Exclusive: China's Metals Output in April

SHANGHAI, May 10 (SMM) - 

Copper cathode

SMM data showed that China’s copper cathode output stood at 970,000 mt in April 2023, up 18,600 mt or 2% from the previous month and 17.2% from the same period in 2022. The actual output was 16,100 mt higher than the expected 953,900 mt. The output totalled 3.68 million mt in January-April, an increase of 352,900 mt or 10.6% year on year.

According to SMM statistics, six smelters carried out maintenance in April, which led to an output cut of 29,500 mt. However, the output in April still increased 35,400 month-on-month due to the shorter statistical cycle of some large smelters in March. This, combined with the output increase of a smelter in central China, the capacity commissioning of a smelter in Jiangxi and the resumption of a smelter in south China, explained why the output in April exceeded the expectations.

Nevertheless, the copper cathode output in April also faced some negative factors, such as the suspension of a small smelter in Jiangxi and the extremely low sulphuric acid prices, although no smelter has been forced by the high sulphuric stocks to reduce or stop production. The average operating rate of copper cathode industry rose 1.79 percentage points MoM to 91.40% in April.

Entering May, according to SMM statistics, five smelters have maintenance plans and two smelters have postponed the resumption to June, which will bring about an output cut of 30,300 mt. However, the smelters that resumed work in May will contribute some output increase. A smelter in Shandong has started production in early May, but its products will not roll off the production line until June. Therefore, the total copper cathode output in May is estimated at 953,500 mt, down 16,500 mt or 1.7% MoM and up 16.4% YoY based on the current production schedules.

The total copper cathode output is estimated at 4.64 million mt in January-May, up 11.74% or 487,200 mt year-on-year. According to SMM statistics, there will be 8 smelters to be overhauled in June, and thus the output is expected to dip further in June.

Aluminium

SMM data shows that China's aluminium output increased 1.5% year-on-year to 3.35 million mt in April (30 days) as aluminium enterprises in Guangxi and Guizhou continued to resume production, with daily output rising 1,533 mt from to about 111,600 mt. Aluminium output totalled 13.27 million mt from January to April, up 3.9% year on year. The output of aluminium semis in south-west China rose in April and the ratio of aluminium liquid increased 2.4 percentage points month-on-month to 73.4%.

Changes in production capacity: In April, enterprises in Guangxi, Guizhou and Sichuan resumed a total capacity of 430,000 mt, and enterprises in Guizhou also put a new capacity of nearly 100,000 mt into production. In Yunnan, aluminium enterprises maintained stable production and the operating capacity remained stable. According to SMM statistics, installed aluminium capacity reached 45.29 million mt (including the production capacity that has been built but not put into production). The operating capacity was 40.79 million mt, and the national average operating rate of aluminium smelters increased 1.1 percentage points to 90%.

Production forecast: 380,000 mt capacity is about to resume in Guizhou (320,000 mt) and Sichuan (60,000 mt) in May. About 180,000–200,000 mt capacity in Yunnan will be resumed. The new capacity in Sichuan and Inner Mongolia has totalled 340,000 mt, but the commissioning of new projects is slow. Therefore, the new capacity put into operation is expected to be less than 30,000 mt in May. The capacity transfer in Shandong may lead to a slight decline in capacity and an aluminium enterprise in Guizhou with 50,000 mt capacity has suspended production. SMM predicts that the domestic aluminium operating capacity will be restored to about 41 million mt by the end of May and the output will stand at 3.46 million mt in May (31 days), a year-on-year increase of 0.72%.

On the demand side, despite the declining operating rates of downstream enterprises, the aluminium ingot stocks declined 235,000 mt amid the increasing aluminium liquid ratio and low aluminium ingot output. In contrast, the overall inventory of aluminium billet only shed by 16,000 mt in April and stood at a relatively high level.

In May, the high aluminium liquid ratio and improving downstream orders are expected to lower the domestic aluminium ingot inventory to around 720,000 mt. But the aluminium billet stocks may continue to fall at a slow pace amid the rising output.

Alumina

Domestic metallurgical-grade alumina output in April stood at 6.54 million mt with average daily output growing by 3,500 mt to 218,000 mt. The total output in April decreased 1.6% from the previous month, given fewer working days in April. But the output in April increased 5.4% year-on-year due to the commissioning of new capacity. The installed capacity and operating capacity of alumina totalled 100.25 million mt and 79.5 million mt respectively. The domestic average operating rate stood at 79.3%.

The average operating rate of alumina refineries in Shanxi was 69.4% in April, an increase of 1.6 percentage points from the previous month, because the companies’ profit margins have grown on the price decrease in raw materials since the end of the first quarter. In Henan, the refineries remained cautious about production despite the significant rise in their profits compared with the beginning of the year, and the average operating rate stood at only 64.1%. As a result, local alumina supply was tight during the month. The average operating rate of alumina refineries in Guizhou recorded 93.1%, a decrease of 3.5 percentage points from March, which was caused by the bauxite shortage and the annual maintenance carried out by some refineries. The average operating rate will grow to about 95% in May when the short-term influence subsides. In Hebei, the average operating rate increased from 66.2% in March to 76.0% in April, which was contributed by the commissioning of the fourth production line (with an annual output of 1.2 million mt) owned by Wenfeng. It is expected that the average operating rate in Hebei will continue to rise in May. Alumina production in Guangxi and Shandong remained steady in April, and the average operating rate stood relatively stable at 87.0% and 91.3% respectively.

Forecast for May output: Lubei Chemical's new production capacity (1 million mt/year) has begun trial production and is expected to be put into operation in May. In addition, some alumina refineries in Shanxi plan to resume the operation of the previously suspended production capacity that totalled 500,000 mt. SMM estimates that the domestic alumina output will grow to 6.85 million mt in May, with a daily average output of 221,000 mt.

Primary lead

China produced 315,400 mt of primary lead in March, down 2.43% on the month but up 16.17% on the year. Total output in January-April surged 15.5% from the same period last year. Production capacity of enterprises involved in SMM survey totals 5.84 million mt in 2023.

According to SMM research, the primary lead output in April fell as expected amid the intensive maintenance of lead smelters in Henan, Yunnan, Hunan, and Shandong. The lasting overhaul and the fact that the majority were large enterprises together led to a significant output cut. Therefore, even with the ramp-up of new capacity of smelters in Henan and the resumption of small and medium-sized smelters in Hunan and Yunnan, the primary lead output still declined in April.

The output is expected to fluctuate widely in May given the intensive resumption in the first ten days of May and the increasing maintenance in the rest of the month. Specifically, some large and medium-sized enterprises in Yunnan and Hunan will resume work while some large smelters in Henan, Shandong, Guangdong, Inner Mongolia and Jiangxi plan to carry out maintenance. In this scenario, SMM expects China's primary lead output to fall further to 313,000 mt in May.

Secondary lead

China produced 350,200 mt of secondary lead in April, down 4.26% MoM and up 0.32% YoY. The output totalled 1.34 million mt in January-April, up 2.5% YoY. China produced 306,300 mt of secondary refined lead in April, down 6.3% MoM and up 5.04% YoY. The total output in January-April increased 2.35% from the same period last year to 1.18 million mt.

Domestic secondary refined lead output declined slightly in April as large and small smelters cut the production significantly in April. Specifically, the maintenance of some production lines in Anhui Narada Huabo brought major output loss, though the resumption of smelters such as Anhui Tianchang and Shandong Zhongqing offset some of the reductions. As such, the average operating rate of large smelters in April dropped by 5.79 percentage points month-on-month. The technological transformation of Jiangxi Xinya led to a significant drop in the output of small smelters, and the average operating rate of small smelters decreased by 18.23 percentage points compared with March.

Entering May, the completion of maintenance of Anhui Narada Huabo and stable production of Shandong Zhongqing will contribute major increases to the supply of secondary lead. In addition, some smelters in Inner Mongolia will maintain low output amid the weak market, tight raw material supply and high costs. The output in Hubei is also likely to decline as local smelters have maintenance plans for about 15 days. On the whole, it is expected that the output of secondary refined lead in May will increase about 30,000 mt with the average operating rate standing at 56.12%.

Refined zinc

The refined zinc output in China declined 16,700 mt or 3.01% month-on-month, but rose 8.97% year-on-year to 540,000 mt. The output totalled 2.11 million mt from January to April, up 7.22% year-on-year. The alloy output registered 87,385 mt in April, up 4,775 mt on the month.

In April, the TCs for domestic zinc ore fell to 4,800-5,000 yuan/mt in metal content, accompanied by tumbling sulphuric acid prices and zinc prices, hence the profits of zinc smelters were squeezed. But zinc smelters have not reduced production yet. Even with the routine maintenance of smelters in Yunnan, Shaanxi, Hunan, Gansu and Inner Mongolia, the stable production of other smelters and the full operating capacity maintained by smelters in Henan and Gansu still drove the output in April to exceed the forecast.

SMM predicts that domestic refined zinc output in May will grow 19,800 mt to 559,800 mt, an increase of 8.65% year-on-year; the cumulative output from January to May will reach 2.67 million mt, an increase of 7.51% year-on-year. The completion of routine maintenance and the easing power supply in Yunnan will bring the output in May back to the normal level. There may be maintenance at smelters in Shaanxi and Henan. In addition, some secondary zinc smelters in Hunan have reduced the production. But the in-plant refined zinc inventory has increased month-on-month as smelters are less willing to ship amid falling zinc prices in April and May.

Refined tin

Domestic refined tin output was 14,954 mt in April, down 1.06% on the month and 0.99% on the year, and the combined output from January to April fell 3.37% on the year, according to SMM research. The actual output in April was lower than expected mainly because three smelters in Guangxi and Jiangxi did not undertake their plan to enhance production in April when three smelters in Yunnan reduced or stopped the production due to raw material shortage and high costs.

Entering May, despite the tight domestic tin ore supply, the refined tin output is unlikely to decline further as some smelters have already cut the production significantly in April. Most smelters will still maintain stable production, and the tin ingot output is estimated at 15,100 mt in May. In addition, the weak downstream demand caused by the active shipments in the previous stage will also prevent the supply of tin ingot from falling significantly in May.

Refined nickel

Chinese refined nickel output totalled 17,600 mt in April, up 0.17% MoM and 36.35% YoY. A smelter in north-west China carried out overhaul during the month, but a smelter in Jiangsu ramped up its production at the same time, thus preventing the output from falling.

The output in May will be 17,900 mt, up 1.99% MoM and 25.73% YoY. A smelter in Jiangsu is expected to continue to increase its production in May. Besides, the refined nickel project in Guangxi will maintain normal production, though the output will be low at the beginning. SMM believes that the refined nickel output will continue to increase in 2023 amid the expected rise in electrowinning nickel output.

NPI

Chinese NPI output stood at 243,000 mt in physical content in April, down 4.74% MoM and 25.09% year-on-year. The total Ni content was 28,400 mt. In April, some NPI factories still cut their production due to losses even though the NPI prices rebounded, and some reduced output on equipment failure. On the other hand, the NPI demand from stainless steel mills remained poor as the mills also got low profits.

In detail, the output of high-grade NPI was about 21,800 mt in Ni content, down 7.08% MoM, while that of low-grade NPI output added 4.07% to 6,500 mt in Ni content as some low-grade NPI companies integrated with stainless steel capacity resumed normal operation in April.

It is estimated that the Chinese NPI output in May will grow 6.71% from April to around 23,700 mt in Ni content. Some high-grade NPI plants will carry out maintenance, but the overall NPI output will still balloon amid growing downstream demand as the stainless steel mills will ramp up their production intensively.

Indonesia NPI

Indonesian NPI output stood at 110,700 mt in April, up 13.36% month-on-month and up 17.7% year-on-year. Output from January to April totalled 415,300 mt in Ni content, up 19.3% year-on-year. In April, the problem of power equipment construction in some factories in Indonesia was resolved, and the domestic and overseas demand for stainless steel has recovered. These, combined with a shortage of stainless steel scrap, boosted the demand for NPI. Therefore, the NPI plants were incentivised to step up production. In addition, although some enterprises have switched their production lines from high nickel matte back to NPI capacity, some enterprises also plan to do the opposite. The commissioning of large numbers of NPI production lines in April was the main reason why the overall supply kept growing.

In May, China's 300-series stainless steel production increased intensively, and some Indonesian NPI plants are scheduled to ramp up production in May. It is estimated that Indonesia's NPI production may reach 115,400 mt in Ni content in the month, a month-on-month increase of about 4.25%, and a year-on-year increase of 17.4%.

Nickel sulphate

Chinese nickel sulphate output stood at 137,100 mt in physical content or 30,200 mt in metal content, down 18.29% on the month and 39.43% on the year. The following reasons accounted for the sharp MoM drop in domestic nickel sulphate production in April. First, the demand recovery of ternary precursor manufacturers did not expectations, and nickel sulphate producers barely accepted the low prices. Therefore, except for long-term orders, there were few trades under small orders. Second, in April, upstream raw material enterprises of nickel sulphate raised prices and the profitability of nickel sulphate with then processing fees was relatively poor, driving some nickel sulphate enterprises into serious losses and to reduce production. Third, some nickel sulphate liquid producers cut output significantly due to ballooning inventory.

In May, according to SMM's analysis, the production schedule of downstream ternary manufacturers is not expected to improve significantly compared with April. And some enterprises that suspended production have no plan to resume production in May. Nickel sulphate output is estimated at 31,200 mt in Ni content in May, flat from the prior month.

Battery-grade manganese sulphate

China’s high-purity manganese sulphate output stood at 7,200 mt, down 75.74% on the month. Owing to the serious supply glut of high-purity manganese sulphates in March and the poor improvement in the demand from the new energy sector, high-purity manganese sulphate enterprises either stopped or reduced the production. Therefore, domestic high-purity manganese sulphate output fell sharply in April. In terms of demand, given their high inventory of raw materials, ternary precursor companies were less willing to pick up cargoes under long-term orders. Therefore, even with the output cuts, the high-purity manganese sulphate supply was still in surplus.

Entering May, according to SMM research, the weak orders from new energy power battery enterprises, the production control of ternary precursor companies, and falling overseas demand have encouraged most high-purity manganese sulphate enterprises to extend the production suspension. Only a small number may resume work in May according to the production of major customers. Overall, China’s high-purity manganese sulphate output is estimated at 7,500 mt in May, up 4.46% on the month.

EMD

SMM data showed that the Chinese electrolytic manganese dioxide (EMD) output was 10,100 mt (including 600 mt for LMO battery, 6,100 mt for alkaline manganese battery, and 3,300 mt for zinc-carbon battery) in April, down 0.98% MoM and 56.65% YoY. EMD output in the first four months of 2023 stood at about 42,800 mt, down 66.80% on the year. The overall EMD output fell slightly in April, which was contributed by production reductions of EMD for alkaline manganese battery and zinc-carbon battery despite the output increase in EMD for LMO battery with the improvement in the downstream demand.

In May, the downstream demand for EMD used in LMO battery will improve, while the consumption of the other two types of EMD will remain poor, hence the overall EMD output may decrease further to about 9,300 mt.

Mn3O4

In April, Chinese manganese tetroxide (Mn3O4) output was 9,400 mt (including 5,578 mt of electronics-grade Mn3O4 and 3,852 mt of battery-grade Mn3O4), down 12.44% MoM and 11.04% YoY. The output in the first four months of the year totalled about 45,100 mt, down 7.01% on the year. The Mn3O4 companies cut their production as LMO battery companies reduced the production amid the fall in lithium carbonate prices in mid-to-early April.

Entering May, most LMO battery producers have received more orders, who generally increased their raw material purchases since late April. The Mn3O4 output in May may be about 9,500 mt.

High-carbon ferrochrome

According to SMM statistics, the output of high-carbon ferrochrome in April stood at 558,200 mt, down 74,100 mt or 11.76% from the previous month but up 700 mt or 0.12% on the year. The output in Inner Mongolia was 343,200 mt, down 6,200 mt or 1.77% MoM, and that in Guangxi stood at 18,000 mt, down 61.7% on the month. Mainstream stainless steel mills greatly cut the bid price of high-carbon ferrochrome during the month, leading to huge losses for ferrochrome plants in the south who had to reduce or suspend their production. The output in the north dipped only slightly since the ferrochrome plants in the region maintained normal production with the support of orders received earlier, lower electricity charges, etc.

The output of high-carbon ferrochrome is expected to rise slightly to 570,000 mt in May. In May, the ferrochrome demand will grow with the increase in the stainless steel mills’ production schedules. In addition, the bid price of ferrochrome disclosed by Tsingshan Group for May stands flat from the previous month, which is higher than the market's previous expectations, encouraging some ferrochrome manufacturers in the south to resume production. However, some plants in the north may cut their output due to factors such as power rationing and environmental protection inspection. The overall ferrochrome output, therefore, is expected to rise only slightly in May.

Stainless steel

Chinese stainless steel output totalled 2.78 million mt in April, up 1.81% MoM but down 4.05% YoY. In detail, the output of 200-series stainless steel dipped 3.67% on the month to 839,000 mt, that of the 300-series gained 5.28% to 1.43 million mt, and that of the 400-series stood at about 508,600 mt, up 1.92% MoM.

Many stainless steel mills that had cut their output resumed the 300-series stainless steel production on the decline in their in-plant stainless steel stocks and more importantly, the rapidly growing profit margins contributed by the rallying spot stainless steel prices amid the rebound in NPI prices in early April. There were also stainless steel mills that increased their production due to more 300-series contracts signed in May and a smooth ramp-up of production capacity. On the contrary, the 200-series orders received by the stainless steel mills were average, and the in-plant inventory dropped relatively slowly, resulting in a MoM decrease in its output. The output of the 400-series was the same as the previous month.

In May, the total output of steel billets in Chinese stainless steel mills may hit a record high, which will be contributed by the new production capacity of 300-series and 400-series in a large mill in east China and the production increase in 300-series in some other stainless steel mills. Besides, the 200-series stainless steel output will also grow somewhat with the end of the maintenance carried out by another stainless steel mill in east China.

As of the beginning of May, the stainless steel social inventory rose only slightly, but SMM believes that in mid-to-late May, the market will see a large inflow of spot stainless steel produced in April. And there will be a large supply surplus in June. In the absence of a significant recovery in demand, the overall stainless steel inventory may rise to a certain extent, curbing the spot prices from rising.

EMM

Chinese EMM output stood at 101,800 mt in April, down 12% on the month and 4.10% on the year, as the SMM data showed. EMM output in the first four months of 2023 totalled around 418,900 mt, up 177.42% year-on-year. Some EMM plants halted operation in April for various reasons, and a small number of factories reduced their production. The overall downstream demand changed little throughout April as the increase in EMM consumption by the 300-series stainless steel sector was offset by the decrease in the consumption by the 200-series sector.

In May, the EMM plants’ inventory pressure may be slightly eased. The stainless steel mills have ramped up their production thanks to relatively good profits. On the other hand, it is said that about 20,000 mt of EMM will be stocked by the National Food and Strategic Reserves Administration. However, the EMM market will still see a supply surplus owing to the sharp increase in EMM output in the first quarter of 2023. According to SMM survey, the EMM plants may cut their output on a large scale in May, hence the overall output will fall further to around 86,300 mt.

Industrial silicon metal

According to SMM research, Chinese industrial silicon metal output stood at 291,200 mt in April, down 22,000 mt or 6.9% MoM and 15,000 mt or 5.5% YoY. The output totalled 1.16 million mt in the first four months of 2023, up 13% year-on-year.

Some industrial silicon metal enterprises carried out maintenance because of the sluggish market or equipment failure. The output in Yunnan, Xinjiang, Fujian, Shaanxi and other places decreased to varying degrees, with around 5,000 mt of industrial silicon metal being cut by companies in Xinjiang and Yunnan. The output in Xinjiang ranked first in April since the average operating rate of the leading enterprises there who accounted for a high share in local capacity stood at around 58%, despite that some local companies carried out maintenance. Yunnan took the second place in terms of output, followed by Inner Mongolia.

In May, the operating rates of companies in Yunnan are expected to drop as some enterprises plan to reduce production in the first twenty days of the month. In Fujian and Chongqing, companies that suspended production in mid-to-late April will result in some output losses. In Sichuan, the local hydropower supply has returned to normal since late April, but industrial silicon metal prices have fallen faster than its production costs, discouraging the silicon metal producers’ willingness to resume operation. SMM believes that the industrial silicon metal companies in Sichuan may resume their work at the end of May if the local power supply is ample, and the products will flow into the market in June. In summary, the industrial silicon metal output will decrease slightly month-on-month in May and also be lower than the level of the same period last year.

Polysilicon

In April, Chinese polysilicon output continued to grow by 2.7% on the month to around 114,000 mt. The output growth dropped affected by the slow progress in the production ramp-up of some enterprises and in the capacity commissioning of the new companies. The market was still in a small supply surplus, and the polysilicon inventory carried by the producers has climbed to about 100,000 mt in total. Some enterprises were eager to win deals and constantly lowered their quotes.

PV module

Chinese PV module output stood at about 41 GW in April, up 7.89% MoM, because the module companies, especially the leading ones, had to ramp up their production to meet the better end demand. Entering May, some power plants have cut their demand for picking up PV modules considering cost cuts and construction-related problems, thus the output growth in May is expected to be slower than market expectations.

SiMn alloy

China produced 895,800 mt of SiMn alloy in April, down 5.74% MoM and 7.59% YoY. From January to April 2023, the total output was 3.71 million mt, a drop of 1.69% year-on-year. In April, SiMn alloy producers in Guangxi had to suspend or cut production since they suffered losses from the low SiMn alloy prices. The output in the north also declined due to factors such as power rationing, maintenance, and power grid transformation.

Companies in south China are highly expected to resume work in May, but the oversupply of SiMn alloy may send the prices to fall. SMM believes that the SiMn alloy producers will still focus on controlling the output. The companies which can win profits may increase output while the ones that suffer losses will cut their production. Therefore, the overall output is expected to change little and stand at about 894,000 mt in May.

Magnesium ingot

China's magnesium ingot output stood at 70,000 mt in April, up 5.3% MoM but down 17% YoY, according to SMM statistics. YTD output through April totalled 269,000 mt, a year-on-year decrease of 20%.

Due to the influence of policies, the domestic magnesium prices jumped alarmingly in April. Additionally, the downstream inventories had been low amid long-term low prices of magnesium previously. Driven by panic, downstream demand surged, and the high profit on primary magnesium resulted in strong production enthusiasm of magnesium plants. According to the current production schedules, the total output may decline slightly due to the impact of semi-coke rectification in May. It is estimated that the total domestic output of magnesium ingots will be around 64,000 mt in May.

Magnesium alloy

China's magnesium alloy output stood at 27,000 mt in April, up 6.4% MoM but down 7.1% YoY, according to SMM statistics. YTD output through April totalled 104,000 mt, a year-on-year increase of 5.1%.

According to domestic magnesium alloy enterprises, their deliveries to downstream buyers were concentrated in April, so the output increased significantly. Regarding alloy orders, a salesperson of a large magnesium alloy manufacturer said that overseas orders were still sluggish in April. Due to the significant fluctuations in magnesium prices, the downstream orders for alloys was also hampered. Yet, as magnesium prices stabilise, alloy orders are expected to grow in May, and domestic magnesium alloy production is expected to be 27,000 mt in May.

Magnesium powder

China's magnesium powder output stood at 5,000 mt in April, down 6.3% MoM. The output totalled 23,000 mt in January-April 2023.

In April, the domestic magnesium powder market was still sluggish. The rejection of the sharply rising magnesium powder prices by downstream buyers, combined with the insignificant growth in domestic orders failing to ease the negative impact brought by the long-standing sluggish export market, kept the production enthusiasm of magnesium powder plants weak. As such, the output of magnesium powder will remain low in May at stand at around 55,000 mt.

PrNd oxide

Domestic output of PrNd oxide in April 2023 stood at 5,958 mt, down 0.9% MoM.

According to SMM survey, the low prices of PrNd oxide significantly eroded profits at some mining companies. The purchasing willingness of metal factories was subdued, muting actual trading of PrNd oxide. Some separation plants curtailed output slightly. The output of PrNd oxide in Jiangsu decreased by 27% from the previous month, and that in Guangxi dropped by 8%. However, some enterprises in Sichuan slightly increased production due to sufficient raw materials, growing the local output of PrNd oxide by 12% month-on-month.

PrNd alloy

Domestic output of PrNd alloy in April 2023 stood at 5,215 mt, up 0.7% MoM. Sichuan and Guangxi saw a slight increase in output, and the output in other areas changed little compared to March.

In April, the prices of PrNd alloy remained in a downward track. Magnetic material factories mainly worked through existing inventories. With the decrease in inventory, some began to push for lower prices, and refrained from buying at high prices. Due to the increase in rare earth imports in the first quarter, domestic supply of PrNd oxide was ample. PrNd alloy output in Sichuan increased by 13% month on month, and that in Guangxi increased by 11%.

Dysprosium oxide

The output of dysprosium oxide stood at 180 mt in April 2023. The output in Jiangxi accounted for about 38%.

According to SMM statistics, the supply of domestic ion ore continued to increase, and the import of unspecified rare earth oxides in the first quarter increased by 818% year-on-year. Affected by news, the price trend of dysprosium oxide was relatively stable compared with that of praseodymium and neodymium products. With the approach of the rainy season in south China, it is expected that the import of rare earths from South-east Asia in Q2 will fall compared with the first quarter. Dysprosium oxide output will also decline in May from April.

Terbium oxide

Domestic output of terbium oxide in April 2023 stood at 345,000 mt. The output in Jiangxi accounted for about 38%.

According to SMM survey, while the current supply of terbium oxide is sufficient, its demand is relatively poor. With sluggish rare earth downstream sectors, most of the market participants lack confidence over terbium oxide prices. At present, the prices of terbium oxide are weak. Considering that the supply of ion ore is relatively sufficient, SMM expects that the subsequent output of terbium oxide will also remain stable.

Molybdenum concentrate

SMM data shows that in April 2023, China's molybdenum concentrate output was 18,100 mt, down 3.5% from the previous month, in line with market expectations. In April, the prices of domestic molybdenum concentrate continued to decline, but molybdenum concentrate sellers still maintained a relatively high profit margin. Therefore, the production enthusiasm of molybdenum ore enterprises was not affected, keeping a relatively high production rate. The 3.5% decline is normal, because some molybdenum mines in China are associated mines or polymetallic mines, meaning the output of molybdenum metal changes. In May, few domestic molybdenum mines have maintenance and shutdown plans, and SMM expects that the output of molybdenum concentrate will be stable in May.

Ferromolybdenum

SMM data shows that in April 2023, China's ferromolybdenum output was 14,300 mt, down 9% from the previous month. In the first half of April, the domestic molybdenum prices continued to fall. The high-priced raw materials, combined with steel mills pushing for lower procurement prices, continued to reduce the profits of ferromolybdenum smelters. In the second half of the month, steel mills’ concentrated bids for ferromolybdenum boosted orders at smelters significantly. Meanwhile, lower-priced raw materials were available in the market. As such, operating rates of smelters gradually recovered. But output still fell due to previous output cuts and maintenance.

Most ferromolybdenum smelters currently report that orders are saturated, and the operating rates have returned to normal. Their production has been scheduled to early June. SMM expects that ferromolybdenum output will increase significantly in May.

Silver

According to SMM survey, domestic #1 silver output stood at 1,334.3 mt (including 1,052.3 mt of silver produced with ore), a drop of 8.29% month-on-month and 6.77% year-on-year. Three reasons accounted for the MoM decrease in production: 1. Smelters were shut down for maintenance; 2. The silver content in raw materials was not stable; 3. The silver prices were high in April, growing the cost of anode slime and silver-containing scrap. This reduced the recycling volume. As silver prices are still fluctuating at a high level in May, SMM predicts that silver production may remain flat in May.

Macro: On May 1, the First Republic Bank of the United States announced its bankruptcy. Although it was subsequently taken over, the market panic was still relatively strong. On May 4, the Federal Reserve announced a rate hike of 25 basis points. The prices of silver rose as the rate hike was in line with market expectations and the risk aversion of market traders was strong. The US April unemployment rate was 3.4%, lower than the previous value of 3.5% and the expected value of 3.6%; the US seasonally adjusted non-farm payrolls in April were 253,000, lower than the previous reading of 236,000 and the expected 180,000. Negative economic data caused silver prices to fall. SMM expects that silver prices will fluctuate at highs in May.

Antimony ingot

According to SMM survey, China antimony ingot output (including antimony ingot, converted crude antimony, antimony cathode, etc.) in April 2023 was 7,258 mt, up 0.03% from March. The import volume of other antimony ores and concentrates in the first quarter of this year has reached 11,742.9 mt, which is almost double compared with 6,556.4 mt in the same period last year. Therefore, many market participants expressed their doubts about whether antimony raw material resources will continue to be tight in the future as the influx of overseas ores may stop domestic sellers from holding onto their cargoes, thereby leading to a continuous increase in the output of antimony products in the market. In April, many manufacturers began to increase production by returning to normal or resuming production, though there were also some manufacturers that stopped production. Altogether, there was a slight increase in the overall output of antimony ingot in April.

Here is an overview of production situation of Chinese antimony ingot producers in April. Among the 33 respondents in SMM survey, 13 manufacturers suspended the production, flat from the previous month; 9 reduced their production, 5 fewer than in March; and 11 maintained normal production, 5 more than in March. SMM predicts that the domestic antimony ingot output in May will grow from April.

Refined bismuth

According to SMM survey, the output of refined bismuth in China was 2,621 mt in April, up 0.06% MoM. Some producers remained closed due to maintenance or raw material shortages. The output increase at some producers was basically offset by declines at others. Downstream demand changed little. The supply-demand pattern will barely change in the near future.

According to SMM survey of 24 producers, five of them were closed in April, compared with seven in March. Four producers saw their output rise slightly, and one of them resumed production. Another five producers reported small declines in their output. SMM predicts that the domestic refined bismuth production will probably stabilise in May, but a slight increase is also likely.

Notes: SMM has released Chinese refined bismuth output data since October 2022. Thanks to high coverage of the bismuth industry, SMM has successfully investigated a total of 24 refined bismuth manufacturers, who are located in eight provinces across the country, with a total capacity of more than 50,000 mt and a total capacity coverage rate of over 99%.

Silver nitrate

The domestic silver nitrate plants with sales qualification together produced 561 mt of silver nitrate in April, down 14.7% MoM. The total output of silver nitrate nationwide stood at 591 mt. Silver prices kept rising in early April, deterring downstream enterprises from purchasing. Falling domestic orders and rising silver prices drove silver nitrate producers to lower their production.

Silver powder producers are still trying to seize market share in TOPCON cell market. The unit consumption of solar cells is gradually falling. SMM sees stable silver nitrate output in May.   

Titanium dioxide

SMM data shows that China's titanium dioxide output stood at 340,000 mt in April, down 0.6% MoM and 0.5% YoY. From January to April, the output totalled 1.31 million mt, a drop of 1.3% YoY.

Weakening downstream demand prevented titanium dioxide prices from going up. Some producers plan to cut output if the market downturn persists. The domestic titanium dioxide output is estimated to fall to 320,000 mt in May with the end of the peak season.

Ammonium paratungstate (APT)

According to SMM data, the output of ammonium paratungstate (APT) in China was about 11,200 mt in April, a decrease of 490 mt or 4.2% from the previous month.

Downstream demand was slack in the first half of April, but improved in the second half of the month, encouraging APT smelters to ramp up their production. Smelters delivered their long-term orders on time.

Tungsten ore supply will tighten slightly in May due to the rainy season and environmental protection checks, making it more difficult for smelters to bring down purchase prices and threatening to incur losses on smelters. Demand has shown no signs of recovery. Therefore, SMM predicts that the domestic APT output will continue to decrease slightly in May.

Lithium carbonate

China’s lithium carbonate output stood at 27,333 mt in April, down 9% MoM, but up 2% YoY. Due to warmer temperatures last month, the output of salt lake-based smelters increased. However, many spodumene and lepidolite-based smelters cut or halted production due to rising costs. Battery recycling market was sluggish.

In May, the rebound of lithium carbonate prices has fuelled strong bullish sentiment in the spot market. Meanwhile, market players expect demand to pick up. SMM forecasts that the domestic lithium carbonate output will stand at 33,556 mt in May, up 23% MoM and 15% YoY.

Lithium hydroxide

China’s lithium hydroxide output was 23,891 mt in April, down 2% MoM, but up 26% YoY. Weak downstream demand resulted in inventory accumulation. Some smelters lowered their production slightly.

With improving price difference between lithium carbonate and lithium hydroxide, the smelting volume of the latter is expected to pick up. SMM forecasts that the domestic lithium hydroxide output will stand at 23,877 mt in May, up 2.1% MoM and 16% YoY.

Cobalt sulphate

China’s cobalt sulphate output stood at 6,232 mt in cobalt content in April, down 17% MoM and 4% YoY. The cumulative output stood at 27,350 mt in cobalt content in January-April, up 11% YoY.

In April, the domestic demand for precursors did not show a significant recovery, while overseas demand weakened slightly. The operating rates of precursor factories remained low. Precursor factories delayed pick-up of long-term orders and barely purchased in the spot market. The overall inventory of cobalt salt factories was relatively high. Cobalt salt factories preferred to take outsourcing orders from their rivals instead of producing for their own. As there was a certain price difference between cobalt sulphate, Co3O4 and refined cobalt, some cobalt salt factories switched their production lines to produce other cobalt products.

Cobalt salt factories will still focus on destocking in May as downstream demand has not yet improved. SMM estimates that China’s cobalt sulphate output will be 5,345 mt in metal content in May, down 14% MoM, but up 15% YoY.

Tricobalt tetraoxide (Co3O4)

The output of Co3O4 in China stood at 6,087 mt in April, up 9% MoM, but down 14% YoY. Co3O4 shipments increased only slightly as lower prices discouraged producers from selling aggressively. Demand from LCO producers rose mildly. The e-cigarette market gradually recovered, encouraging relevant LCO producers to increase raw material purchases.  

SMM predicts that China’s Co3O4 output will stand at 6,648 mt in May, up 9% MoM and 21% YoY.

NMC precursor

Domestic NMC precursor output was 53,444 mt in April, a month-on-month drop of 1% and a year-on-year growth of 1%. The output totalled 231,847 mt in the first four months of the year, a year-on-year decrease of 2.3%.

The average operating rate of the precursor plants was low amid continued output cuts. Although the downstream electronics market has warmed up, the improvement was insignificant. On the power battery front, the overseas market has weakened, and the domestic market has shown no signs of recovery. Affected by poor downstream demand, some leading manufacturers stopped production in April. At present, the competition in the precursor market is fierce, and the selling prices are almost lower than the costs. Some small factories without raw material advantages could not sell at low prices and are forced to cut output further.

It is expected that in May, export-oriented top-tier precursor plants will have more stable production schedules, and medium and low-nickel precursor projects at some factories will bring about a slight increase in supply. The previously suspended bases are also expected to resume production in May. China’s ternary precursor output in May is estimated at 56,026 mt, a month-on-month increase of 5% and a year-on-year increase of 2%.

Ternary cathode materials

The domestic ternary cathode material output was 44,809 mt in April, down 3% month month-on-month and 2% year-on-year. The domestic ternary cathode material output was 177,609 mt in January-April, down 4% year-on-year.

Although the recovery of the domestic end market was slow, some battery companies made some adjustments to their inventory after an extended period of destocking. Some e-bike and digital electronics battery companies became more willing to place orders for ternary cathode materials, mainly 5 and 6 series, as their profitability has improved after lithium prices fell to a low level. However, softening overseas demand forced high-nickel battery material producers to lower their production.

Entering May, en-user demand has picked up slightly. After a long period of destocking, the raw material inventory of downstream battery cell companies was relatively low. This, combined with improving sentiment after lithium prices stopped falling, will somehow boost downstream purchases. SMM estimates that China’s ternary cathode material output will stand at 48,562 mt in May, up 8% MoM and 5% YoY, boosted by improving demand.

Iron phosphate

China produced 65,714 mt of iron phosphate in April, down 5% month-on-month, but up 83% year-on-year. The cumulative output surged 84% YoY in January-April. The production and sales of iron phosphate both fell last month. Inventory was piling up across the entire battery industry chain in the first quarter. LFP output in April rose only slightly from March, thus demand for iron phosphate did not pick up significantly. LFP plants still focused on destocking in April. In terms of cost, phosphoric acid prices fell amid poor demand.

SMM predicts that the domestic iron phosphate output will stand at 72,245 mt in May, up 9% MoM and 61% YoY, driven by low costs and expectations for demand recovery.

LFP

China produced 72,085 mt of LFP in April, up 2% month-on-month and 54% year-on-year. The cumulative output surged 31% YoY in January-April. Demand was bleak in early April as the entire battery industry chain focused on destocking. The energy storage market became more active after lithium carbonate prices stopped falling in the second half of April, but the NEV market remained relatively weak. On the cost side, lithium carbonate prices bottomed out in late April, while iron phosphate prices continued to fall. However, due to the time lag in cost transmission, the overall cost was temporarily stable.

LFP plants raised their production schedules for May as they believe the market outlook will improve. SMM predicts that the domestic LFP output will stand at 77,814 mt in May, up 8% MoM and 66% YoY.

LCO

China’s LCO output stood at 6,020 mt in April, up 15% MoM ad 6% YoY. On the supply side, the output of leading LCO manufacturers increased in April, while that of others rose to varying degrees or changed little. As the sales promotions for electronics products (June 18) are approaching, electronics battery cell makers began to stock up raw materials. However, due to the slow recovery of orders at battery cell makers, the demand for LCO improved only mildly. The rebound of battery-grade lithium carbonate prices pushed up the costs of LCO plants, allowing LCO prices to rise as well. LCO plants raised raw material purchases and production as their sentiment has improved.

SMM predicts that the domestic LCO output will stand at 6,418 mt in May, up 9% MoM and 7% YoY. However, the cumulative output in January-May may decline 30% YoY.

LMO

China’s LMO output stood at 6,814 mt in April, up 66% MoM and 109% YoY. Downstream orders did not increase in the first 20 days of April as lithium carbonate prices kept plunging. However, the situation reversed in the last 10 days of the month as battery makers rushed to stock up LMO after industrial-grade lithium carbonate prices rebounded slightly. Most LMO producers are optimistic over their orders in May. Therefore, SMM estimates that the domestic LMO output will surge 39% MoM and 170% YoY to 9,474 mt this month.