SHANGHAI, Aug 9 (SMM) — This is a roundup of China's metals output in July 2021, from an exclusive survey of key producers by SMM analysts.
SMM data showed that China’s copper cathode output stood at 830,500 mt in July, up 0.1% month on month and 10.81% year on year.
The intensive maintenance was about to end in July. Jinchuan headquarters, Wouthwest Copper, Yuguang Gold Lead, Jinlong Copper and some companies have not resumed full production. However, smelters such as Yunxi, Shandong Jingsheng, SDIC and Baiyin have conducted maintenance gradually. This, coupled with the power curtailment and frequent accidents, dragged down the output in July.
In the raw material market, the TCs for imported copper concentrates continued to rise from $40/mt in early July to a high level of $50/mt at the end of the month. At the same time, domestic sulphuric acid prices rose and exceeded 1,000 yuan/mt amid high demand for fertiliser. RCs for blister copper slightly fell back amid tight supply, but were still profitable against the costs around 1,000 yuan/mt for smelters. Despite the maintenance and power curtailment, smelters maintained high operating rates amid the high profits on concentrate and scrap.
Some smelters in Guangxi advanced the maintenance to August due to the continuous power curtailment in south China and Henan. Other smelters in Guangxi and Henan also slightly reduced the capacity utilisation rates of copper cathode. At the same time, smelters in Jiangxi conducted maintenance on the electrolytic cells as planned, and smelters in Ludong started maintenance due to an accident.
According to SMM survey, a total of 40,000 mt of copper cathode output will be affected by the maintenance and power curtailment, which is 10,000 mt lower than July. Other smelters will maintain high operating rates. SMM predicts that domestic copper cathode output in August will be 820,200 mt, a decrease of 1.2% month on month but up 1.2% year on year. SMM estimates output to total at 6.69 million mt from January to August, a year-on-year increase of 11.6%.
SMM data showed that China’s alumina output was 6.29 million mt in July, including 6.08 million mt of metallurgical grade alumina. The daily average output of metallurgical grade alumina was 196,000 mt, down 0.34% on the month but up 6.71% on the year. China produced 41.51 million mt of metallurgical grade alumina from January to July, a year-on-year increase of 8.28%. Disturbances were frequent on the supply side in north China. The tight supply of coal and ore was not eased due to the flood and pandemic, and the capacity operation fluctuated sharply in Henan. The production in south-west regions stood stable, and the new capacities continued to be released. China's aluminium output was 3.28 million mt in July. The net imports of alumina was estimated to be around 300,000 mt, and China’s alumina surplus was about 69,000 mt in July.
As of early August, China's metallurgical grade alumina production capacity was 72.08 million mt/year, with existing capacity at 88.60 million mt/year. The alumina capacity in north China is expected to stagnate in August, mainly due to the lack of coal. The output continued to increase from the new capacities in south-west China. The output of metallurgical grade alumina is expected to reach 6.12 million mt, with the average daily output slightly higher on the month.
China produced 3.28 million mt of aluminium in July, up 5.06% on the year. The average daily output was 106,000 mt, down 1,500 mt from June. The output totalled 22.75 million from January to July, an increase of 7.65% on the year. The power curtailment and production restriction strengthened on the supply side in July, and the flood in Henan has caused two local aluminium plants to reduce or suspend production.
China's operating aluminium capacity stood at 38.53 million mt/year in early August, while existing capacity stood at 43.68 million mt/year, leaving the operating rate at 88.2%. According to SMM survey, aluminium liquid accounted for 66.7% of China’s total aluminium output in July, a decrease of 1.6 percentage points from June.
On the supply side, the reduced production due to the power curtailment is hard to recover in August, and the new capacities in south-west China are unlikely to see output, so the total output is expected to decrease to around 3.27 million mt in August. The import volume of aluminium is expected to be around 50,000 mt, and 90,000 mt of national reserve will be released.
On the demand side, the traditional peak season for aluminium downstream processing is expected to come in late August. The inventories of aluminium ingot in consumption areas are expected to further decrease in Q3 and fall to around 700,000 mt in the end of August. The year-on-year consumption growth rate is expected rise to 1.17%.
SMM data showed that China produced 279,000 mt of primary lead in July, down 1.34% from June, and up 7.84% from a year ago. The cumulative output from January to July increased 6.75% year on year. Total production capacities of enterprises involved in the survey will stand at 5.48 million mt in 2021.
According to SMM survey, maintenance and production resumption both occurred in July, and the output declined. Due to the 100th anniversary of the founding of CPC in early July, some regions restricted the production with high energy consumption, and the small and medium sized smelters in Hunan and Henan conducted maintenance for a short time. Later in the month, power rationing strengthened in Henan, Yunnan, and Hunan, resulting in lower output of the deliverable brands. Hunan Yuteng, Anhui Tongguan and Yunnan Mengzi were having maintenance. Therefore, even after the work resumption in two large smelting companies in Inner Mongolia, it is still not possible to make up for the reduction in refined lead output in July.
SMM expects refined lead production to stand stable in August. Henan and Hunan are still under power rationing, and lead concentrate supply is tight. The local output is expected to further decline. On the other hand, the power curtailment in Yunnan has eased, and the production has recovered. Hunan Yuteng, Anhui Tongguan, and Chifeng Shanjin will resume production in August. The production resumption will be higher than the reduction, so the refined lead output is expected to rise slightly to 285,500 mt in August.
SMM data showed that China produced 367,100 mt of secondary lead in July, up 15% from June and 34.09% on the year. The total output from January to July was 75.25% higher from a year ago. SMM data showed that China produced 356,200 mt of secondary refined lead in July, up 17.17% on the month and 32.16% from a year ago.
Secondary lead output increased sharply in July. Jiangsu New Chunxing lifted production significantly after the technical transformation. Tongliao Taiding in Inner Mongolia and Jiangxi Fengri increased production after resumption. Chilwee, Anhui Dadao, Jiangxi Xinya, and Hubei Xinzi further resumed production after maintenance, and Inner Mongolia Jinfan's new production capacity was put into trial operation. The output increment mainly came from these large enterprises. Therefore, the overall output of secondary lead increased despite the production reduction of some companies due to the environmental protection, power curtailment, and tight supply of raw materials.
Jiangsu New Chunxing will further increase production in August. Anhui Tianchang and Dadao will raise production after the maintenance with more working days in August. The output of Inner Mongolia Jinfan will increase with the operation of new capacities. Guizhou, Huoqilin plans to put new capacities into production. The overall output of secondary lead will keep rising. China’s secondary lead output is likely to stand at 395,000 mt in August, and the secondary refined lead output will increase to 374,000 mt.
Note: In order to increase the diversity of data and better meet the market demand, SMM will release the national output data of secondary refined lead from August 2021.
July SMM domestic zinc output stood at 515,200 mt, up 7,200 mt or 1.42% month on month and 4.54% year on year. Accumulated output from January to July stood at 3.533 million mt, up 5.16% year on year. July domestic output of alloy at sample zinc smelters stood at 75,400 mt, slightly down 3,200 mt month on month.
SMM survey showed that recovery of domestic zinc supply in July fell short of expectations because of tightened power supply in Guagnxi and Hunan has resulted in a reduction of output from the previous month. In addition, power restrictions in Yunan have further disrupted production. However, output in July was more stable than that in June as a result of off-peak production. Thus the overall output of zinc was less affected. On the other hand, output is lower in Inner Mongolia and Anhui amid regular maintenance.
Power supply in Guangxi will likely to tighten further in August, and output in this region may fall by 12,000 mt month on month. Also, output in Yunnan and Hunan will remain affected by power restrictions, adding difficulties to production increase. Hence, zinc output in August at Yunan and Hunan is likely to fall 3,300 mt month on month. On the other hand, planned maintenance in Hunan, Shaanxi and Gansu will contribute to some of the production cuts.
Domestic zinc output may decrease by 20,600 mt month on month and 2.86% lower on the year to 49,2600 mt in August.
Note: SMM will not be providing the September output forecast for zinc ingots as power restrictions will keep disrupting production.
According to SMM, domestic tin output stood at 11,324 mt in July , down 19.62% month on month.
Output reduction caused by regular maintenance in Yunnan was limited, and the impact of power restrictions in the region is insignificant. Tin output in Guangxi is lower due to tightened power supply. In Inner Mongolia, Yinman mining postponed to resume production until end of July, bringing some influences.
Output increase was mostly contributed by a few smelters in Jiangxi, in light of sufficient power supply and comparatively less tightened raw materials.
As Yinman mining resumes operation, there is likely to be an increase in production during August. But further power restrictions in Guangxi will impact the market negatively. The overall tin output is expected in rise month on month as maintenance in Yunnan draws to a close.
Domestic nickel output stood at around 12,335 mt in July, down 13.48% or 1,922 mt month on month, according to SMM survey. Operating rates of smelters stood at 56%. Peak production in June in Gansu lifted the overall June benchmark, and returned to normal entering July, resulting in a reduction on a month-on-month basis. While slight reduction seen in Xinjiang was caused by seasonal adjustment.
Domestic nickel output will stand at 12,400 mt in August amid stable production and completion of maintenance at smelters.
Nickel Pig Iron
Domestic output of nickel pig iron (NPI) stood at 41,900 mt in July, up 7.63% month on month. For NPI at different grade, July output of high-grade NPI stood at 33,700 mt, up 4.9% month on month; while low-grade NPI stood at 8,300 mt, up 20.55%.
In July, demand of high-grade NPI strengthened, and prices rose due to tight supply. Existing operation sustained, and resumed operation or added capacity has created more capacities. Low-grade NPI production greatly increased month on month, mainly contributed by resumed operation of 200-series stainless steel in south China though some smelters reduced their production.
Domestic NPI output is expected to fall by 0.95% to 41,500 mt in August, among which high-grade NPI will stabilise and reach 33,700 mt as the slowing increase will be a result of tightened supply of nickel ore and production restrictions on stainless sell. Output of low-grade NPI will stand at 7,900 mt as the slight reduction will be caused by anticipated power restriction in Guangxi.
According to SMM, domestic nickel sulphate output stood at 24,200 mt in metal content, and 110,100 mt in physical quantity in July, up 2.35% month on month and 110.46% year on year. Battery-grade nickel sulphate output stood at 102,500 mt in physical quantity, and electroplating-grade nickel sulphate output stood at 7,600 mt in physical quantity.
Wet-process intermediates remained tight in supply in July. Proportion of nickel sulphate produced by pure metal and scrap increased, and others were supplemented by dissolved nickel briquettes. In July, application rate of nickel briquettes and powders stood at 53.11%, partly contributed by increasing imports of nickel powders. 32.4% of nickel sulphate was produced by secondary materials.
Nickel prices were at low levels recently. Nickel briquettes arrivals increased, discounts narrowed, and in-house dissolution of nickel briquettes accompanied sound economic efficiency, encouraging improvement in in-house dissolution of nickel briquettes. At the same time, some companies previously engaged in scrap production have also shifted to in-house dissolution of nickel briquettes/powders.
Meanwhile, reflux of intermediates may pick up in August, and those produced by Goro and Liqin wet process will arrive in the month. Thus the overall supply shall exceed the previous month. Domestic nickel sulphate output in August will stand at 24,400 mt in metal content, up 0.66% on the month.
Domestic stainless steel output stood at 2.918 million mt in July, up 68,000 mt or 2.40% month on month and 11.45% year on year, according to SMM. Accumulated output from January to July stood at 19.743 million mt, up 26.26% year on year.
In early July, expected output of the month stood at 3.10 million mt. However, actual output did not see any increase. Market news about annual output in 2021 shall not exceed last year’s ceiling surfaced during the month. In addition, typhoon and heavy rains in Henan have disrupted production at some smelters; while implementation of power restriction policies in Guangxi by end-July reduced actual output, bringing the expectation down by 180,000 mt.
However, the real output stood high. Output of 300-series stainless steel totalled 1.54 million mt, while output of 200-series stood at 876,000 mt, and that of 400-series was at 502,000 mt. Among them, production of 200-series increased 56,000 mt month on month, mainly caused by shifted production focus away from 200-series in June and resumed production in July.
Overall stainless steel output is expected to decline by 118,000 mt in August, with output of 200-series down by 76,000 mt to 800,000 mt. As for output for 300-series, it is likelt to trend lower by 51,000 mt to 1.489 million mt, and output for 400-series to remain largely unchanged at 510,000 mt. Output reduction in August will mainly come from power restrictions in Guangxi.
In terms of production restrictions, though this year’s output is not allowed to exceed last year’s ceiling, most of the smelters were at full capacity last year, and some are capable to product steel and stainless steel, enabling shifted focus on production. As a result, the operating capacity of stainless steel will be less affected, while added capacity may be postponed. In light of the current market status, stainless steel output may stay high in the short term but with willl not see a substantial increase.
Manganese ingot output across China stood at 62,800 mt in July, down 15.90% month on month and up 0.88% year on year. The accumulated output in Janurary to July totalled 498,400 mt, up 9.17% year on year, according to SMM survey. Manganese ingot output in Shaanxi accounted for 66% of the total output , followed by Shanxi (21%).
Operating rates across the manganese sector in July stood at 57.93%, down 14.05% month on month and up 55.17% year on year. Many producers were under maintenance, resulting in lower operating rates in Shaanxi. Some factories in Xinjiang suspended operation due to safety reasons, and are expected to resume production in mid to late August after inspection, leading to a significant decline in regional operating rates.
Operating rates among manganese factories are expected to stay low in August on the back of prolonged production suspension to make way for coke oven upgrading program. According to the current production schedules, planned maintenance will still be seen in August at some factories in Fugu.
Manganese ingot output is expected to stand at 65,000 mt in August.
Industrial silicon output in China stood at 272,000 mt in July, an increase of 64.4% year on year and 18.1% month on month, according to SMM survey.
Output of industrial silicon has grown steadily in July,as the south-west China entered wet season, resulting in seasonal high production among silicon companies. However, the increment in output was still behind expectation. Power restrictions in Baoshan and Nujiang in spite of the wet season were among the major causes, which has led to production reductions or reduced operating rates. On the other hand, an unexpected production suspension of a company in Xinjaing in Mid-July caused by accident also reduced the month’s output by around 10,000 mt than the previous period.
The rainfall capacity will continue to affect the intensity of the power restrictions in Yunnan. But one thing is certain that, even if the tight power supply were eased, it was still unable to support higher operating rate but to maintain the normal operation of the existing production. While the company in Xinjiang is still pending notice from relative authorities to resume production.
In consideration of the high uncertainty in operating rates in the two major producing regions, silicon output is expected at around 290,000 mt in August from an optimistic view.
July domestic polysilicon output stood at 41,500 mt, up 47.2% year on year and 1% higher month on month, according to SMM survey.
Maintenance in Xinjiang and Inner Mongolia has been completed in July, lifting output from the previous month. On the other hand, there was some reduction of output due to power restrictions and safety inspections in Inner Mongolia but overall increase in output has outperformed output cuts.
Polysilicon output is expected to stand at 42,300 mt in August as a resulted of run down in capacity and resumption of production after maintenance.
Domestic praseodymium oxide output stood at 5,965 mt in July, down 11% month on month mainly contributed by Sichuan, Guangdong and Inner Mongolia, according to SMM survey.
Rare earth separation plants in Sichuan and Guangdong largely suspended or reduced production due to environmental protection policies. SMM data showed that July output in Sichuan reduced 74% month on month, and down 59% month on month in Guangdong.
Separation plants in Inner Mongolia reduced production slightly due to power restrictions, and some decreased by 20%. One large separation plant, with monthly production of 200 mt, suspended production due to re-location, and was expected to resume production until November.
Generally speaking, rare earth is quoted based on oxide. And increase in oxide prices in July pushed up the quotation of rare earth. Mining traders were unwilling to sell with scare deliveries, tightening supply to separation plants.
Separation plants in Sichuan may resume normal production in August, but it is still uncertain. Imports of ionic minerals from Myanmar was greatly hampered due to closures in the country. August domestic output is expected to rebound slightly month on month.
Note: SMM started to report the domestic praseodymium oxide output since June 2021. SMM surveyed 63 rare earth separation plants in July, including separation plants of raw ore and scrap recovery plants, across 13 provinces in China. Their combined capacities account for over 91% of the total capacity.
Domestic 1# silver output stood at 1195.489 mt in July (among which silver produced from mines stood at 1020.409 mt), up 1.28% month on month, basically in line with the expected stable output with slight changes.
Recent nonfarm payroll data influenced precious metals prices. Richard Clarida, vice Chair of the Federal Reserves, said that a tapering QE decision might be announced in late 2021. Yields of US Treasury Notes fell comparatively significantly, while the actual yields were experiencing global down-trend, reflecting the investors’ worries over the latest round of Covid-19 outbreaks.
The following months will present a clearer picture of US labour market. But some believe that a stagnated inflations in the US is almost certain, and many countries might have been preparing to purchase gold as national reserves, supporting the recent strength in gold prices, which, to some extent, supported silver prices as well.
However, recent fluctuations in silver prices may continue with a possibly wider price range. Though the transactions in spot market might be influenced, production variation was mainly caused maintenance or resumed production. For example, maintenance at Shaanxi Non-ferrous, Yunnan Tin Group, Mengzi Mining & Metallurgy greatly reduced July production. Maintenance in Gejiu Lianxing, Jiangxi Youtianyong that started in May or even earlier has not completed yet, extending its impact on overall production.
On the other hand, many companies completed maintenance and resumed production in July, significantly increasing production like Chifengshan Gold-Silver-Lead and Guiyan Silver Group. Reduction of output caused by other companies was somehow offset by increases.
Currently, supply of silver materials like anode mud is still insufficient. August domestic output may see slight and insignificant variations.
Note: SMM started to report domestic silver output since February 2021. SMM surveyed 48 silver producers across 17 provinces in China in July, with combined sample capacity reaching 24,000 mt, covering over 95% of the total capacity.
China’s cobalt sulphate output stood at 5,116 mt in metal content in July, a month-on-month increase of 3% and year-on-year increase of 56%. Although some cobalt sulphate plants reduced production amid the power curtailment, most plants were mainly producing cobalt sulphate for its higher prices compared with cobalt chloride. Therefore, the cobalt sulphate supply increased. SMM expects China’s cobalt sulphate output to stand at 5,123 mt in metal content in August, a month-on-month increase of 0.1% and year-on-year increase of 44%.
China’s output of tricobalt tetraoxide stood at 7,315 mt in July, down 2% month on month, but up 23% year on year. Downstream digital 3C products demand was not strong despite the peak season in Q3. Mainstream battery companies reported that orders were reduced by 30%, and mainstream orders from cobalt tetroxide companies fell by more than 10%. Most companies reduced their production schedules slightly for July and August, but the reduction was less than the reduction in orders as producers will prepare for inventories. Output in August is expected to fall 2% on the month but increase 12% on the year to 7,195 mt.
China’s lithium carbonate output was 18,675 mt in July, a month-on-month decrease of 11% and year-on-year increase of 26%.Ooutput in Qinghai fell 5% on the month to 5,240 mt in July due to the annual maintenance of some smelters and the tight supply of raw materials. The output in Jiangxi also fell by 4% to 6,580 mt due to the equipment failure. Output in Sichuan and other provinces dropped more significantly mainly for lack of the domestic supply of spodumene concentrate, and the output fell by 15% on the month to 8,655 mt in July. The spodumene concentrate supply is still tight in August, and Sichuan is under power rationing. The overall output of lithium carbonate is expected to increase 6.1% on the month and 18.8% on the year to 19,820 mt in August.
China’s lithium hydroxide output stood at 12,727 mt in July, a month-on-month decrease of 11% and year-on-year increase of 61%. The spot supply of battery-grade was in obvious shortage in July as the major plants suspended production due to the maintenance until end-July, and the export volumes increased. Some new production lines are still in the commissioning stage, and capacity release is limited.
According to SMM survey, most companies in maintenance will resume normal production in August, but the electricity consumption will be high in Sichuan and other provinces due to the high temperature, the cut down power supply will affect the supply. It is estimated that the supply will pick up to 14,410 mt in July, an increase of 13% month on month and 27.5% year on year.
China produced 34,555 mt of ternary materials in July, a decrease of 2.2% month on month but up 86% year on year. The output of some ternary material companies in south China declined due to the power curtailment and flood in Henan. On the demand side, the sales of some high-nickel models in the power market was low, and the ternary demand slightly decreased. However, the demand for high-grade nickel in the high-end consumption and power tool markets increased. The demand from the power and small power markets will increase in August, but the ternary material output is expected to rise only slightly to 35,015 mt due to the power curtailment, up 1.3% on the month and 76.3% on the year.
China’s LFP output was 29,810 mt in July, a month-on-month increase of 3.5% and year-on-year increase of 133%. The demand from downstream power market and energy storage kept increasing. Some battery companies were expecting higher demand and prices of LFP, and were restocking amid increased orders. Major LFP companies have accelerated their production expansion. Some of the production lines were put into operation in Q3. Domestic LFP output is expected to be 31,110 mt in October, up 4.4% month on month and 116.3% year on year.
Lithium manganese oxide
China’s lithium manganese oxide stood at 8,140 mt in July, a month-on-month decrease of 8.23% but a year-on-year increase of 67%. Recently, the downstream 3C digital market continued to weaken with less recovery, and overall demand of small power stood stable. Henan’s power facilities were mostly damaged in late July due to the heavy rains, and the government focused on ensuring residential electricity, leading to the decline in some local lithium manganese oxide plants.
Raw material prices fluctuated widely recently, and downstream battery manufacturers were forcing down the increase in the prices of lithium manganese oxide, which squeezed the profits of lithium manganese oxide. Some small and medium-sized manufacturers often reduced or suspended production. China’s lithium manganese oxide output is expected to be 8,460 mt in August, a month-on-month increase of 3.93% and year-on-year increase of 44%.
China’s total output of LCO decreased 1% from June and increased 3% on the year to 7,000 mt in July. Downstream digital 3C products orders fell short of expectations, battery cell companies had fewer orders, and LCO companies lowered their production schedules. Mainstream companies fine-tuned their production plan for restocking. LCO output is expected to be 6,750 mt in August, a decrease of 4% on the month 3% on the year.