SMM Analysis: China Copper Output Fell Short of Expectations amid Tight Blister Copper Supply in July

SHANGHAI, Aug 8 (SMM) – China’s copper cathode output was 840,000 mt in July, down 2% MoM and up 1.1% YoY, SMM data showed. Overall, domestic smelters were about to complete maintenance in July. The maintenance of Jinchuan, Nanguo and Chifeng Jintong had a great impact on their production, but the main reason for the much lower than expected domestic copper cathode production was technical upgrading of some smelters and tight supply in the blister copper market. The supply of copper concentrate was relatively abundant, and the spot TCs of copper concentrate stabilized at a low level of $70/mt. With the gradual accumulation of stocks in some ports, TCs even have a tendency to rise. Even though overseas sulphur prices fell rapidly, which caused domestic sulphuric acid prices halved in July, the profits of smelters were still relatively high. The shortage of copper scrap and blister copper is the major problem facing smelters. Copper scrap supply tightened following collapse in copper prices, affecting blister copper producers who use copper scrap as raw material.  In terms of imports, LCS has begun two-month overhaul since early July, affecting about 20,000 mt of output. CCS carried out 10-day overhaul due to boiler leakage, and Kansanshi's output was unstable. 
Based on smelters’ production schedules in August, except for the extension of maintenance plans and technical upgrading of some smelters, the rest have basically resumed production. With the commissioning of Fuye Group’s new capacity, domestic copper cathode output may rise to 900,000 mt in August. However, market needs to be alert to the potential production reduction caused by tight supply of copper scrap and blister copper. SMM predicts that China’s copper cathode output will be 892,100 mt in August, up 6.2% month-on-month and 8.9% year-on-year.