Exclusive: China's Metals Output in March

SHANGHAI, Apr 12 (SMM) - This is a roundup of China's metals output in March 2022, from an exclusive survey of key producers by SMM analysts.

Copper cathode

China produced 848,500 mt of copper cathode in March, up 8.42% MoM and down 5.79% YoY, according to SMM statistics.

Overall, the domestic smelters’ output was basically in line with expectations, except that two private smelters in Shandong were forced to reduce the production due to capital and other problems. Although some smelters in north-east China have advanced the maintenance plan due to raw materials problem, it had little impact on the output. From the raw material side, the market was still sufficient in supply. The TC of copper concentrate significantly increased above 70 yuan/mt mark to around 80 yuan/mt as the forced output cut and the sold off of port spot of domestic smelters led to the expectation of increasingly sufficient supply. At the same time, the prices of sulphuric acid have basically returned to the high level of last year, even exceeded 1,000 yuan/mt in some areas under the influence of the rising cost of sulphuric acid. Driven by high profits, the smelters basically maintained full production. In terms of blister copper, although some smelters in Shandong experienced a short-term shortage in March, on the whole, the blister copper RCs in both domestic and overseas markets were in an upward trend. So that the domestic copper scrap prices are expected to stand high with the high copper prices.

According to the production plans of smelters in April this year, smelters are unwilling to reduce the production amid the low domestic inventory, high premiums and high TCs. Although smelters such as Zhongjin and Fuye were under maintenance, the impact on copper cathode output will be limited, and only some smelters in the north will be affected by maintenance. The reduction of output mainly comes from the production suspension of smelters in Shandong, while other smelters basically maintained the full production plan driven by high profits. SMM China copper cathode output is estimated to record 827,700 mt in April, down 2.5% MoM, down 5.7% YoY.

Alumina

SMM data showed that in March, China’s alumina output was 6.548 million mt, of which metallurgical-grade alumina was 6.342 million mt. The average daily output of metallurgical-grade was 204,600 mt, an increase of 20.42% month on month and 4.44% year on year.

The output increased significantly month on month in March, and the output added 11% month on month in Shandong, 19% in Shanxi and 78% in Henan. The increase in Shanxi was mainly caused by the production resumption in March after the restriction of environmental protection policies in February, while the increase in Henan was mainly due to the recovery from output cut and production suspension. After the rapid control of the pandemic, the output in Guangxi increased by 22% month on month as Guangxi Huayin Alumimium Co., Ltd. and Guangxi Xinfa Power Industry Co., Ltd returned to normal operation around the beginning of March and the mid and late-March respectively. The output in Chongqing decreased by 32% month on month, mainly due to the suspension of Nanchuan Nanchuan Xianfeng Oxidation Aluminium Co., Ltd. in March, and the plant had no plan to resume the production. On the whole, the output growth in March mainly came from the resumption of production capacity in the early stage. In March, it was estimated that the net import of alumina would be -150,000 mt, and there was a shortage of 189,000 mt in the month. The slight shortage of supply supported the steady increase of alumina prices in March.

Looking back on the first quarter of 2022, the domestic alumina output totalled 17.89 million mt, with an increase of 2.8% YoY. From the perspective of fundamentals, the overall shortage in the first quarter was 55,000 mt, which strongly supported the alumina prices. Starting from the second quarter, it is expected that there is a high possibility of large-scale production in April, and the shortage in the first quarter will be made up quickly amid the capacity expansion of Xiaoyi Tianyuan Chemical Co., Ltd. (400,000 mt/year), the Chongqing Bosai Wanzhou project (1.8 million mt/year), the plan of Hebei Wenfeng New Material Co., Ltd. (1.2 million mt/year) and Jingxi Tiangui phase II project (800,000 mt/year). If the export maintains about 150,000 mt per month, the alumina will remain in a tight balance pattern, but if the export volume is less than expected, the fundamentals will tilt towards a supply surplus, and the prices of alumina will be under pressure.

Aluminium

According to SMM data, China produced 3.315 million mt of aluminium in March, down 0.92% on the year. The daily output averaged 106,900 mt, up 1,700 mt/day on the month, down 1000 mt on the year. The output totalled 9.465 million mt from January to March 2022, a decrease of 2.28% on the year. In March, the suspended production and new production capacity of domestic aluminium were put into operation at an accelerated rate, including 998,000 mt of new and resumed production capacity in Yunnan and Guangxi. In March, domestic aluminium enterprises did not reduce production. As of early April, Chinese aluminium operating capacity reached 39.974 million mt, and the installed capacity was 44.047 million mt, and the operating rates stood at 90.8%. In March, the pandemic broke out in many places in China, affecting the conversion of aluminium liquid in some aluminium smelters. According to SMM research, the proportion of aluminium liquid in China was about 63% in March, with a MoM increase of 1.8%.      

In April, there is still room for growth at the domestic supply side. Among them, the resumed production capacity and the new production capacity in Yunnan, Guangxi and other places are put into operation smoothly. It is expected that the domestic aluminium operating capacity will reach around 40.3 million mt by the end of April, and the domestic aluminium output is expected to reach 3.32 million mt in April, with a year-on-year increase of 1.9%. On the demand side, since March, the pandemic in many places in China continued to interfere with the transportation and production of the domestic aluminium industry chain. The domestic aluminium consumption has weakened, and the mismatch between supply and demand in the aluminium market continues. It is expected that the domestic aluminium social inventory will maintain its growth in the first ten days of April, and the inventory will decline when the consumption resumes as soon as the pandemic is under control. It is expected that the domestic aluminium social inventory will reach the level of 1.1 million mt by the end of April. The market will continue to pay attention to the impact of the domestic pandemic on the industrial chain.

Refined zinc

China's output of refined zinc in March 2022 is estimated at 501,300 mt, up 42,900 mt or 9.37% MoM and 0.9% YoY. The total output of refined zinc from January to March 2022 is expected to be 1.477 million mt, down 2.19% year-on-year.

SMM survey showed that output of domestic refined zinc rose sharply in March from a month ago, however it was lower than expected. Reasons for the increase in output are as follow: Smelters in Liaoning resumed production, providing a small increase. Some small smelters in Sichuan stopped production, but production resumption of local secondary zinc plants drove the output of Sichuan increasing MoM. Some smelters in Inner Mongolia resumed production after maintenance without full capacity, but still provided the main increase. Smelters in Yunnan, Hunan, Guangxi, Qinghai and other regions resumed production in March with larger increase MoM. In addition, a smelter in Qinghai put into production in March with slight increase in output production. The rest of the sharp increase was due to the rise in the number of production days in March. The decrease in output was caused by maintenance and production cuts at some smelters in Shaanxi and Gansu.

SMM expects that output of domestic refined zinc in April will increase by 2,300 mt to 503,600 mt MoM, a slight increase from March which is less than market expectations, and a decrease of 1,500 mt or 0.29% from last year. The total output of refined zinc is expected to be 1.981 million mt from January to April, a total decrease of 1.71% from a year ago. Reasons for the increase in output are as follow: The production resumption of small and medium-sized smelters in Hunan provided the main increment. The end of maintenance at a smelter in Gansu. The resumption of production in March of some smelters in Guangxi with normal output in April. A smelter in Qinghai reached optimal capacity in April. Reasons for the decrease in output are as follow: Maintenance in some smelters of Yunnan led to major reductions. Some smelters in Shaanxi reduced production in April while some in Inner Mongolia stopped production.

Primary lead

China produced 263,900 mt of primary lead in March, up 11.35% MoM and down 6.07% YoY, according to SMM statistics. The combined output in January-March declined by 2.12% from a year ago. Production capacities of enterprises involved in the survey totalled 5.71 million mt in 2022.

According to the survey, after the Spring Festival holiday, primary lead smelters gradually resumed normal production. At the same time, as March has 31 days, the output of major enterprises increased to varying degrees. During this period, the production of Minshan and Xinling in Henan, Yinxing and Huaxin in Hunan were restored after maintenance. The final output growth in March was still lower than expected, mainly due to the extending impact of pandemic in March, especially on transportation. Besides, the tight regional supply of lead concentrate and crude lead also led to the production reduction of smelters in Yunnan, Henan, Guangxi and other regions.

Looking forward to April, the pandemic situation is still severe, and the limitations of transportation continue to affect the raw materials. So that the production reduction of smelters in Yunnan, Hunan and Henan is expected to be difficult to recover for the time being. However, Henan Minshan, Xinling, Chihong and other enterprises are expected to recover after maintenance. In a comprehensive view, the supply growth will be greater than the reduction. SMM China's primary lead output will rise MoM to 285,000 mt in April.

Secondary lead

SMM data showed that China produced 292,400 mt of secondary lead in February, down 8.72% MoM and down 9.76% YoY. For January-March 2022, the combined output surged 11.87% from the same period last year. Meanwhile, China produced 251,400 mt of secondary refined lead in March, down 9.9% month-on-month, and sown 19.81% year-on-year. Combined output in January-March 2022 advanced 7.65% on the year.

According to SMM research, the output of secondary lead fell unexpectedly in March, mainly due to the implementation of value-added tax on battery scrap in March and the pandemic. The contradiction between supply and demand of battery scrap intensified, and the production recovery of secondary lead enterprises was significantly lower than expected. In addition, some smelters maintained normal production in the Spring Festival, and began the maintenance in the off-season after the festival. Taking Jiangxi as a representative, the output of secondary lead output decreased instead of increase in March as a whole.

In March, the battery scrap supply of smelters in Inner Mongolia was tight. Most smelters failed to recover as scheduled after the Spring Festival, and even some smelters reduced their production compared with that during the Spring Festival. There are three enterprises in Jiangxi just temporarily entered the maintenance state. The production of smelters in Henan was reduced to varying degrees due to the strict control of battery scrap and the pandemic. The newly expanded secondary lead smelters in Jiangsu were unexpectedly shut down due to environmental protection, equipment and other factors, which also produced a lot of reduction.

It is expected that the production of secondary lead will be restored in April. Firstly, some smelters in Jiangxi and Ningxia have been restored from maintenance one after another, and the impact of the pandemic in Henan has also been alleviated. In additon, some smelters have formulated production plans in advance, and small smelters in Jiangsu have also put into operation plans. The pandemic prevention and control policies across regions upgraded, and the follow-up impact on the production of secondary lead is still not clear, so that further attention is still needed.

Refined tin

China refined tin output was 15196 mt in March, an increase of 24.92% from February, and a slight increase of 5.26% year-on-year, according to SMM research. The main reason for the MoM increase in March was that the major domestic smelters recovered from the Spring Festival holiday and entered the transition production cycle. The end of overhaul of some smelters also brings increment to the total output. In terms of regions: 1. The output of smelters in Yunnan increased MoM, and the main smelters are in normal production at present. The main output increase in March was caused by the production resumption after the completion of maintenance by individual enterprises and the centralized production of some enterprises to offset the output decline during the Spring Festival. 2. The output of enterprises in Guangxi decreased significantly month on month, mainly due to the maintenance of individual enterprises. 3. The output of smelters in Jiangxi picked up significantly month-on-month, mainly due to the production resumption of smelters after the Spring Festival. Except for the temporary impact on the production of individual smelters, other mainstream smelters maintained stable production. 4. The output change of smelters in other regions in March also basically converged. As the output reduction of some smelters during the Spring Festival was small, so that the output MoM growth in March was stable on the whole.

Chinese tin output in Marsh fell as expected, and the influencing factors were also in line with estimate. According to SMM research, mainstream smelters have basically resumed normal production in April, and only a few smelters are still under maintenance. To sum up, the output of domestic smelters in April is expected to change little month-on-month while the overall enterprises remained stable. SMM expects the domestic refined tin output to be 15578 mt in April.

Refined nickel

China produced 12,600 mt of refined nickel in DMarch, down 2.48% MoM and down 3.38% YoY, according to SMM statistics. The decline in output in March was mainly due to the tight raw material supply amid the continuous intensifying domestic pandemic and import losses. At present, some manufacturers have reduced production.

The output of refined nickel is expected to stand at 12,900 mt in April , up 2.38.9% MoM and down 0.88% YoY. In April, the output is expected to increase slightly, mainly because the pandemic in other provinces may be alleviated this month, and some manufacturers in Xinjiang have resumed normal production. However, it is expected that some manufacturers in Jilin will not be able to alleviate the shortage of raw materials in the short term.

NPI

According to SMM data, China's NPI output stood at 38,800 mt (Ni content) in March, up 19% MoM and up 0.98% YoY. And the output increaed. The output of high-grade NPI stood at 31,800 mt (Ni content) in March, an increase of 18.6% MoM. And the output of low-grade NPI was 6,950 mt (Ni content), up 20% on the month. In addition to the increase of natural days, the tight supply of nickel series products in the direction of domestic stainless steel amid the nickel prices surge also led to the increase of NPI. The increasing nickel ore supply also provided a guarantee for the increase of NPI. By regions, the outputs of low and high-grade NPI across the country were both rising, but the manufacturers in north were limited by the pandemic.

The output of NPIn in China is expected to be 39300 mt (Ni content) in April, and the output continues to rise. The output of high-grade NPI increased to about 3,3,000-34,000 mt (Ni content). The main reason was that the supply of ferronickel and refined nickel has not been restored. The output is expected to rise as the profit is optimistic, the pandemic is recovering.

Nickel sulphate

According to SMM data , China’s output of nickel sulphate was 24,700 mt in metal content in March, or 122,400 mt in physical content, down 1.27% on the month and up 14.09% on the year. In March, the output of nickel sulphate continued to decline on the basis of the reduction in February. Affected by the sharp fluctuation of nickel prices in March, the economy effectiveness of imported raw materials was poor, so that the in-house dissolution of nickel briquette decreased significantly. In March, the dissolution of nickel briquette and nickel powder accounted for 30% of the output of nickel sulphate, while the peak of last year reached over 54%. At present, some scrap manufacturers with domestic prices have relatively good production advantages. However, the overall nickel salt profit performance was modest. In addition to losses, the transportation problem of raw and auxiliary materials in some areas caused by the pandemic also led to the production reduction. Therefore, based on the supply situation, there was a reduction in March or April. Downstream precursors also showed that the negative feedback from the terminal was obvious, so that the price transmission was difficult. Many large factories are expected to reduce production in April. The output of nickel sulphate is expected to stand at 23,500 mt in Ni content in April, down 4.71% MoM and up 3.17% YoY.

Battery-grade manganese sulphate

According to SMM data, the output of battery-grade manganese sulphate in China was 24,500 mt in March, up 34% MoM. In addition, the cumulative output of high purity manganese sulphate in the first quarter of this year was 64,700 mt. In the market, as the overall output of the downstream ternary cathode precursor increased month-on-month in March, the demand for manganese sulphate was released synchronously. The average price of battery-grade manganese sulphate was 10,830 yuan/mt in March, with a slight increase of 5.3% MoM. The domestic supply and demand of battery-grade manganese sulphate was relatively optimistic this month. In addition to the long-term agreements of some terminal enterprises in the second quarter, there was still additional demand for scarce spot trades. However, SMM expects that due to the sharp rise in the procurement costs of lithium salt and nickel salt, the procurement demand for manganese salt may decline in April. Although the production cycle in April is slightly shorter, the demand for battery-grade manganese sulphate is expected to decline month-on-month compared with March, mainly consist of the actual signing of the manufacturers.

High-carbon ferrochrome

SMM data showed that China's high-carbon ferrochromium output increased in March, with a MoM increase of 17.08% to 584,600 mt, a YoY increase of 131,600 mt, an increase of 29.05%; The output oin Inner Mongolia was 306,300 mt, a MoM increase of 14800 mt, a decrease of 5.08%; the output in was 33000 mt, up 65% MoM. In March, the downstream stainless steel manufacturers increased production and the demand for ferrochrome improved. The equipment maintenance of south ferrochrome plants were completed in February, and the output of centralized production resumption was significantly increased. The ore prices increased significantly as the port inventory decreased amid the rising chrome ore consumption. Under the calculation of spot raw material cost, the profit of some ferrochrome plants are upside down was less than the cost. However, the chrome raw material inventory still had profit, so that the operating rate of ferrochrome plants  has not decreased.

The output of high-carbon ferrochrome in April is expected to be 621,600 mt, which will be further increased compared with that in March; Driven by the rapid rise in the chromium ore prices, the ferrochrome prices increased. Although there was no profit of spot raw materials, the profit of inventory raw materials was still optimistic. The ferrochrome plants with high cost in south China reduced the purchase of raw materials and chose to consume their stocks. In April, the supply of ferrochrome still increased under the expectation of production reduction of stainless steel plant. Although the price of chrome ore was still strong, the driving force of ferrochrome price is expected to be weak.

Stainless steel

According to SMM survey, the domestic stainless steel production in March totalled about 2.97 million mt, up 79,200 mt or 31.4% month-on-month and 1.51% year-on-year. 200 series products stood at 842,000 mt, down 14.18% YoY, 300 series products recorded 166,700 mt, uo 22.2% YoY, and 400 series products registered 553,000 mt, down 17.62% YoY.

In March, due to the resumption of normal production after the Spring Festival holiday, the output in March increased significantly compared with that in February. In April, due to the impact of the pandemic and the shortage of imported nickel raw materials, the output of stainless steel decreased by about 4% month-on-month, and 0.01% year-on-year, basically the same as that of the previous year. Among them, the decrease was mainly caused by the 300 series stainless steel. Many steel mills were forced to reduce 300 series or change production among departments due to multiple factors, such as large import losses, transportation problem caused by the pandemic and high cost. Therefore, 300 series stainless steel decreased by 8.66% month-on-month and increased by 5.87% year-on-year. 200 series stainless steel decreased slightly by 0.61%, while 400 series stainless steel increased by 4.7%.

EMM

The domestic output of EMM will be 23,000 mt in March, up 155% month-on-month and 78.3% year-on-year, according to SMM estimate. The average monthly ex-works price of EMM in March was 26,930 yuan/mt, a decrease of 31.4% from the previous month. The average monthly FOB price was $4,389/mt, a drop of 30% MoM. The domestic operating rates of EMM plants were still lower than 10% in March. Although the supply did not increase, the prices of manganese at home and abroad synchronously declined, which mainly due to the early inventory and market transaction prices deviating from acceptable price range of the terminal, leading to demand-supply dynamics, coupled with the increases in overseas EMME production lines squeezing the overseas market, putting pressure on the domestic manganese market. Therefore,  domestic suppliers lowered prices to destock. SMM expects that EMM prices would remain low in April. Although the costs and demand have increased on the month, the acceptable prices of the terminal still need to be observed with apparent demand-supply dynamics.

PrNd oxide

In March, the domestic output of praseodymium neodymium (PrNd) oxide was 6,392 mt, an increase of 5% month-on-month. The main increase came from Jiangxi and Sichuan, and the main decrease was contributed by Fujian, Jiangsu and other places.

The output of PrNd oxide in Jiangxi rose by 13% month-on-month. The shortage of scrap eased in March, and the operating rates of scrap recyclers in Jiangxi climbed as a whole. The downstream demand has increased, and the demand for long-terms orders rose as well. The production capacity of magnetic material enterprises expanded as a whole. Affected by this, scrap recyclers Jiangxi continued to expand their production, and some will expand their annual capacity to 120%. It is expected that the output of PrNd oxide from scrap recyclers in Jiangxi will increase steadily in April.

In March, the ROM inventory of separation enterprises in Jiangxi was temporarily sufficient, and the output of praseodymium oxide was stable for the moment. Affected by environmental inspections, the local middle and heavy rare earth mines have not yet been mined, and the China-Myanmar border is still closed, making it difficult to supplement supply with imported ores. It is expected that the output of PrNd oxide by separation enterprises in Jiangxi will decrease in April and May.

The output of PrNd oxide in Sichuan rose by 3% month-on-month. The sources of raw materials in this region are mainly imported light rare earth ore and local mining. Due to the sufficient inventory of light rare earth ores, the operating capacity of some separation enterprises in Sichuan continued to increase until full production in the first quarter. It is expected that the production of PrNd oxide in Sichuan will remain stable in April.

Due to the obstruction of rare earths imports from Myanmar, the ROM inventory of some separation enterprises in Jiangsu and Fujian dropped, and the operating rates fell some as well, and some have even stopped the production.

Output of PrNd oxide in April is expected to fall slightly MoM.

PrNd alloy

In March, the domestic output of PrNd alloy was 5,278 mt, an increase of 4% month-on-month. The main increase came from Sichuan, Jiangxi and Gaungxi, and the main decrease was contributed by Inner Mongolia and Guangxi.

The output of PrNd alloy in Sichuan rose by 9% month-on-month. During the Spring Festival in February, metal enterprises had more routine maintenance and the operating rates were low. The supply of raw materials was stable in March, and the operating capacity of metal enterprises gradually recovered.

The alloy output in Jiangsu also rose. Affected by the small-scale bidding of magnetic material enterprises, the operating rates of some metal enterprises in Jiangsu increased slightly.

In Inner Mongolia and Jiangxi, the output fell by 5% and 15% respectively MoM. And some metal enterprises in Inner Mongolia were forced to stop the production due to equipment failure. When the equipment is replaced in April, the operating rates are expected to increase slightly.

In March, the rare earths prices continued to decline. Affected by the sentiment of buying on hikes rather than dips, magnetic material companies continued to see lower inventories. In order to avoid the risk of loss, some magnetic material enterprises placed less orders. Affected by this, the output of PrNd oxide of some large metal enterprises in Jiangxi has dropped by more than 20%.

The output of PrNd alloy in April is expected to be flat MoM.

Industrial silicon

The domestic output of industrial silicon stood at 262,000 mt in March, up 9.1% month-on-month and 29.5% year-on-year, according to SMM estimate. The domestic output of industrial silicon totalled 749,700 mt in January to March, a year-on-year increase of 18.55%.

The increase in maintenance capacity in Xinjiang and Fujian led to a slight decrease in the output. The main output increment of industrial silicon in March was contributed by the increasing number of operated furnaces in Sichuan and Nujiang, Yunnan, coupled with the resumption of production at silicon plants in Hunan, Guizhou.

In April, some silicon plants in Inner Mongolia were in maintenance. More silicon plants resumed production after the rainfall returned to the normal level in Sichuan and there were new capacities in Nujiang. It is expected that the output in March will increased to 280,000 mt from February.

Polysilicon

The domestic output of polysilicon stood at 54,500 mt in March, up 7.9% on the month and 51.2% on the year, according to SMM estimate. The MoM increase was contributed by two factors, including the number of production days in March increaseing by three days compared to February and the rising in Sichuan's new production capacity.

The output in April will dip slightly due to the small-scale maintenance at two silicon plants in Sichuan and Xinjiang. The rising production capacity among Asia Silicon, Xinte Energy and South Glass totalled 60,000 mt with the release of new capacity slower than expected. The domestic output of polysilicon is expected to be 56,000 mt in April, up slightly from March.

Silicon-manganese alloy

The domestic output of silicon-manganese alloy stood at 1.0146 million mt in March (including 65,000 mt of high-grade silicon manganese, 949,600 mt of regular silico-manganese), up 11% on the month and 7.4% on the year, according to SMM estimate. The domestic output of silicon-manganese alloy stood at 2.8058 million mt from January to March 2022, a decrease of 1.2% year on year.

According to SMM research, the domestic output of silicon-manganese alloy rose to a high level in March, which mainly because of the shifted production among different models of SiMn, and those silicon-manganese alloy with less manganese, the costs would be relatively lower. Therefore, under the rising prices of manganese ore and coking coal and met coke, many enterprises turned to produce products with low costs, boosting the output of silicon-manganese alloy. In addition, under the impact of the pandemic, the terminal transport was restricted with poor orders in steel enterprises, resulting in the increases in the inventory of silicon-manganese alloy. The prices of silicon-manganese were flat in March, but the steel mills held firm to the prices supported by the costs.

In April, the LME prices of manganese oxide ore remained unchanged from February. In terms of the prices, the costs of picking up goods hovered at a high level with little price fluctuations in the future. Therefore, prices of silicon-manganese alloy may continue to be supported by the costs in the short term. After the pandemic stabilises and the terminal demand releases, the spot prices of silicon-manganese alloy may start to fall.

Magnesium ingot

The domestic output of magnesium ingot stood at 86,800 mt in March, up 4.33% MoM and 30.83% YoY, according to SMM statistics. The output totalled 247,400 mt, a year-on-year increase of 26.2%.

The output of magnesium factories in March maintained a high level with increases in output of Shaanxi and Shanxi provinces. From the production schedule of magnesium plants, some factories in Xinjiang and Inner Mongolia plan to overhaul for a month in April, affecting about 50%-100% of output. The domestic output of magnesium ingot is expected to maintain a high level of  about 84,000 mt in April.

Magnesium alloy

The domestic output of magnesium alloy stood at 25,500 mt in March, up 10.39% MoM and down 22.20% YoY, according to SMM statistics. The output totalled 70,500 mt, a year-on-year decrease of 30.02%.

The average operating rate of magnesium alloy industry stood at 44.94% in February, up 10.39% MoM and down 25.85% YoY. Overseas orders of some domestic leading enterprises continued to be strong with high operating rates. Orders of some small factory picked up on the month. Some sales staff said the pandemic dragged down the operating rates of downstream with weak domestic demand. The domestic output of magnesium alloy is expected to grow to 28,000 mt in April after the pandemic ends.

Magnesium powder

The domestic output of magnesium powder stood at 6,700 mt in March, up 15.76% on the month. The average operating rate of the magnesium powder industry stood at 39.43%.

The domestic output of magnesium powder showed a slight pick-up in March, but overall orders were less than expected. In terms of persons in charge of the magnesium powder plants, on the one hand, the overseas stockpiling led to the weak demand; on the other hand, due to the Russia-Ukraine conflicts, energy prices surged in Europe, resulting in the rise of energy costs at steel mills and declining output. Considering that the energy crisis has aggravated the impact of weak overseas demand for magnesium powder, the domestic output of magnesium powder is expected to grow slightly to 6,800 mt in April.

Molybdenum concentrate

SMM data shows that in March 2021, the domestic molybdenum concentrate output was 19,300 mt, an increase of 6.63% from February.

Domestic molybdenum concentrate output increased greatly in March compared to February, which mainly because the majority of mines resumed normal production in March as domestic molybdenum mines were no longer affected by the Chinese New Year holiday. In addition, downstream steel mills returned to normal procurement in March and stockpiled molybdenum products in advance due to concerns about the pandemic affecting future transportation, leading to a significant increase in demand compared to February and a further increase in mine production enthusiasm.

Ferromolybdenum

The domestic ferromolybdenum output stood at about 15,500 mt in March, up 1,400 mt or 9.93% from February. Domestic ferromolybdenum saw great increase in supply.

The main reason was that on the one hand, with the end of the Spring Festival holiday, the production of ferromolybdenum enterprises returned to normal. In addition, as safety and environmental protection control has been eased in many northern cities, especially in Beijing-Tianjin-Hebei region, the overall operating rates of ferromolybdenum increased. On the other hand, downstream demand increased significantly. According to SMM statistics, the bid solicitation volume of China in March stood at 17,000 mt, an increase of 183% compared to February, with the significant increase in downstream demand boosting the output of ferromolybdenum.

Silver

SMM data shows that the domestic output of 1# silver in March stood at 1,265.29 mt(including 1,062.83 mt of mineral silver), up 14.41% on the month with the overall silver output rising sharply. The main reason was that the output was affected during the Chinese New Year holiday, but overall silver output increased in March after manufacturers resumed production, in line with SMM's expectation last month that China's silver output was likely to increase in March due to the resumption of working days. In terms of the macro level, the NATO summit held on March 24th, whose attitude towards Russia-Ukraine joint talks, support for Ukraine, requirements for China to choose a side was the key to the movement of gold and silver prices. Many experts believe that the US will not compromise easily and Europe will not integrate easily, which are bullish for gold. And people pointed out five key content of the Russia-Ukraine talks: a compromise on neutrality; a reduction in military action; Ukraine not joining a military alliance; Ukraine being able to join the EU; and a possible meeting between the two leaders. Digging deeper into the content, Crimea will not belong to Russia and Donbass will not be independent, which need to be negotiated by the two leaders. So even if they have negotiated, Zielinsky will blame for the referendum. It seems that the conflicts will not be resolved easily. And the UK ramped up the conflicts by announcing that a truce would not stop the sanctions, only when Putin compromises could the sanctions be cancelled. It is expected that silver prices will continue to fluctuate in April with growing space. In terms of production of manufacturers, there was a reduction in the output of a small number of manufacturers. Output of some enterprises reduced significantly in March, including Jinlong Copper, Yanggu Xiangguang and Yunnan Zhenxing. Output of many companies has increased, including Daye Nonferrous Metals, Guangdong Gold Industry, Guiyang Yinxing, Baiyin Nonferrous Metals and Guiyuan Platinum, etc. The overall output of silver in China saw a significant rise in March. It is expected that the domestic output of silver may be flat in April, with the possibility of continued growth, but not by much.

Titanium dioxide

The domestic output of titanium dioxide stood at 337,700 mt in March, up 6.77% MoM, according to SMM statistics. The output totalled 974,200 mt, a year-on-year increase of 26.2%.

According to SMM research, overseas demand was strong in March. Foreign trade orders have reduced the impact of weak domestic trade to some extent which was caused by the pandemic. The operating rates of domestic titanium dioxide enterprises remained stable. Considering that overseas giants announced to increase the selling prices of their products in April and May, which was bullish for domestic export orders. If the pandemic is under the effective control, the total output of titanium dioxide is expected to grow to 340,000 mt in April.

Lithium carbonate

The domestic output of lithium carbonate stood at 26,178 mt in March, up 41% on the month and 42% on the year, according to SMM estimate. The increases were mainly because the lithium salt plants resumed production in March after the maintenance at the beginning of the year. In addition, some new production capacities were climbing up, coupled with the production increment of the salt lake, leading to an increase in the output of lithium carbonate. Although new production capacity of some enterprises continued to ramp up and output of salt lake rebounded, some manufacturers plan to carry out maintenance in April with the overall output flat from March. The output of lithium carbonate in April is expected to be 26,785 mt, an increase of 2% from March.

Lithium hydroxide

The domestic output of lithium hydroxide stood at 17,612 mt in March, up 39% on the month and 31% on the year, according to SMM estimate. In March, many lithium salt plants ended maintenance in March, coupled with some new production capacities climbing up, leading to a large increase in output compared to February. In April, although some new production capacities were climbing up, some manufacturers still have production line maintenance plans in April, while some manufacturers face the risk of production reduction due to tight supply of ore with the slow growth in output. The domestic output of lithium hydroxide is expected to be 18,878 mt in April , a month-on-month increase of 7%.

Cobalt sulphate

The domestic output of cobalt sulphate stood at 5,830 mt in metal content in March, up 2% on the month and 19% on the year, according to SMM estimate. On the supply side, the arrivals of intermediate products have improved in March. The output should have been increased, but the leading factories reduced production in late March due to the pandemic, and the unstable prices of lithium and nickel led to a weak demand for cobalt salt in downstream, resulting in cautious production in cobalt salt factories. Even though the arrivals of intermediate products have improved, there was no significant increase in the output of cobalt salt. It is expected that the arrivals of intermediate products will further improve in April. In consideration of thin demand for downstream purchases and stockpiled inventory at cobalt salt plants, there will be no significant increase in cobalt sulphate output in April. China’s output of cobalt sulphate is likely to stand at 5,645 mt in metal content in April, down 3% month-on-month.

Tricobalt tetraoxide (Co₃O₄)

The domestic output of Co₃O₄ stood at 6,413 mt in March, down 13% on the month and 11% on the year, according to SMM estimate. Demand of downstream Co₃O₄  for LCO weakened in March. As prices of lithium carbonate hovered at a high level since the beginning of the year and the second quarter of the off-season for digital batteries is approaching, some manufacturers of LCO reduced production in March under the influence of costs and demand, leading to a reduction in production of Co₃O₄ enterprises indirectly. The domestic output of Co₃O₄ is expected to be 6,750 mt in April, up 5% on the month.

Ternary cathode precursor

The domestic output of ternary cathode precursor stood at 64,153 mt  in March, up 8% on the month and 64% on the year, according to SMM estimate. On the supply side, precursor companies resumed production before the end of the holiday. Some leading precursor companies continued to release capacity with increasing output. But a precursor plant in Zhejiang was affected by the pandemic with a sharp reduction in production in the second half of March. The overall supply increased MoM. On the demand side, the demand increased in Chinese power battery market under the influence of advanced orders. The demand rose in some overseas material companies, following by the export volume. In addition, the demand for digital product  was still affected by the surging lithium prices while the orders did not recover and the overall demand increased. It is expected that the demand for downstream power battery and digital products will be reduced in April, with output of precursor at 60,199 mt, down 6% on the month.

NMC cathode materials

The domestic output of NMC cathode materials stood at 49,938 mt in March, up 15% on the month and 60% on the year, according to SMM estimate, which mainly due to forward orders of downstream battery factories in March and increasing procurement demand. In addition, the new production capacity of some manufacturers was climbing up, and most of the manufacturers which took off and had maintenance plans in February resumed production in March. Analysis by product: orders of 6-series and 8-series increased greatly. Due to the soaring nickel prices and rising lithium prices, as well as the early stockpiles, when facing the high prices of raw materials, some battery factories reduced inventory and decreases the purchases of ternary materials. Output of ternary materials may decline due to the dipping orders. Output in April is expected to be 47,206 mt, down 5% on the month.

LFP battery

The domestic output of LFP stood at 50,714 mt in March, down 4.9% on the month and up 97.9% on the year. The production capacity of some leading LFP factories in March, but the pandemic recurred nationwide, resticting the deliveries of some enterprises. Meanwhile, prices of lithium salt started to fall with LFP prices stabilised at a high level. Under the impact of uncertain terminal demand, limited supply of some main materials like anode, and the adequate inventory of LFP, downstream battery enterprises remained wait-and-see, and their demand for LFP declined, leading to the fall of output and sales of LFP. Output of LFP is expected to stand at 41,429 mt in April, a month-on-month decrease of 18.3% and year-on-year increase of 50%.

LCO

The output of LCO cathode material in China stood at 6,959 mt in March, up 4% MoM and down 16% YoY. The off-season of LCO material and downstream digital end products is approaching, coupled with the unstable prices of lithium carbonate, which has suppressed the willingness of some small and medium-sized enterprises to take orders. The supply of LCO declined in March from the previous year. Output of LCO is expected to stand at 6,296 mt in April, a month-on-month decrease of 10% and year-on-year of 20.2%.

LMO

The domestic output of LMO stood at 5,742 mt in March, up 40% on the month and down 35% on the year, according to SMM estimate. Most LMO material enterprises mainly completed the previous orders in March. Some enterprises which stopped production during Spring Festival holiday have gradually resumed production, with increasing industry supply and output. On the demand side, on the back of the pandemic, some areas in Guangdong were in a lockdown in March. Some small and medium-sized LMO battery factories reduced and stopped production in a large scale, coupled with the declining demand for mobile power, smart wear and other digital 3C and the high LMO finished product inventory of downstream batteries and traders. It is expected that the demand for LMO material will move downwards. Output of LCO is expected to stand at 4,742 mt in April, a month-on-month decrease of 17% and year-on-year of 45%.