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SMM Analysis on Semi-Annual Reports of Copper Companies – Profits Surged in H1 2021
Sep 16,2021 15:10CST
Source:SMM
SMM gives detailed interpretation of the semi-annual reports of these 13 listed companies. (The following data are all excerpted from their 2021 semi-annual reports). All listed copper companies recorded double-digit growth in percentage in their operating income in the first half of the year amid the increase in the sales volume of their main products and the sharp increase in the sales prices of copper cathode. Both net profit and the profit excluding non-recurring gains and losses recorded 3-digit growth in percentage, and some companies saw 4-digit growth.

SHANGHAI, Sept 16(SMM) – As of August 31, 2021, the 2020 semi-annual report has been fully disclosed. There are 13 listed companies with copper smelters that have released the semi-annual report: Tongling Nonferrous Metals (000630), Jiangxi Copper Corporation(600362), Jinchuan International (02362.hk), Daye Nonferrous Metals (00661.hk), Yunnan Copper (000878), Zijin Mining (601899), Yuguang Gold and Lead (600531), Western Mining (601168), Yunnan Tin Group (000960), Humon (002237), Zhongjin Gold (600489), Baiyin Nonferrous (601212) and Jintian Copper (601609).

SMM gives detailed interpretation of the semi-annual reports of these 13 listed companies. (The following data are all excerpted from their 2021 semi-annual reports)

All listed copper companies recorded double-digit growth in percentage in their operating income in the first half of the year amid the increase in the sales volume of their main products and the sharp increase in the sales prices of copper cathode. Both net profit and the profit excluding non-recurring gains and losses recorded 3-digit growth in percentage, and some companies saw 4-digit growth.

The average gross profit margin of several companies in the first half of 2021 was 0.81% higher than that of the first half of 2020, but the average gross profit margin in the whole industry was lower than the same period last year. The main reason is that the TCs in the first half of 2021 was lower on the year. The average TC for long-term orders was $59.2/mt, down $2.5/mt on the year. The average TC for small orders was $59.1/mt in H1 2020, and that in H1 2021 was $36.7/mt, down $22.4/mt on the year.

The gross profit margin of Zijin Mining’s copper cathode produced with the copper concentrate from its own mine increased 30.47 percentage points to 58.87%. This shows that the gross profit of copper produced by the raw materials from the smelters' own mines is very high, which is also the main reason why major smelters strive to increase the output of their own mines.

In the downstream industries, the profits of copper semi processing plants diverged significantly in the first half of 2021, due to the mixed trend of processing fees and imbalanced demand by region.

Most copper semi processing companies saw limited increase in the profits on the year. The net profit margin of copper foil companies was the highest at 13.78%, an increase of 3.6% year-on-year.  

The gross profit margin of sulphuric acid, one of the by-products of the smelter, has generally risen in the first half of 2021. Its average gross profit margin in the first half of 2021 was 32.96%, an increase of 101.82% from H1 2020. The prices of sulphuric acid have been rising since March last year.

Only two companies (Jiangxi Copper and Zijin Mining) had the output of over 100,000 mt of copper concentrate in the first half of the year, while the largest increases in the output came from Western Mining, Zijin Mining and Baiyin Nonferrous Metals, standing at 32,000 mt, 9,900 mt and 9,400 mt respectively. The 13 companies produced a total of 550,800 mt of copper concentrate in H1 2021, an increase of 38,000 mt to 7.5% on the year.

The copper cathode output of these companies totalled 3.90 million mt in the first half of 2021, accounting for 75.65% in the national output of 5.15 million mt, the proportion up 2.86 percentage points from the same period last year. It is expected that the industry concentration will continue to increase in the future as Daye Nonferrous's new 400,000 mt capacity will be put into production.

Although the TCs for copper concentrate in the first half of the year was at a historically low level, in the context of the continuous rise of copper cathode and sulphuric acid prices, the operating rates of all smelters across the country were relatively high, and the output increased significantly. Only two smelters slightly lowered output. However, the operating rates in some private-owned smelters were low. The increase in the national copper cathode in the first half of 2021 was 332,000 mt, and the output in the above-mentioned 13 smelters increased by 389,000 mt.

The production plans of these companies show that they will produce 7.59 million mt in 2021, an increase of 253,000 mt on the year. However, as of the end of June, they have completed 51.38% of their annual output plan. Stimulated by the higher TCs and sulphuric acid prices, their output is expected to further increase. The total output in 2021 is expected to exceed the plan and reach about 560,000 mt.

Semi-annual report
copper
copper concentrate
copper cathode
profit
output

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