimistic expectation is that refined zinc output in Yunnan area will decrease by 13,120 mt from the previous month. Optimistic expectation is that refined zinc output in Yunnan area will decrease by 4,500 mt from the previous month. Except for Yunnan, the resumption of production is mainly concentrated in the resumption of production after the regular maintenance in May, and the reduction is based on Gansu refineries. In summary, the pessimistic expectation is that domestic refined zinc output will increase by 2,400 mt from the previous month to 497,100 mt in June. Optimistic forecast is that domestic refined zinc output will increase by 12,300 mt to 507,000 mt from the previous month.

Primary lead

China produced 264,800 mt of primary lead in May, down 0.38% from April, and down 0.03% from a year ago. For January-May, output rose 6.94% 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, the output of primary lead declined month on month in May. Due to the second round of central environmental inspections, the smelting enterprises whose production was restricted in April were expected to resume in May. However, the power supply in Yunnan was insufficient in May and radiated to the surrounding areas. The production of smelting enterprises in Yunnan, Guangdong, Hunan and other regions all dropped slightly in May. In addition, some companies in Hunan were still in a state of shutdown due to environmental protection. Henan Jinli, Haicheng Chengxin, Chifeng Shanjin, Xing'an Silver and Lead, and Shaanxi Dongling took maintenance. The two major factors caused a large reduction in the primary lead output. Therefore, even if the maintenance is completed in Henan Yuguang and Yunnan Chihong, it is still impossible to make up for the reduction gap.

China's primary lead output is expected to increase month on month in June. Although TCs for lead concentrate have been falling all the way down due to the continued tight supply, smelting companies such as Hunan and Jiangxi reduced their production slightly this month due to insufficient ore supply. In addition, Chifeng Shanjin and Yunnan Red Lead were under maintenance. However, at the same time, Henan Jinli, Yunnan Chihong, Haicheng Chengxin and other enterprises have completed their maintenance and recovered a larger volume of production, which basically made up for the reduction brought by other refineries. SMM expects China's primary lead output to increase over 10,000 mt to 277,000 mt in June.

Secondary lead

SMM data showed that China produced 331,200 mt of secondary lead in May, up 7.73% from April, and up 34.55% from a year ago. For January-May, output surged 109.14% from the same period last year.

SMM survey showed that the output of secondary lead rose more than expected in May. The main reasons were that environmental protection inspections in Hebei, Jiangxi, Anhui and other places gradually ended, some secondary lead smelting enterprises resumed production, and output gradually rebounded. On the other hand, the centralisd maintenance of large-scale secondary lead refineries such as Anhui Camel and Dahua successively ended in May, and the output increased sharply from the previous month. At the same time, newly-expanded projects such as Anhui Huaxin and Tianjin Dongbang continued to contribute to the increase. Therefore, although Anhui Huabo took maintenance and reduced production, and Jiangxi Fengri renewed its license and halted production, the output of secondary lead refineries increased significantly from the previous month.

The impact of environmental protection inspectors' production restrictions has been further reduced in June. Refineries such as Dahua and Fengri have completed the maintenance or certificate renew, and output has further recovered. However, Anhui Chaowei took maintenance. SMM expects China's secondary lead output to increase slightly by about 5,000 mt to 335,700 mt in June.

Tin

China's refined tin output stood at 13,768 mt in May, down 11.2% from April.

Yunnan's power curtailment upgrade caused all local private smelters to suspend production in late May, which had a greater impact on the refined tin production in Yunnan. In addition, tin factories in Inner Mongolia resumed part of their production due to the resumption of Yinman Mining. Some tin factories with small production in the early stage in Jiangxi Province resumed production and increased production affected by the recent strong tin price trend, contributing to the output. Yunnan power curtailment measures eased in the wet season in June. At present, some smelters restored electrolysis and other less power-consuming production links, but did not fully resume production. It is expected that the local tin factories will further resume production in mid-June. China's refined tin output is expected to stand at about 14,800 mt in June.

Magnesium

China's magnesium ingot output stood at 694,000 mt in May, down 3,000 mt or 4.11% month on month. The output totalled 321,200 mt from January to May.

68% of the increment in the output came from Shaanxi, and 19% came from Shanxi. SMM expects the operating rates of magnesium industry to be 62.70% in May, down 4.91% month on month, but up 64.42% year on year. The overall output of magnesium ingot decreased on the month due to the maintenance in the major production regions. However, magnesium alloy ingot producers raised the production of common magnesium ingots driven by the profits amid rising magnesium prices.

According to the current production schedule, the magnesium plants in Xinjiang are expected to resume production from maintenance in June, while a lot of magnesium plants will conduct maintenance in June and July. At the same time, some plants that were overhauled in May will resume production, and the overall output in June is expected to stay in dynamic balance around 71,000 mt.

Silicon

SMM data showed that China's silicon metal output stood at 189,000 mt in May, down 4.2% from the previous month. The increase in maintenance capacity in Xinjiang and power curtailment and production cut in Yunnan affected the output in May.

The output of silicon plants in Xinjiang decreased due to periodic maintenance. Power curtailment caused the Yunnan silicon plants to reduce production. Only three submerged arc furnaces opened in Yunnan by the end of May. Time of resumption of production in Yunnan during the flood season was later than previous years. Although Sichuan was in the flood season, most of the silicon plants resumed production at the end of May, leading to less production release in May. In addition, the opening of some silicon plants in Guangxi, Guizhou, Hunan and other places slightly contributed to the increase.

The arrival of the rainy season in Yunnan, the resumed production of silicon plants in Sichuan, and the restoration of maintenance capacity in Xinjiang will jointly drive the increase in silicon metal output in June, which is expected to increase to around 230,000 mt.

Silver

According to SMM survey, domestic 1# silver output stood at 1,171.6 mt (including 975.9 mt of mineral silver) in May, down 7.19% from the previous month.

The overall output declined slightly, in line with last month's expectation that domestic 1# silver output may still maintain a stable state in May with a slight fluctuation, and the overall output will decline. Due to the recent fluctuations in the US dollar index, there were less market news than in the past, and some minutes of the Federal Reserve’s meetings were also bearish. Apart from capital speculation on inflation, economic data was not surprising to expectations, leading to a slight decrease in the domestic and overseas market fluctuations in May from the previous period. The volatility also slowed down slightly, and as the export spread continued to shrink, the gradual closing of the window for export spreads also reflected in this month's data. The decline in export silver ingots also contributed to the overall decline in output to a certain extent.

However, the silver-containing materials, including anode mud, were still tight in supply, and the competition was still fierce. Therefore, many manufacturers were still stuck in the suspension of production and maintenance, such as Gejiu Lianxing and Chihong Zinc Germanium. Some manufacturers, such as Xiangguang, Mengzi, and Xing'an Silver Lead, also cut production or took maintenance in May. There were also those that resumed production, such as Yunnan Tin Group. This also accounted for the decline in output in May as a whole. One of the reasons for the widening of the domestic and overseas price difference in the early period was also because the domestic silver supply was too large, and the bank funds that had previously participated in the transaction on a large scale suddenly stopped buying goods. If there is no receipt of bank funds, it should have been exported long ago. However, the bank funds were not buying goods at that time, which led to the continuous expansion of the discounts of silver prices, so there was a huge price difference between domestic and overseas market. With the recent return of market transactions to normal, the silver price discount recovered, and large-scale production by manufacturers also decreased. It is expected that China's silver output in June may still maintain a stable state, and it is more likely to continue to fluctuate slightly.

Cobalt sulphate

On the supply side, China’s cobalt sulphate output stood at 4,640 mt in metal content in May, a month-on-month increase of 5% and year-on-year increase of 69%. Some companies switched their cobalt chloride lines to cobalt sulphate production for the increased demand from downstream ternary precursor customers. Supply increased as the producers in Jiangxi resumed production. Inquiries of the cobalt sulphate market are currently active in June, and smelters are expected to increase production. SMM expects China's cobalt sulphate supply to increase 5% on the month and 84% on the year to 4,880 mt in metal content in June.

Lithium carbonate

China’s lithium carbonate output was at 21,293 mt in May, a month-on-month increase of 10% and year-on-year increase of 44.6%. The output in Qinghai increased 20% on the month, and will gradually reach its annual peak near summer. Operating rates in Jiangxi increased significantly. Nanshi Lithium contributed the highest domestic output of lithium carbonate currently. A large smelter in Sichuan conducted its annual maintenance at the end of May, with little impact on output. The overall operating rates remained high, and the increase in output was limited. Therefore, the output in Sichuan was relatively stable in May. In addition, Hebei Yangang's new production capacity has seen output in May. Lithium carbonate output is expected to increase by 3.4% on the month to 22,020 mt in June.

Cathode materials

China imported 33,030 mt of ternary materials in May, an increase of 9.2% month on month and 152.7% year on year. The increment mainly came from motive power and small motive power markets. The overseas orders of high-grade nickel kept increasing for domestic leading battery enterprises, and the demand for high-nickel ternary materials grew as well. In addition, domestic battery companies have gradually switched from 5-series production to 6-series and 8-series high-nickel and low-cobalt production. The high-nickel products output of domestic leading material companies increased accordingly. In the small motive power market, the two-wheeler market has recovered, the power tool market remains as focus, and output of 5-series products has increased.

Didymium oxide

SMM data showed that China's didymium oxide output stood at 6,395 mt in May, up 6% from the previous month. The top five provinces with the highest output of didymium oxide in May were Inner Mongolia, Jiangxi, Jiangsu, Sichuan and Shandong. Some raw ore and waste separation plants in Jiangxi region ceased production in April and resumed production in May. Some raw ore separation enterprises in Inner Mongolia, Jiangsu, Sichuan and other places reduced and stopped production in May. The reasons for the reduction in production were the normal equipment maintenance and the impact of environmental protection.

Prices of rare earth products showed a downward trend in June. Some separation plants have terminated the purchase of ore. The production of raw ore separation enterprises in Shandong was affected by environmental protection this month. In addition, prices of raw materials were still relatively high. Near the overseas summer break, downstream demand for rare earth is expected to be at a relatively low level and domestic didymium oxide output is expected to decline slightly from the previous month.