Exclusive: China's Metals Output in December

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

Copper cathode

The domestic copper cathode output in December stood at 870,300 mt, up 5.38% month-on-month (MoM) and 0.97% year-on-year (YoY). Generally speaking, many smelters have completed their maintenance, and some recovered quickly from accidents. There were a few smelters producing with high operating rates to meet their annual production targets. As such, the domestic copper cathode in December was far higher than market estimate, marking a new high in nearly 6 months. In terms of maintenance plans, only Yunnan Copper, Fuye Group and Huludao Beifang Copper were under maintenance. The two largest copper smelters in Guangxi also resumed normal production from maintenance and the accident, and their monthly output even recorded historical highs.  For raw materials, the short supply of blister copper eased to some extent.  And the copper cathode imports have returned to normal in November with the improvement of the shipping problems at ports in South Africa. Only a few smelters in coastal provinces have not yet reached full production due to shortage of blister copper. Nonetheless, the tight blister copper supply is likely to mitigate after the global supply chain recovers. Meanwhile, the raw materials inventory of smelters basically remained high amid stabilised copper concentrate supply. And the short-term closure of the ports in north China did not affect the use of copper concentrate by the smelters in north-west China. The overall output in December hit a new high since the second half of the year for multiple factors, including the increasing output of Dongying Fangyuan who has a capacity of 280,000 mt.

Based on the production plans in January 2022, the overall output will remain high. The other encouraging factor is that the impact of the Winter Olympics on the production activities in north China is expected to be limited. And the smelters are in full swing amid the favourable SHFE/LME copper price ratio in January 2022 in anticipation of an exciting new start. The domestic copper cathode output is expected to stand at 868,400 mt in January, down 0.22% MoM, but up 8.78% YoY, according to SMM estimate.

Alumina

The China alumina output in December (31 calendar days) was 6.59 million mt, of which metallurgical-grade alumina output stood at 6.36 million mt, according to SMM statistics. The average daily output of metallurgical-grade alumina was 205,300 mt, an increase of 4.33% MoM and 10.68% YoY. China's cumulative output of metallurgical-grade alumina stood at 72.16 million mt throughout 2021, a year-on-year increase of 7.25%. The heating season policy in north China in December has a relatively limited impact on the roasting capacity of alumina refineries in Shandong, Henan and Shanxi. The output in the north did not decline significantly compared with the previous month. The increase in December was mainly a result of the stable operation in south-west China. And the refineries in Longzhou County in Guangxi (with an installed capacity of 1 million mt) have reached the full capacity from a low of 240,000 mt/year since the end of November, bringing some additional output. On the whole, it is estimated that the net imports of alumina in December will be 150,000 mt. And there will be a surplus of 401,000 mt in the month, and a slight surplus of about 1.04 million mt throughout the year. (1 mt of aluminium consumes 1.925 mt of alumina).

China's metallurgical grade alumina operating capacity has reached 74.92 million mt/year as of early January, with the installed capacity at 89.6 million mt/year. As the Winter Olympics are getting closer and closer, in order to ensure the air quality, the control measures for heavily air pollution in January are expected to be stronger than that in December. The risks of disrupted alumina production in the north still exist. It is estimated that in January (31 calendar days), the output of metallurgical grade alumina will be around 6.1 million mt.

Aluminium

China produced 3.18 million mt of aluminium in December, down 3.17% on the year, according to SMM statistics. The daily output averaged 102,400 mt, up 100 mt/day MoM. The full year output in 2021 totalled 38.49 million mt, up 3.7% YoY. The operating aluminium capacity in December increased slightly. Among them, some aluminium smelters in Inner Mongolia, Yunnan, and Shanxi increased their output, resuming the production of a total capacity of around 240,000 mt. As of the beginning of January 2022, the domestic operating aluminium capacity stood at 37.7 million mt. The installed capacity was 43.77 million mt, and the average operating rate nationwide was 86.1%. According to SMM survey, liquid aluminium accounted for 65.5% of the total aluminium output in December, an increase of 3.1 percentage points from the previous month.

The supply side will probably see rising operating aluminium capacity in January. And the output in Yunnan and Shanxi may also increase. The production in other regions will be stable at the same time. More importantly, the aluminium smelters have not received clear production cut orders for the Winter Olympics. The aluminium output is expected to be 3.2 million mt in January, and the daily average output is likely to rise to around 103,200 mt. On the demand side, downstream consumption showed signs of weakening except for the aluminium plate/sheet, strip and foil sector, and some fabricators such as aluminium rods are expected to reduce their production. The domestic aluminium ingot output is likely to increase MoM in January, and the domestic aluminium ingot inventory will start rising since mid-January. The inventory is likely to increase to the 800,000 mt level by the end of January.

Primary lead

China produced 269,700 mt of primary lead in December, up 8.42% MoM and down 5.79% YoY, according to SMM statistics. The total output rose 0.88% throughout the year YoY. The production capacities of enterprises involved in the SMM survey totalled 5.48 million mt in 2021.

The lead smelting enterprises resumed their production as scheduled after centralised maintenance in December, according to SMM survey. During this period, the output of Jiangxi Copper, Jiangxi Jinde, Shandong Hengbang, Henan Wanyang, etc. all increased MoM. Meanwhile, as December is the last month of 2021, some smelters continued to ramp up their output to meet their annual production targets. Therefore, although Guangxi Nanfang Non-ferrous and Zhongjin Lingnan conducted maintenance, the overall output maintained growth in December.

The CNY holiday period in 2022 is mainly in early February, which has limited disruption to the production of smelters in January, though the overall market already presented festive atmosphere. At the same time, enterprises including Guangxi Nanfang No-ferrous and Hunan Shuikoushan plan to resume the production after maintenance, while Yunnan Zhenxing will carry out maintenance. SMM expects that the output of primary lead in January will increase by nearly 10,000 mt to 279,000 mt.

Secondary lead

China produced 369,700 mt of secondary lead in December, up 3.39% MoM and 13.06% YoY. The annual output in 2021 surged 51.36% from the previous year. Meanwhile, China produced 334,500 mt of secondary refined lead in the month, down 0.55% mt MoM and up 15.61% YoY. The annual output in 2021 advanced 47.48% compared with a year ago.

The output of secondary refined lead decreased only slightly in December according to SMM research. The maintenance and production resumption of the secondary lead smelters coexisted, hence the total output was largely unchanged as a whole. Specifically speaking, Anhui Huabo delayed the resumption of production in December after maintenance was started in late November, and its monthly output dropped significantly from a month ago. Anhui Huaxin unexpectedly suspended its production for internal reasons. In Jiangsu, Chunxing Group was still in the process of production upgrading, leading to some declines in the output. At the same time, some smelters in Guizhou were affected by the environmental protection inspects, and their output declined as well. On the other hand, after Anhui Tianchang completed its maintenance in November, the output recovered in December. The overhaul of some smelters in Inner Mongolia was completed. And the orders also increased. A few smelters in Anhui and Shandong ramped up their output in light of improving secondary lead profits.

January 31 will be the CNY, more smelters in north China took holidays in advance, coupled with the poor weather. However, at the same time, the second phase of Anhui Huabo was preparing for production in early January, and it may yield output in the middle of the month. Jiangsu Chunxing Group is expected to complete the technical transformation in early January. The secondary refined lead output in January 2022 is likely to be flat MoM amid the mixture of bullish and bearish factors including CNY holiday, poor weather and maintenance.

Refined zinc

SMM data showed that China's refined zinc output stood at 513,300 mt in December 2021, down 1.2% or 6,200 mt on the month and 7.26% on the year. The cumulative output from January to December stood at 6.09 million mt, a year-on-year decrease of 0.29%. The alloy output at domestic refined zinc smelters in SMM survey sample registered 78,400 mt in December, up 1,200 mt on the month.

There has been unexpected refined zinc output declines in December, according to SMM survey. Expected output growth: The smelters in Inner Mongolia returned to full production after the maintenance or energy consumption control came to an end. The smelters in Jiangxi and Shandong also resumed full production after maintenance. Unexpected output decline: Some smelters in Shaanxi and Guangxi reduced their output which was unanticipated. A few smelters in Gansu and Yunnan cut their output slightly. The maintenance of Yunnan Hualian Zinc & Indium and Hunan Sanli also contributed to the declines.

It is expected that the domestic refined zinc output will increase by 100 mt from the previous month to 513,400 mt in January 2022, basically the same as in December, according to SMM estimate. According to SMM survey, the expected growth in the output in January is mainly contributed by Yunnan Hualian Zinc & Indium who will complete its maintenance in January, as well as the increasing operating rates of smelters in Gansu. The output will also see some declines as some small-sized smelters in Hunan will be closed for Chinse New Year (CNY) holiday after mid-January.

On the other hand, the secondary zinc smelters in Hunan and Sichuan will reduce their production during to the CNY holiday in February, and will resume after operating after mid-February. It is expected that refined zinc output will drop by 11,000 mt month-on-month in February.

Refined tin

China's refined tin output stood at 14000 mt in December, up 5.41% MoM. The smelters’ output in Yunnan dropped palpably in December, as the production in Gejiu was suspended for a short period of time due to intensifying production restrictions in response to repeating air pollution. The shutdown of Kaimeng Co. in December for maintenance also affected the overall output in the region. On the other hand, the output in Yunnan was also negatively impacted by the tight supply of raw materials amid the closed customs in Myanmar on the back of spreading COVID-19 pandemic. The output in Guangxi was little affected by the tight supply of raw materials as the shortage was partly made up by the outsourcing of tin ore, hence the overall output in the region rose slightly MoM. The output in Guangxi increased significantly, because the smelters that were affected by environmental protection-related production restrictions or technical transformation have returned to normal production, while the others were maintained smooth operation. The output in other regions decreased slightly in December compared with that in November, but the overall production was relatively stable. And there was no other influencing factors recently except for the CNY holiday.

In January, some smelters in Yunnan were expected to take a holiday, which will lead to less output. But the resumption of production of Kaimeng will make up for the some of the declines. Several smelters in Guangxi have lowered their production expectations due to the holiday factor and tight raw materials supply, which is expected to reduce the output by 700 mt. Jiangxi has also lowered its production forecasts due to the CNY holiday, reducing the output in January by around 20%. Smelters in other regions will gradually be shut down as planned. In summary, SMM expects the domestic refined tin output in January to stand at 12,485 mt.

Refined nickel

The domestic refined nickel output stood at about 15,012 mt in December, down about 209 mt or 1.37% MoM. The operating rate stood at 68%. As the smelters in Gansu have completed the annual production plan, the production of refined nickel returned to normal in December. The production activities in Jilin also recovered in the month, and the production of smelters in Xinjiang was relatively stable.

The output of refined nickel is expected to stand at 14,400 mt in January 2022. Some smelters slightly lowered their output target in January after completing their full-year production plans in 2021.

NPI

Domestic NPI output stood at 33,100 mt in Ni content in December 2021, up 2.83% MoM and down 11.21% YoY. The output of high-grade NPI stood at 27,700 mt (Ni content), an increase of 4.14% MoM. And the output of low-grade NPI was 5,400 mt (Ni content), down 3% on the month. The production of NPI plants was quite differentiated greatly in different regions in December. Some NPI plants returned to normal production in south China, especially in Guangdong, where the output of high and low-grade NPI rose significantly. The output in Shandong, Liaoning and Hebei dropped slightly, as the local smelters were unable to reach full production due to the Winter Olympics. And the cold weather also affected the production activities. In addition, the prices of PNI dropped sharply in December, which fell below the costs of many NPI plants. Some, as a result, decided to carry out maintenance to control the costs. The production in other regions increased steadily and moderately, with minor changes.

The domestic NPI output is expected to be 32,200 mt in Ni content in January, down 2.72% MoM, mainly because the NPI production lines of some integrated steel mills could not reach full production due to the holiday factor. The output of high-grade NPI will be 27,700 mt (Ni content), a decrease of 2.47% MoM. And the output of low-grade NPI will stand at 4,600 mt (Ni content), down 17.86% MoM.

Nickel sulphate

The domestic output of nickel sulphate stood at 127,000 mt in physical content or 27,800 mt in metal content in December 2021, down 3.37% MoM and up 62.7% YoY. The output of battery-grade nickel sulphate was 25,600 mt in metal content. The volume of self-dissolved nickel briquette (powder) accounted for about 54% of the total raw materials in December, virgin materials (MHP/MSP/high matte nickel) accounted for about 32%, scrap took up about the remaining 14%. The output of battery-grade sulphuric acid declined significantly in December mainly due to the shrinking market demand caused by the falling output of some OEMs. In addition, the costs of raw materials remained high, but the prices of finished products could hardly rise along with the costs. The salt factories reduced the production due to meagre profits. Some factories experienced falling output amid the pandemic. Nonetheless, there are still some integrated precursor enterprises expanding their capacity, and the use of self-dissolved nickel briquette increased MoM. A few companies indicated that they had year-end maintenance plans in January. While most companies reported no maintenance plans in the month. In addition, some companies, who have been closed for maintenance in December, will resume their production in January. The output in January 2022 is expected to increase by 0.6% to 28,000 mt in Ni content, a year-on-year increase of 74.84%.

Battery-grade manganese sulphate

China's battery-grade manganese sulphate output stood at 25,100 mt in December 2021, an increase of 2.4% MoM.

Although the leading terminal enterprises had rigid demand, the overall orders were limited as the overall manganese prices were relatively high. On the other hand, some small and medium-sized material manufacturers indicated that they did not receive more orders from the terminal sector by end of 2021, hence their demand for manganese was modest. What’s more, these manufacturers have not exhausted their in-plant inventories. SMM believes that the overall demand for high-purity manganese sulphate was not strong in December, and the market prices will carry downside potential though are expected to be stable as a whole, due to the increase in costs and supply.

High-carbon ferrochrome

The output of high-carbon ferrochrome totalled 638,900 mt in December, up 15,000 mt or 2.4% MoM, according SMM statistics. The output in Inner Mongolia increased by 7,100 mt or 2.37% MoM to 306,700 mt. The high-carbon ferrochrome output stood high in December. Although the production reduction plans of stainless steel plants continued, a number of large-scale submerged arc furnaces were newly put into operation in Inner Mongolia. In addition, high-carbon ferrochrome manufacturers still maintained a certain profit as a whole. The output of high-carbon ferrochrome recorded new historical highs as the NPI plants had hectic production schedules.

The domestic high-carbon ferrochrome output is expected to stand at 548,300 mt in January, down 14.18% MoM and up 28.32% YoY. Recently, the prices of high-carbon ferrochrome have been falling steadily, and the profits of the manufacturers narrowed, especially when the electricity prices and coke prices in the south were higher than those in the north. Some NPI plants suffered losses already. Furthermore, the demand for high-carbon ferrochrome dropped as the downstream stainless steel mills are expected to cut the output. And some expressed maintenance plans. All of these factors are likely to lead to productions cuts or suspensions. Recently, it has been reported on the Internet that the dual control policy of energy consumption in western Inner Mongolia requires some NPI plants to report production reduction plans. Yuncheng, Shanxi launched red air pollution alter, many local high-carbon ferrochrome manufacturers have stopped their production, and the output is expected to decline. The market shall pay attention to the production schedules of stainless steel mills and the intensity of production restrictions in the heating season.

Stainless steel

According to SMM survey, the domestic stainless steel output in December totalled about 2.68 million mt, up 51,100 mt or 1.4% MoM and down 10.2% YoY. The annual stainless steel output stood at 32.39 million mt in 2021, an increase of 8.43% YoY. Specifically speaking, the output of 200-series stainless steel totalled 9.68 million mt, up 0.6% YoY. The annual output of 300-series was about 16.32 million mt, an increase of 10.2% YoY. The output of 400-series in 2021 recorded 6.39 million mt, a year-on-year increase of 17.5%.

In December, a steel plant in Guangdong resumed its production in November after it was shut down in early stage, and the output of 200-series and 300-series both rose MoM in December. However, some steel mills conducted maintenance and production cuts in December, but the reduction will mostly be reflected in January, and the reduction in December was limited.

In January 2022, most steel mills have started their annual maintenance, and the output of stainless steel of each series will decline to varying degrees. Among them, the output of 200-series stainless steel in January is estimated at 650,000 mt, down 190,000 mt MoM. The output of 300-series will be around 1.22 million mt, down 110,000 mt MoM. The output of 400-series is likely to be 460,000 mt, a drop of 50,000 mt. The total output of all series stainless steel will be 2.33 million mt in January, down 13% MoM.

EMM

The domestic EMM output in December stood at 90,000 mt, a drop of 2% MoM and down 32% YoY, according to SMM statistics. The average monthly ex-works price of EMM in December was 39,224 yuan/mt, a decrease of 7.15% from the previous month. The average monthly FOB price was $6,278/mt, a drop of 8.35% MoM. According to SMM research, the overall supply of refined manganese in the fourth quarter of 2021 was in a obvious surplus. Therefore, in January 2022, quite a number of domestic manganese manufacturers will suspend the production and stand on the sidelines, and most of the transactions are made with inventories. Nonetheless, the sellers are less interest in selling, and the prices will hover at a high level.

Industrial silicon metal

The domestic industrial silicon metal output stood at 269,000 mt in December, down 10.1% MoM and up 10.2% YoY, according to SMM statistics. The output totalled 2.91 million mt throughout 2021, an increase of 32.5% YoY and a historical high.

The decrease in industrial silicon metal supply in December mainly came from Sichuan and Xinjiang. The smelters in Sichuan reduced their production since late November as the electricity supply was low amid the dry season, and the output cuts were more palpable in December and the coming January. Two manufacturers cut the production because they exceeded the yearly energy consumption quotas. The combined output in the two major producing areas dropped by 25,000 mt MoM in December. The manufacturers in Yunnan also declined slightly in the dry season. In addition, some manufacturers in Gansu, Shaanxi, Guizhou, and Guangxi were shut down for maintenance, and the capacities are expected to be resumed after the CNY.

The production cuts in Yunnan in the dry season mostly happened at the end of December. Under this scenario, it is expected that the industrial silicon metal output in January will continue to decline to around 245,000 mt.

Polysilicon

The domestic polysilicon output was 48,800 mt in December, an increase of 14.0% month on month and 44.0% year on year, according to SMM statistics. The new production capacity of Yongxiang, Zhongneng and Daquan was gradually put into production at the end of the year, resulting in a significant increase in output in December compared with the previous month. Two enterprises created their monthly output record of above 10,000 mt for the first time in the month. China’s polysilicon output totalled 487,000 mt in 2021, a year-on-year increase of 23.1%.

At present, 11 solar-grade silicon material plants are producing with high operating rates. If the operating rates are still low in January-February amid seasonal low in the terminal sector, the in-plant inventory will rise slightly from a level of zero.

As the new production capacity ramps up its output, it is expected that the output of silicon materials will continue to increase in January 2022, and it is expected to reach 51,000 mt, setting new monthly high.

Silicon-manganese alloy

China produced 794,400 mt of silicon-manganese alloy in December, down 8.1% MoM and 21.2% YoY, according to SMM statistics. The output totalled 10.65 million mt in 2021, a year-on-year decrease of 6.4%. The average operating rate of silicon-manganese alloy industry stood at 51.3% in December, down 8.1% MoM and 21.2% YoY. The output of silicon-manganese alloy in north China was moderate in December, while many manufacturers were closed due to high costs, resulting in less output. Meanwhile, the demand from the terminal steel mills was poor in the month, and the shipment of silicon-manganese alloy was low. Though the overall output has declined, the market supply was still far greater than demand, and the spot prices were close to the break-even point. SMM believes that since there are rumours of production restrictions in the near future though it has not been officially announced, the market is inclined to hold the prices firm However, at the beginning of 2022, the electricity prices in various places are expected to be lowered, and the costs may drop subsequently. Hence the prices of silicon-manganese alloy may lack upside momentum. The market shall keep an eye on the production restrictions in north China and the real electricity prices.

Magnesium ingot

China's magnesium ingot output stood at 74,700 mt in December, up 4.96% MoM and 1.69% YoY, according to SMM statistics. The output totalled 828,700 mt in 2021, a year-on-year increase of 6.38%.

According to SMM research, the exports of magnesium ingots reached 24,300 mt in December, a month-on-month increase of 43.78%. The monthly output of magnesium ingots returned to the annual high under the support of the traditional seasonal high overseas. Considering that there will be restocking demand after Christmas and before the CNY in January, the demand will remain high though less strong than in December. According to the existing production schedules, there will be currently no production suspensions for maintenance in January, which means that the production will still be busy. SMM expects that the output will total 75,000 mt in January.

Magnesium alloy

China's magnesium alloy output stood at 20,300 mt in December, up 4.90% MoM and down 39.04% YoY, according to SMM statistics. The output totalled 318,000 mt throughout 2021, a year-on-year increase of 7.09%.

The average operating rate of magnesium alloy industry stood at 37.59% in December, up 4.9% MoM and down 38.85% YoY. The overseas orders for magnesium alloys were relatively high, and the operating rates of leading manufacturers remained high, while that of small and medium-sized manufacturers were less than expect. The salesman of a magnesium alloy factory said that the prices of magnesium jumped again recently, and the downstream acceptance was low. The bargaining power of small and medium-sized manufacturers was limited, while the large ones were less affected by virtue of its large scale and brand reputation. Considering that the current overseas demand remained strong and the large manufacturers maintained high operating rates, there is possibility that the orders will flow to medium and small-sized manufacturers, lifting the overall output. The magnesium alloy output is expected to reach 21,000 mt in January.

Magnesium powder

According to SMM data, China's magnesium powder output stood at 9,600 mt in December, a month-on-month increase of 7.95%.

The average operating rate of magnesium powder industry recorded 54.18% in November.

On the back of the continuous recovery of overseas orders in December, the supply of magnesium powder maintained a positive growth. Overseas customers stockpiled in advance for Q1 2022 as the prices of magnesium experienced several rounds of hikes in the fourth quarter 2021. There is possibility that the restocking demand in January ahead of the CNY may be less than expected. The domestic magnesium powder output is likely to be 9,500 mt in January.

Praseodymium-neodymium oxide

China's praseodymium neodymium (PrNd) oxide output was 6,150 mt in December 2021, a slight increase of 1.75% month-on-month (MoM). The main increase areas mainly came from the major light rare earth producing provinces like Inner Mongolia, Sichuan, and Shandong, while Jiangxi, Hunan, and Guangdong contributed most of the declines, especially middle and heavy rare earth.

The raw ore supply in major light rare earth ore consuming markets was comparatively sufficient in December, and the output of PrNd oxide and alloy in Inner Mongolia and Sichuan rose slightly. The downstream NdFeB magnetic materials companies continued to expand their capacity, constantly creating new demand. Some separation companies in Inner Mongolia, Sichuan and Shandong put their new production lines into operation in December in order to meet the demand generated by expanding NdFeB capacity, and more capacities are expected to start producing in 2022.

Nonetheless, the upstream separation/smelting quotas in Inner Mongolia, Shandong and Sichuan were unable to meet the demand from NdFeB magnetic materials. And a few separation companies in north and south-west China failed to ramp out the production due to lack of quotas.

The raw ore supply in major middle and heavy rare earth ore consuming regions was relatively tight, and the output of PrNd products in Jiangxi, Zhejiang, Guangdong and Guangxi was flat in December when compared with that in November, when the output dropped slightly from a month ago. Some manufacturers were unable to return to normal production.

With the customs clearance of rare earth ores from Myanmar in January, the supply of rare earth ore will be supplemented. It is expected that the output of PrNd oxide in January will increase slightly to 6,200 mt.

Praseodymium neodymium alloy

The output of PrNd alloy stood at 5,626 mt in the month, a slight increase of 0.9% MoM, which was basically the same as in November. The increase was mainly found in Inner Mongolia.

The magnetic material companies rushed to deliver orders in December, and the overall restocking demand was weak. In the short term, magnetic material companies have signed long-term orders for 2022 around the end of 2021. Their purchasing and restocking demand increased in January, and some metal companies in Inner Mongolia and Sichuan have received long-term orders to their full capacity. The global downstream demand in the new energy vehicles, wind turbines and other fields will increase throughout 2022 on the back of carbon peaking and carbon neutrality, and the demand for PrNd alloy will continue to grow. 

In January, imports of rare earth ores from Myanmar will complete the customs clearance, but it will take some time before raw ore is produced into PrNd alloy. It is expected that the PrNd alloy in January 2022 will stand at around 5,630 mt, flat from a month ago.

Molybdenum concentrate

SMM data shows that in December 2021, the domestic molybdenum concentrate output was 19,800 mt, an increase of 2.5% from the previous month.

The output in December increased slightly MoM. According to SMM understanding, due to the increase in downstream demand and the rise in domestic molybdenum prices in December, the production enthusiasm of molybdenum mining enterprises increased significantly, especially the large mines. However, at the same time, power cuts in Zhejiang, production restrictions on some mines in Beijing-Tianjin-Hebei region due to the Winter Olympics, and the impact of the COVID in Inner Mongolia have reduced the mine production to a certain extent. Therefore, domestic molybdenum concentrate output only increased slightly in December.

Ferromolybdenum

The domestic ferromolybdenum output stood at about 17,800 mt in December, up 1,950 mt or 12.3% on the month. Domestic ferromolybdenum saw great increase in supply.

The purchase volume of domestic steel mills continued to increase in December. According to SMM statistics, the total amount of domestic ferromolybdenum traded through bids in December was about 10,600 mt, an increase of about 7% MoM. The steel mills increased their purchases of ferromolybdenum again for pre-CNY restocking in January. At the same time, considering the influence of the COVID at the end of the year, the Winter Olympics, the Two Sessions and other factors, the overall restocking volume in December increased significantly compared with previous years. The production enthusiasm of ferromolybdenum enterprises has been greatly improved on the back of rising molybdenum prices. The output of ferromolybdenum is expected to increase significantly.

Silver

According to SMM survey, domestic silver output stood at 1238.462 mt (including 1040.532 mt of mineral silver) in December 2021, down 5.95% from the previous month. On the macro front, the minutes of the Fed meeting released at the end of the year showed that Fed officials are considering raising interest rates earlier and more significantly than previously expected. The minutes also showed that policymakers discussed starting to shrink their balance sheets soon after the first rate hike. “Nearly all participants agreed that it may be appropriate to initiate balance sheet reduction sometime after the first increase of the federal funds rate in the target range," the minutes added. The sell-off in US. Treasuries accelerated after the release of the minutes of the latest Fed meeting. The 10-year Treasury yield rose to 1.7787% at one point, its highest level since April. The overnight swap market was pricing in an 80% chance that the Fed would raise rates by 25 basis points at its March meeting. Therefore, the policy changes on the macro side also affected the trend of silver prices in December to a certain extent. However, the trading was still low, and the prices demonstrated downside potentials. There was a rebound in the market, but it met strong resistance.

SMM expects silver prices to continue to move rangebound. The changes in the production of manufacturers were still relatively small. The output of some manufacturers was largely unchanged, and more reduced their production due to factors such as maintenance or production restrictions. Companies with significantly reduced output this month included Yunnan Copper, Shandong Zhaojin, Zhejiang Hongda, Zhejiang Yadong Industrial, Baiyin Nonferrous Metals, Huludao Nonferrous Metals, Chifeng Yunnan Copper. There were also companies with increased production, such as Zhongyuan Gold, Guiyan Platinum, Zijin Mining, Shandong Hengbang, and Hunan Shuikoushan, mainly owing to resumed production or ramped up output at the year-end. But the increase was weaker than the decrease in output. The current supply of silver-containing materials, including anode mud, was still tight. The pricing coefficient is basically unchanged. The domestic silver output in January is likely to rise mildly on the whole.

Titanium dioxide

China's titanium dioxide output stood at 306,700 mt in December, down 3.08% MoM and 0.10% YoY. The output totalled 3.76 million mt throughout 2021, a year-on-year increase of 9.45%.

The output in December declined MoM because some manufacturers suspended the production for maintenance, while some were restricted by the environmental protection requirements. According to the existing production schedules, except for a few manufacturers, the maintenance in December have basically been completed in January. Considering that domestic and foreign manufacturers have been optimistic about titanium dioxide demand in January, it is expected that in January the total domestic output of titanium dioxide will reach 315,000 mt.

Cobalt sulphate

China’s cobalt sulphate output stood at about 5,634 mt in metal content in December, a month-on-month decrease of 2% but a year-on-year increase of 12%. On the supply side, two large cobalt salt manufacturers in Zhejiang were suspended for 2 weeks due to the COVID. and some manufacturers have inconstant production scheduling due to maintenance or orders. Hence the overall supply of cobalt sulphate has declined slightly. On the demand side, there is a certain increase in the demand for precursors due to the stockpiling ahead of the CNY. Looking forward, the production is expected to recover, and the demand for cobalt sulphate will rally as a whole. The output of cobalt sulphate will be 5,938 mt in metal content in January, up 5% month-on-month and 20% year-on-year.

Lithium carbonate

China’s lithium carbonate output stood at 19,526 mt in December, a month-on-month decrease of 5% but a year-on-year increase of 28%. The prices of lithium carbonate rose sharply in December. The domestic mainstream smelters in Sichuan and Jiangxi conducted maintenance around the end of 2021, which greatly impacted the output. The Beijing Winter Olympics also restricted the production activities in surrounding areas including Hebei and Shandong. According to SMM statistics, among the monthly output in December, the output of lithium extraction from spodumene accounted for about 48% of the total, the output from lithium mica accounted for about 25%, the output from salt lake accounted for about 22%, and the other sources took up about 5%. The lithium carbonate output is estimated at 19,021 mt in January 2022, down 3% MoM and 52% YoY owing to the further production cuts on maintenance ahead of the CNY.

NMC materials

China produced 47,451 mt of NMC materials in December, an increase of 10.9% month on month and 61.9% year on year. On the supply side, the new production capacity of some manufacturers was put into operation, and some rushed to meet their annual production targets. Hence the supply increased. On the demand side, battery and material factories have both stockpiled before the New Year’s Day, and some manufacturers thought that the prices of raw materials are rising too fast, hence they have placed their orders in advance. In addition, some overseas battery factories increased the orders in face of the impact of logistics due to the holiday factor. In January, although the orders of some manufacturers are still increasing, the output of some material manufacturers have returned to normal after fulfilling their production targets in 2021. China’s NMC output is expected to stand at 47,064 mt in January, down 0.8% month on month and up 54.6% year on year.