SHANGHAI, May 10 (SMM) - This is a roundup of China's metals output in April 2022, from an exclusive survey of key producers by SMM analysts.
China produced 827,300 mt of copper cathode in April, down 2.5% MoM and down 5.7% YoY, according to SMM research.
Overall, the output of domestic smelters in April was basically in line with market expectations, but some smelters moved the maintenance plan to May due to certain obstacles to the maintenance of equipment. Two smelters in Shandong also have not resumed the production in May. In terms of raw material, the news of the resumption of production of a smelter in Shandong has significantly slowed down the growth rate of TC, which rose rapidly in the early stage. As the smelters’ copper concentrate inventory and the port inventory was sufficient, the market demand for spots was not strong, so the supply and demand on the mine side will gradually return to balance. At the same time, the rising sulphuric acid prices recently showed a downward trend due to the off-season in the downstream chemical fertilizer sector. But the sulphuric acid prices were still at the high level of 700-900 yuan/mt as a whole. Driven by high profits, except for those under maintenance, the smelters basically maintained full capacity. In terms of blister copper, the shortage in some areas in the early stage has been effectively alleviated, and the overall supply was stable. However, in the later stage, the RCs of blister copper showed a downward trend under the strong demand of smelters amid the centralised maintenance period in China.
According to the smelters’ plans in May this year, domestic smelters have entered the centralised maintenance period, including Chifeng Yuntong Nonferrous Metals Co., Ltd, Southeast Copper, Zijin Copper Co., Ltd, Daye Nonferrous Metals Group, Tongling Jinguan, while the maintenance of CICC and Fuye Group in the early stage has not ended yet. As a result, it is estimated that the output in May will hit a new low in the year as two smelters in Shandong will gradually resume the production from May to June and the new domestic production capacity will be gradually released in the second half of the year. SMM China copper cathode output is estimated to record 826,500 mt in May, down 1.3% MoM, down 4% YoY.
SMM data showed that in April (30 days), China’s alumina output stood at 6.397 million mt, of which metallurgical-grade alumina was 6.201 million mt. The average daily output of metallurgical-grade was 206,000 mt, down 2.2% MoM and up 5.05% YoY.
The production days in April decreased by 1 day compared with the previous month, so the output in some areas decreased month-on-month. Among them, the output in Henan and Guizhou declined, mainly because the mine safety inspections in Guizhou since February have not been relaxed, so the ore supply was still limited. And some enterprises were still in the state of production cuts. Due to the requirements of environmental protection policies, the roasting capacity of alumina plants in Luoyang was limited. In addition, in April, the natural gas supply in Henan was tight, so some enterprises reduced the production, resulting in a decrease in production.
In April, Hebei, Guangxi and Chongqing provinces posted rising output, mainly due to the capacity release of local new projects. Among them, the output in Guangxi increased by 3% MoM, Chongqing by 47% and Hebei by 350%. According to SMM, as of the beginning of May, operarting capacity Jingxi Tiangui, Chongqing Bosai Wanzhou project and Hebei Wenfeng had reached 1.7 million mt, 1.8 million mt and 1.2 million mt respectively. As manufacturers were actively putting new capacity into production, large-scale quality products will gradually flow into the market in May.
On the whole, it was estimated that the net import of alumina was 100,000 mt in April, and there was a shortage of 46,000 mt during the month. The slight shortage supported the steady increase of alumina prices. Starting from May, operating capacity of Chongqing Bosai Wanzhou project and Hebei Wenfeng will both rise to 2.4 million mt, and Jingxi Tiangui phase III with 850000 mt will be launched soon. The production of new capacity will be accelerated and the output will be huge. As a result, the long-term supply of alumina will tend to be surplus, and the alumina output is expected to reach about 6.6 million mt in May. At that time, the prices will be under pressure. (1 mt of aluminium consumes 1.925 mt of alumina)
According to SMM data, China produced 3.298 million mt of aluminium in April, up 1.47% on the year. The daily output averaged 109,900 mt, up 3,000 mt on the month, up 1,600 mt on the year. The output totalled 12.763 million mt from January to April 2022, a decrease of 1.13% on the year. Compared with the first quarter of 2022, the domestic production resumption progress and the growth rate of new production capacity slowed down in April. The added output was mainly found in Yunnan, Guangxi and other places, where new production capacity, production capacity replacement and resumed capacity totalled 704,000 mt. In April, the production capacity in Shandong Province was reduced by about 200,000 mt due to production capacity replacement, and there was no production reduction in other regions. As of early May, China operating aluminium capacity reached 40.478 million mt, while the installed capacity was 44.173 million mt, equalling to an operating rate of 91.6%. The SMM ratio of aluminium liquid recorded 63.8%, with a MoM increase of 0.8%. Only a few enterprises slightly adjusted their production according to the operation of downstream enterprises.
In May, the domestic operating aluminium capacity is expected to continue to rise slightly. Some enterprises in Yunnan, Guangxi, Gansu and other regions still have plans to resume the production, and some new production capacity in Sichuan, Qinghai and other regions is expected to be put into production. In addition, considering the capacity replacement projects, the domestic operating aluminium capacity is expected to be around 40.7 million mt by the end of May, and the domestic aluminium output in May is expected to stand at 3.43 million mt, an increase of about 3.5% YoY. On the demand side, as the domestic pandemic situation repeated in April, transportation and other problems were not well alleviated, so the downstream production was less than expected, and the demand of aluminium for construction and automobile decreased significantly year-on-year. The overall aluminium ingot social inventory did not fall smoothly, and the arrival of some aluminium ingots was delayed. In May, with the improvement of the pandemic situation and the acceleration of transportation, the delayed aluminium ingot arrivals may arrive. At the beginning of the month, the domestic aluminium ingot inventory is likely to maintain its growth. However, with the recovery of downstream consumption, the inventory will drop. It is expected that the aluminium social inventory is 900,000 mt by the end of April. In the future, SMM will continue to pay attention to the impact of the domestic pandemic on the industrial chain.
China produced 271,500 mt of refined lead in April, up 2.88% MoM, and up 2.14% from YoY. The combined output in January-April declined by 1.05% from a year ago. Production capacities of enterprises involved in SMM survey totalled 5.71 million mt in 2022.
According to the survey, in April, the maintenance and production resumption of refined lead smelters coexisted. For example, Henan Jinli and Hunan Jingui started maintenance while Henan Wanyang has being expanding its crude lead production line since March, which is expected to last until June. At the same time, the maintenance of Minshan, Xinling, Shibing and Chihong enterprises in Henan Province has completed, hence the regional supply of lead concentrate has improved. In addition, the production of some smelters has resumed. Overall, the increase of refined lead output in April was greater than the decrease, which is basically in line with SMM forecast in the April report.
Looking forward to May, according to the production scheduling plan of smelters, the increase and decrease of refined lead production in May can generally be offset by each other, and is expected to have no significant change compared with April. On one hand, Hunan Jinli will complete the overall, and the production line of Zhongjin Lingnan with an annual capacity of 100,000 mt is planned to be resumed in May. On the other hand, maintenance of Hunan Jingui is still ongoing, while Chihong and Chengxin have started the maintenance, and Yunnan Mengzi also have maintenance plans. To sum up, SMM expected that the domestic refined lead output will decline only slightly MoM to 268,600 mt in May.
China produced 349,100 mt of secondary lead in April 2022, up 19.39% MoM, and up 13.54 % YoY. The combined output in January-April increased by 12.31% from a year ago. Meanwhile, China produced 291,600 mt of secondary refined lead in April, up 15.97% MoM, and up 5.09% YoY. Combined output in January-April 2022 increased 6.99% on the year.
According to SMM research, the output of secondary lead rose sharply as scheduled in April. On the one hand, the maintenance and production resumption of smelters in Jiangxi, Ningxia and Inner Mongolia contributed most of the increment. On the other hand, as the pandemic situation in Henan, Guizhou and Tianjin eased, some refineries have begun to ramp up the production. At the same time, some smelters also increased the production thanks to technical transformation, profit and other factors. During the month, the output in Anhui was less than expected due to the impact of the pandemic. Although some smelters in Hubei were overhauled in the month, the overall output of secondary lead increased strongly.
In May, the overhauled smelters in Hubei, Shanxi, Inner Mongolia and other places will gradually resume the production. The enterprises that have already resumed the production in Jiangxi, Ningxia and other places in mid-April will further ramp up the production in May. Although some smelters in Anhui and Henan will start maintenance, the reduction will be less than the increment. So that it is expected that the production of secondary lead smelters will further resume.
In April 2022, SMM China refined zinc output stood at 495,500mt, with a decrease of 400 mt MoM or 0.08% and a decrease of 1.89% YoY. From January to April 2022, the combined refined zinc output was 1.967 million mt, a decrease of 1.89% year on year. In addition, the output in March was revised to 495,900 mt, an increase of 8.19% MoM and a decrease of 0.19% YoY.
SMM survey showed that the output of domestic refined zinc decreased slightly month-on-month in April and was less than expected.
Reasons for the increase in output are as follows. Although a small-scale overhaul of a large smelter in Guangxi led to the reduction, the output of a medium-sized smelter increased greatly after it resumed normal production. Small and medium-sized smelters in Hunan resumed normal production and contributed the main output increment in April. A large smelter in Sichuan increased the production slightly, but it has not yet reached full production. Some smelters in Guizhou and Qinghai have officially reached the designed production, so the monthly output increased slightly. Some smelters in areas such as Gansu, Jiangxi and Anhui have resumed full production.
Reasons for the decrease in output also vary. A large smelter in Yunnan was overhauled, so the output decreased significantly. A smelter in Inner Mongolia stopped the production for some reason and is expected to resume the production in late May, bringing major reductions.
SMM expects that the domestic refined zinc output in May 2022 will increase by 21,800-517,300 mt month on month, which is in line with previous expectations, with a YoY increase of 22,700 mt or 4.58%, mainly due to the production reduction of smelters in Yunnan and other places in the same period last year. From January to May 2022, the combined refined zinc output is estimated to be 2.485 million mt, a decrease of 1.01% year on year.
Reasons for the increase in output are as follows. Smelters in Yunnan have resumed normal production, resulting in the main increase in May. Some smelters in Shaanxi will receive zinc concentrate, and have planned to gradually increase the production. Some smelters in Guangxi have resumed normal production and will provide increments. A smelter in Inner Mongolia plans to resume the production in late May, and another smelter will also gradually resume the production. A small smelter in Hunan has resumed normal production.
Reasons for the decrease in output include the overhaul of a large smelter. And a smelter in Qinghai will stop the production in mid-May, bringing major reductions.
According to SMM research, domestic refined tin output was 15,103 mt in April, down 0.61% from March, and down 2.59% year-on-year. The combined output from January to April dropped 2.75% YoY. The domestic refined tin output in April did not deviate greatly from the previous expectation. In April, many places in China were disturbed by the pandemic, but the operating rates of mainstream smelters basically remained stable, ensuring the stable domestic output.
In terms of regions: 1. The output of smelters in Yunnan declined only slightly MoM, and the mainstream smelters are in normal production at present. The main reason for the decrease in output in April was the short-term equipment maintenance of a smelter in the region, resulting in nearly 30% of the monthly output reduction. 2. The output of enterprises in Guangxi increased month-on-month, mainly due to the resumption from maintenance of several enterprises. 3. The output of smelters in Jiangxi increased slightly month-on-month. On the whole, large-scale smelters maintained stable operation. The change of monthly output was consistent with the SMM survey result of the weekly operating rate in Jiangxi. 4. The total output of smelters in other regions changed little month-on-month in April, but the performance of individual smelters was slightly different.
In May, the production of domestic mainstream smelters has been stable, and some enterprises previously affected by equipment maintenance have returned to normal. To sum up, the output of domestic smelters in May will remain stable and have an upward trend due to production ramp-up plans of a few smelters. SMM predicts that the domestic refined tin output in May will be 15,825 mt.
China produced 12,900 mt of refined nickel in April, up 2.62% MoM and down 0.65% YoY, according to SMM statistics. The slight increase in output in April was basically in line with expectation, mainly because LME nickel prices in April were more stable than that in March. There was a continuous decline of LME nickel at the end of the month, and refined nickel manufacturers that completely rely on imports for some raw materials have resumed normal production at the end of April. In addition, some manufacturers that reduced the production due to maintenance in March have resumed normal production in April.
The output of refined nickel is expected to stand at 13,400 mt in May 2022, up 3.63% MoM and up 7.86% YoY. It is expected that the output will increase slightly in May, mainly due to the easing of raw material import problems of some manufacturers. As production has just resumed at the end of April, normal output can be restored in May.
Domestic NPI output slightly declined and stood at 37,200 mt in Ni content in April, down 4.17% MoM and up 9.86% YoY, according to SMM research. The output of high-grade NPI stood at 30,700 mt (Ni content) in April, down about 3.7% MoM. And the output of low-grade NPI was 6,700 mt (Ni content), down about 6.5% MoM. In April, the NPI prices remained high, and the profits of NPI mills were good, which should have encouraged upstream production. However, due to the pandemic, the operating rates of NPI production lines in some regions such as Inner Mongolia, Liaoning and Jiangsu were lower than expected, and the NPI output recovered limitedly or even decreased compared with that in March. Secondly, although the output of NPI increased slightly in physical content in April, the final output in metal content was lower than expected due to the fluctuation of NPI grade. Therefore, the overall NPI supply was still tight in April.
The output of NPI in China is expected to be 38,700 mt (Ni content) in May, and may continue to rise. Among them, the output of high-grade NPI may increase to about 32,000 mt (Ni content). The recurrence of the pandemic and the decline of demand from steel mills are the main factors limiting the expectations.
According to SMM data, China’s output of nickel sulphate was 21,600 mt in metal content in April, or 97,500 mt in physical content, down 12.46% on the month and down 5.22% on the year. In April, the profits of nickel salt factories were basically negative due to the comprehensive impact of high cost and weak demand. Under this circumstance, factories chose to reduce the production to protect the prices. The nickel salt output of integrated manufacturers also fell synchronously with the shrinking precursor output. In addition, in April, from the perspective of raw material supply structure, the proportion of nickel sulphate produced with nickel briquettes has been reduced to 20%, the proportion of high-grade nickel matte has been increased to 12%, and that of hydrometallurgy nickel intermediates was about 46%.
In May, with the gradual concession of raw material prices, the profit situation of nickel sulphate will improve, and some nickel salt plants have begun to return to work. The output is expected to increase by 9.01% month on month and 9.71% year-on-year. Nickel salt profits have recovered in May, but considering that the current demand for precursors and batteries is still poor, the nickel salt profits are unlikely to have significant increase in May. And the overall production situation is relatively low compared with the high output in the early stage.
Battery-grade manganese sulphate
According to SMM data, the domestic output of battery-grade manganese sulphate in April was 25,900 mt, up 5.7% MoM. In addition, the cumulative output of high purity manganese sulphate in the first four months of this year was 90,700 mt. In April, the average spot price of battery-grade manganese sulphate in China was 9,779 yuan/mt, down 9.7% MoM. Also in the month, the quotation of battery-grade manganese sulphate declined obviously under pressure, which was mainly due to the operation stagnation as the domestic terminal and consumer market was affected by the pandemic in the middle and late April, so the consumption cycle of battery and other raw materials became slower. While the operating rates of raw material plants were high, and the transactions were mainly in the form of long-term orders in the early stage, most manganese plants had no interest in retail transactions. However, under the situation of oversupply, the buyer's market depressed the manganese prices. At the end of April, low-cost manganese sulphate has been actively sold. In addition, the total output of various models of precursors decreased significantly month-on-month in April. As a result, SMM expects that the high purity manganese sulphate prices will decline with a wait-and-see mood in May.
SMM data showed that China's high-carbon ferrochrome output decreased in April, with a MoM decline of 4.98% to 555,500 mt, a YoY increase of 95,000 mt or 19%. The output in Inner Mongolia was 262,200 mt, a MoM decline of 19,600 mt, a decrease of 14%. The output in Shanxi was 39,500 mt, down 22% MoM. In April, the central environmental protection supervision team arrived in Ulanqab in Inner Mongolia. Some high-carbon ferrochrome manufacturers chose to close their factories as well as the sintering equipment, reducing the production to a certain extent, which limited the output in Inner Mongolia. Affected by the pandemic in Shanxi, the transportation of raw materials was restricted, suppressing the operating rates. During the wet season in Sichuan, the cost fell due to the declined electricity charge, so that manufacturers actively increased the production.
The output of high-carbon ferrochrome in May is expected to be 584,100 mt, which is slightly higher than that in April. The environmental protection inspection in Inner Mongolia has ended, and the pandemic situation in Shanxi has alleviated. In addition, the rainy season in southern Sichuan and other regions is coming, so the hydropower generation has increased and the electricity charge has reduced. As a result, the operating rates of high-carbon ferrochrome smelters in the region are expected to increase. Recently, the ferrochrome prices have been driven up by the rise of chrome ore prices. And ferrochrome manufacturers actively purchased on considerable profits earlier. However, recently, the chrome ore prices has been rising rapidly, and most ferrochrome mills are cautious in procurement due to the high raw material prices. If the low-cost raw materials are consumed in the later stage, there is a certain risk of production decline of ferrochrome. In addition, due to the weak consumption of stainless steel under the influence of the pandemic, steel mills are expected to reduce the production and reduce the demand for ferrochrome. Ferrochrome market is likely to be weak in supply and demand in the near future.
In April, due to the shortage of imported nickel-based raw materials, the high cost amid the extreme LME nickel prices, the limited transportation under the pandemic situation, as well as the backlog of finished products at steel mills, most steel mills stopped the production or switched from 3 series to produce 2 & 4 series stainless steel. Hence the overall output of steel mills decreased sharply.
Due to the high imported nickel-based raw material prices, some steel mills have turned to the stainless steel scrap, however, the supply of stainless steel scrap was relatively limited, which also limited the production of some steel mills in the south. Therefore, the output in April decreased significantly compared with that in March. In April, the output of stainless steel was basically the same as that in the previous year, with a decrease of 1% YoY.
In May, SMM expects the overall output may still decline slightly compared with April. Among them, the ferrochrome prices will increase due to the shortage of imported nickel-based raw materials, the pandemic situation, and the flood in South Africa. As a result, the profits of 2 $ 4 series stainless steel have also been squeezed or are even negative and there will be a certain reduction in the output in May. While the output of 3 series stainless steel will remain basically the same as that in April. 200 series stainless steel output is expected to drop 4.35% and 400 series stainless steel fall 7.5%.
According to SMM statistics, in April 2022, the total domestic EMM output was 106,000 mt, with an increase of nearly 360% MoM and an increase of 19% YoY. In April, the overall operating rates of the manganese plants increased significantly to 51%. The average monthly ex-works price of EMM in April was 15,974 yuan/mt, an obvious decrease of 41% MoM. The average monthly FOB price of EMM was $2,561/mt, a significant drop of 42% MoM.
In the first quarter of this year, the overall inquiries and transactions of high-priced goods were few in the terminal market. Under the influence of high cost, although the operating rates of domestic manganese plants were low and the supply did not increase significantly, the manganese prices did decline significantly.
On the one hand, before the prices rose, both the supply and the demand side have specific acceptable price levels. The high prices of 30,000-40,000 yuan/mt were basically a serious deviation from reasonable price correction. So the market terminals mostly turned to silicon-manganese and ferromanganese as alternatives to EMM. As the decline of EMM inventory failed and the manganese plants were about to start the operation at the end of the first quarter, the manganese prices plummeted and returned to the level in the early stage.
On the other hand, although the domestic manganese prices fluctuated slightly since April, the overall trend was still downward. The logistics and production of various industries in Shanghai and surrounding areas have been suspended for nearly two months due to the COVID, so the upstream and downstream of the whole industry remained bearish after the Labour Day holiday. As traders' taking and delivery of orders are not smooth at present, it is expected that the average price of EMM in May will still decline.
The domestic output of industrial silicon stood at 276,000 mt in April, up 5.4% month-on-month and 39.9% year-on-year according to SMM estimate. The domestic output of industrial silicon totalled 1.0258 million mt in January to April, a year-on-year increase of 23.62%.
Many new capacities commenced the production in Sichuan and Yunnan, where the output increased by nearly 17,000 mt on the month, contributing the main increase in output. Operating rates of silicon plants in Fujian and Hunan also increased after the maintenance was completed, leading to a month-on-month increase in output.
Output in Xinjiang fell by nearly 8,000 mt on the month because of the maintenance of silicon plants in Yili, while output in Inner Mongolia also fell MoM for the same reason.
As the capacities are expect to be resumed in Mary in Xinjiang and operating rates of silicon plants in Sichuan and Yunnan may improve further, the output of industrial silicon is expected to increase to 290,000 mt in May.
The domestic output of polysilicon stood at 52,700 mt in April, down 3.3% on the month and up 38.32% on the year according to SMM estimate. China’s polysilicon output totalled 208,200 mt in January to April, a year-on-year increase of 40.2%.
In April, the output of a silicon plant in Xinjiang fell on the month because of maintenance and the output of other silicon plants remained flat with stable operating rates.
In May, the output of a small silicon plant is expected to decline slightly due to electricity shortage, while output of Xinte, Daquan and other two enterprises will increase slightly with the end of maintenance and the release of new capacity. By the end of April, the domestic operating capacity stood at 670,000 mt with average operating rate of 94.4%. Operating capacity of polysilicon is expected to reach 700,000 mt in May and output of polysilicon will rise to 53,700 mt in the month.
The domestic output of silicon-manganese alloy stood at 969,400 mt in April (including 54,000 mt of high-silicon SiMn alloy, 915,400 mt of plain-silicon alloy), down 4% on the month and 4% on the year, according to SMM estimate. The domestic output of silicon-manganese alloy stood at 2.7752 million mt in January to April, a decrease of 2% year on year.
According to SMM research, the prices of silicon-manganese alloy remained unchanged in April. First of all, terminal transport was restricted by the pandemic and demand for silicon-manganese alloy was limited. With slow digestion of silicon-manganese alloy inventory and sufficient supply of spot, the prices of silicon-manganese alloy were in lack of upward momentum in April. Secondly, the costs of alloy plants were high affected by the high prices of raw materials. Quotations stood at 8,400-8,500 yuan/mt (in cash). Despite of few shipments, factories were unwilling to lower the prices with the support of high costs. Therefore, the market of silicon-manganese alloy was in a deadlock in April with prices moving rangebound.
Prices have been fluctuating on the raw material side in May. Firstly, prices of coking coal and coke saw the first round of declines with bearish expectations in the market, which are expected to fall by 500 yuan/mt. Secondly, the quotations of overseas manganese ore have been announced with a slight decrease, but the costs of receiving ore remained unchanged as the exchange rate of Chinese yuan rose. In addition, miners held firm to the prices with concentration of the mining rights of some manganese mines. But as the supply of manganese ore has been rather sufficient, the prices do not have much growing space. In consideration of the above reasons, SMM suggests to be cautious about the bullishness in silicon-manganese alloy market in May and the market shall pay more attention to changes in cost. If quotations of manganese ore drop, the production costs of silicon-manganese alloy will fall and the prices of silicon-manganese alloy may move in a downward trend with oversupply.
The domestic output of magnesium ingot stood at 84,200 mt in April, down 3.02% MoM and up 24.14% YoY, according to SMM statistics. The output totalled 336,600 mt, a year-on-year increase of 25.68%.
According to SMM research, the output of magnesium ingot fell slightly in April. Output declined in Inner Mongolia and Xinjiang due to environmental protection inspections, while output of some plants in Shanxi fell because of the transport restrictions caused by the pandemic. Considering that the pandemic in Shanxi is already under control and the environmental protection inspections lasting for a month in Xinjiang and Inner Mongolia are coming to an end, the output of magnesium ingot is expected to increase to 85,000 mt in May. SMM will continue to focus on the release of the rectification policy in the main producing areas of semi-coke.
The domestic output of magnesium alloy stood at 28,700 mt in April, up 12.50% MoM and down 14.68% YoY, according to SMM statistics. The output totalled 99,200 mt, a year-on-year decrease of 26.32%.
The average operating rate of magnesium alloy industry stood at 50.59% in April, up 12.5 percentage points MoM and down 18.69 percentage points YoY.
According to domestic magnesium alloy factories, the magnesium alloy market is expected to pick up in May with increasing output of large factories. The domestic demand has been less than expected and the impact of the pandemic on output of automobiles has also affected the downstream restocking demand to a certain extent. According to the Bureau of Statistics, output of automobiles of China in March fell by 5.16% on the month. The declining demand for auto parts caused by the stagnation in the automobile industry chain may continue to affect the domestic demand for magnesium alloy. Output of magnesium alloy only rise slightly to 29,000 mt in May for lack of momentum.
The domestic output of magnesium powder stood at 7,700 mt in April, up 14.31% on the month. The average operating rate of the magnesium powder industry stood at 45.07%.
The output of magnesium powder maintained growth in April. According to the sales staff from some magnesium powder factories, magnesium powder market will encounter the seasonal low in May-June. While the overseas buyers have already built large stocks, downstream demand will be less than expected. Output of magnesium powder is expected to remain flat at around 7,000 mt in May compared to April.
Output of PrNd oxide stood at 6,488 mt in April, a slight increase of 1.5% on the year, with the main increase coming from Jiangxi and the main decrease from the Jiangxi, Shandong and Jiangsu.
The output of PrNd oxide in Jiangxi increased by 3.5% on the month. With the expansion of a large-scale scrap recycler, its output of PrNd oxide increased by 9% on the month in April. In addition, some small-scale scrap recycling enterprises are affected by the tight supply of scrap, with reduction in production due to the lack of raw materials.
Magnetic material enterprises are mostly located in Zhejiang. Affected by the pandemic in Yangtze River Delta and Pearl River Delta regions, orders from downstream new energy vehicles and electric bicycles reduced. Output of scrap from magnetic material enterprises in April reduced and the supply of NdFeB scrap tightened with rising prices of scrap. As a result, the raw material stocks of some small scrap recyclers in Jiangxi and Shandong fell below the safety level, and the output of PrNd oxide decreased in April.
Despite of the import of ion ore around 1,000 mt in late April, the supply of the middle and heavy rare earth ores in Jiangxi, Fujian and Guangdong remained tight, with increases in ion ore inventory of only a few separation companies in Jiangxi. The average operating rate rose to 90% in April.
In contrast, supply of light rare earths was sufficient with stable output of PrNd oxide in Inner Mongolia and Sichuan in April.
Output of PrNd oxide in May is expected to fall slightly on the month.
Domestic output of PrNd alloy in April stood at 5,473 mt, up 3.6% on the month. The increase was mainly found in Jiangxi and Inner Mongolia.
The output of PrNd alloy in Inner Mongolia increased by 7% on the month. As some of the metal companies have replaced the damaged production equipment, the average operating rate rose in April. The output of PrNd alloy in Jiangxi increased by 6% on the month. A few metal enterprises restocked PrNd oxide and the production returned to full capacity.
Output of PrNd alloy is expected to remain flat on the month in May. With the normalisation of pandemic control in the Yangtze River Delta and the Pearl River Delta regions, motor and terminal enterprises have resumed the production and the average operating rate of magnetic material enterprises is expected to increase in May. With small-scale of restocking across magnetic material enterprises before the May Day holiday, it is expected that the demand in PrNd alloy market will grow slightly after the holiday.
SMM data shows that in April 2022, the domestic molybdenum concentrate output was 20,850 mt, an increase of 8.29% from March.
Output of domestic molybdenum concentrate increased sharply in April from March, mainly due to active bidding activities in March, especially in late March and early April when many steel mills joined the bidding. The molybdenum market continued to hit the record high with full release of production enthusiasm across mines. The pandemic eased in some areas in April with less impact to mine production and a significant increase in output in the month.
SMM data shows that in April 2022, the domestic ferromolybdenum output was 16,200 mt, an increase of 3.1% from March.
The main reason is that as a result of the concentration of steel mills bidding in late March, smelters signed a large number of orders at the end of March. Ferromolybdenum enterprises basically produced at full capacity in the middle and early April in order to catch up on orders, while the market transactions were busy as the market prices rose, boosting the operating rates of ferromolybdenum.
According to SMM survey, domestic 1# silver output stood at 1,249.68 mt (including 1039.68 mt of mineral silver) in April 2022, down 0.45% from the previous month.
On the macro front, the Fed has just announced an interest rate hike by 50 basis points as well as its balance sheet shrinking plan to start on June 1 at a pace of $47.5 billion per month and the upper limit will be raised to $95 billion per month within three months. Powell said that a one-time interest rate hike by 50 basis points is optional for the next few meetings (75-basis-point rate hike is basically excluded from consideration). The main focus was on reducing inflation to 2% because the inflation may further exceed expectations.
And the Parliamentary Assembly of the Council of Europe (PACE) voted: first, to call for an international criminal tribunal to try Russia's political and military leaders; second, to call on the UN General Assembly to put forward the issue of limiting the use of the veto by the permanent members of the UNSC; and third, the need to use frozen assets of Russian citizens to compensate the victims in Ukraine! Russian citizens with assets of $10 million or more are counted. There are comments that the vote is a hypothetical for a war with Russia.
In light of uncertainty about the geopolitical issues coupled with changes in the economic environment, silver prices are expected to move rangebound in May, ranging between 4,600 yuan/kg and 5,200 yuan/kg.
In terms of production of manufacturers, there was a reduction in the output of a small number of manufacturers while others remained unchanged. Enterprises with sharp reduction in output in April included Henan Zhongyuan Gold Smelter, Zhejiang Fuye Group, Shandong Zhaojin and Baiyin Nonferrous. There were not many enterprises increasing their output significantly, such as Zhejiang Hongda, which posted a significant increase in output due to the gradual recovery from production cuts. And output also increased in enterprises like Guangdong Gold Industry, Yunnan Zhenxing Industry, Zhejiang Yadong Industrial and Jinlong Copper, thus the silver output did not change much in April with only slight decreases.
It is expected that the domestic output of silver may be flat in May, with the possibility of a sight further drop.
Output of silver nitrate stood at 500 mt in April, down 2% from March.
Domestic silver nitrate output in April was slightly lower than in March, mainly due to restrictions on transport of raw materials and disturbed productions of downstream silver paste manufacturers caused by the pandemic in east China, resulting in reduced demand. Demand pressure affected silver powder and silver nitrate manufacturers through the supply chain, resulting in the reduction in orders of silver nitrate manufacturers whose customers mostly have demand for silver powder. Most silver nitrate manufacturers produced on demand, thus silver nitrate output of some manufacturers in Jiangsu and Zhejiang reduced.
Under the impact of the Federal Reserve interest rate hike, falling silver prices and controlled pandemic in east China, supply chain has recovered and demand for silver powder has picked up. The usage of silver nitrate in other industries is relatively stable. SMM expects that silver nitrate output in May will rise slightly.
The domestic output of titanium dioxide stood at 340,000 mt in April, down 1.96% MoM, according to SMM statistics. The output totalled 1.3243 million mt in the first four months, a year-on-year increase of 8.69%.
According to SMM research, overseas demand was strong in April, reducing the impact of weak domestic demand, which was caused by the pandemic, to some extent. The operating rates of titanium dioxide enterprises remained stable. Considering the ongoing conflicts between Russia and Ukraine, overseas demand has shifted to the Chinese market. At the same time, the new prices of domestic titanium dioxide in May have not been finalised and the price advantage still exists. The total output of titanium dioxide is expected to rise to 360,000 mt in May supported by the export market.
SMM data shows that in April 2022, APT (ammonium paratungstate) output was 13,800 mt, an increase of 12.2% from March.
Domestic APT output showed a small increase in April compared to March. The main reasons are as follows: First, in early April, the safety and environmental protection inspections in the north and the Beijing-Tianjin-Hebei region relaxed, and the average operating rate of the upstream and downstream producers in the tungsten industry chain increased significantly. Coupled with improved downstream demand and adequate supply of raw materials, production of APT smelters was able to resume. Second, affected by the Russia-Ukraine conflicts, overseas market have shifted their demand for Russian tungsten products to Chinese products, increasing the purchases of domestic APT to a certain extent. Domestic APT output improved in April under the influence of the above two reasons.
APT output is expected to stabilise in May.
The domestic output of lithium carbonate stood at 26,676 mt in April, up 2% on the month and 30% on the year. Some manufacturers ramped up their production while the output from brine lakes returned to the peak. However, some manufacturers reduced the production due to pandemic control, production line maintenance and lack of raw materials, with overall output rising steadily.
In May, as the impact of the pandemic control on the production gradually recedes, some of the new capacity will be raising their production. Output from brine lakes will continue to pick up with a month-on-month increase. The domestic output of lithium carbonate is expected to be 29,362 mt in May, a month-on-month increase of 10%.
The domestic output of lithium hydroxide stood at 18,520 mt in April, up 5% on the month and 31% on the year.
In terms of smelters, output of some manufacturers’ new capacities picked up steadily, but some manufacturers stated or ended maintenance in the middle of April, with minimal increases in smelters’ output. However, under the impact of falling lithium carbonate prices, output of causticising process showed a small increase.
In May, new production lines of some manufacturers will be put into production, and the overall supply will increase slightly, coupled with the recovery of production in plants with maintenance in April as well as the small increases in output from causticizing process. The domestic output of lithium hydroxide is expected to be 19,388 mt in May, a month-on-month increase of 5%.
China’s output of cobalt sulphate stood at 6,510 mt in metal content in April, up 10% month-on-month and 28% year-on-year, according to SMM estimate.
On the supply side, a large number of intermediate products arrived in April. Considering the inventory of raw materials and the cost of idle hand, most manufacturers still maintained stable output. On the demand side, the transactions were thin in April and the finished products inventory at cobalt salt factories increased sharply. Output of precursor manufacturers was severely affected by the pandemic with extreme weak demand. Manufacturers mainly consumed the inventory of raw material in April.
Production of cobalt salt plants tend to be cautious in May and there is no significant increase in cobalt salt output. It is expected that the arrivals of intermediate products will improve in May. In consideration of thin demand of precursor manufacturers and stockpiled finished product inventory at cobalt salt plants, output of cobalt sulphate will decline in May. China’s output of cobalt sulphate is likely to stand at 6,345 mt in metal content in May, down 3% month-on-month.
Tricobalt tetraoxide (Co3O4)
China’s output of Co3O4 stood at 7,097 mt in April, up 11% month-on-month and down 7% year-on-year, according to SMM estimate.
Demand from downstream players was still weak in April. Influenced by the off-season in digital battery sector in Q2 and the spreading pandemic, some LCO manufacturers scheduled April production according to orders and reduced their finished goods inventory, which indirectly led to a reduction in output of Co3O4 enterprises compared with last year.
The Co3O4 market is still not optimistic in May. With sluggish demand and low downstream inquiries, prices still have room for downward movement. The domestic output of Co3O4 is expected to be 6,332 mt in May, down 11% on the month.
China produced about 52,842 mt of PCAM (precursor of cathode active materials) in April, a decrease of 18% month-on-month but an increase of 20% year-on-year.
On the supply side, leading precursor plants in Zhejiang resumed the production at the beginning of April. But affected by the weak demand and wide fluctuations in nickel and cobalt-based raw material prices, output of precursor enterprises reduced sharply in April.
On the demand side, in terms of power battery, the supply chain of terminal car enterprises was missing a part affected by the national pandemic. With a sharp drop in automobile output and de-stocking of ternary materials by leading battery factories, demand or PCAM dropped sharply in April. In addition, in the electronics market, orders failed to recover due to the fluctuations of lithium prices and overall market demand decreased.
In the overseas market, the demand in the power battery market improved and orders from overseas leading battery enterprises recovered. Exports of precursors grew. Overall, demand for precursors decreased in April.
It is expected that the demand from downstream power battery and electronics markets will not recover in May and overseas orders will remain stable with output of precursor at 52,974 mt in the month, flat from April.
NMC cathode materials
The domestic output of ternary cathode material stood at 45,784 mt in April, down 8% on the month and up 36% on the year.
As the nickel prices soared, many raw material prices hovered at a high level. Orders for batteries from terminal players were also unstable due to pandemic control measures. In addition, battery companies have actively restocked in previous period, hence they reduced the demand for NMC materials in order to reduce existing material stocks. Overseas demand, however, was relatively stable with small increases. By product, output of 5-series and 8-series NMC materials was more greatly affected.
In May, orders of leading material manufacturers still hover at a low level and orders of some manufacturers are still moving in a downward trend, while the overseas market is steadily generating certain demand. The output of NMC ternary materials is expected to be 44,742 mt in May, a decline of 2% on the month.
Output of LFP stood at 46,837 mt in April, a month-on-month decrease of 7.6% and year-on-year increase of 70%. On the supply side, operating rates of some enterprises decreased affected by the downward trend of lithium salt prices and weak demand. The release of new production capacity was delayed and the total supply declined.
On the demand side, more NEV enterprises and supporting enterprises reduced or suspended the production due to the recurred pandemic. While some battery cell enterprises reduced their battery inventory and the demand for upstream products was weak, hence the output of LFP dropped.
China is expected to produce 53,163 mt of LFP in May, an increase of 13.5% month on month and 86% year on year.
In April, the output of LCO materials in China was 5,673 mt, down 18% on the month and 28.1% on the year. In the off-season for LCO cathode materials, coupled with weak downstream demand, enterprises purchased on rigid demand with fewer inquiries and thinner transactions. LCO plants reduced the production in April and the supply decreased sharply from last year. Output of LCO is expected to stand at 5,378 mt in May, a month-on-month decrease of 5% and year-on-year of 27%.
Output of LMO stood at 3,268 mt in April, a month-on-month decrease of 43% and year-on-year increase of 62%. On the supply side, the inventory of LMO hovered at a high level and the downward movement of lithium salt prices drove some traders to sell off their LMO stocks, resulting in significantly falling LMO prices. Operating rates of most LMO material enterprises declined due to the high costs of raw materials and the sluggish terminal demand, and some enterprises suspended all or half of its production.
On the demand side, affected by the LMO prices, the demand from electronics and two-wheeler for LMO fell sharply. Coupled with high inventory of traders and battery cell enterprises, the demand for upstream products fell significantly.
Output of LMO is expected to be 3,144 mt in May, a month-on-month decrease of 4% and year-on-year decrease of 63%.