Exclusive: China's Metals Output in June

Copper cathode

 In June, SMM China's copper cathode output was 917,900 mt, a decrease of 40,900 mt or 4.3% month-on-month, and a year-on-year increase of 7.1%. The output totalled 5.56 million mt from January to June, a year-on-year increase of 11.06%.

According to SMM, there were 9 smelters undergoing maintenance in June, with a total impact of more than 50,000 mt, which was the main reason for the decline in production in June. In June, the price of sulphuric acid in most parts of the country continued to decline, but according to our research, there were still no smelters who have reduced or shut down production. However, the market demand for blister copper has increased significantly, and some smelters have not purchased enough blister copper, resulting in a decline in production. This is also one of the reasons for the unexpected decline in output in June. According to the latest statistics from SMM, as of June 30, the average RC of crude copper in the south was 800 yuan/mt, which was 250 yuan/mt lower than that in early June. In addition, a new smelter in Shandong has already started yielded output in June, and its output is expected to further increase in July. The average operating rate of copper smelters slide 3.84 percentage points MoM to 86.49% in June.

Entering July, according to SMM statistics, there are 7 smelters with maintenance plans. The total impact of these 7 smelters is expected to be more than 60,000 mt. However, this situation will be reversed in August with only one smelter undergoing maintenance. In September, the number of smelters with maintenance plans will increase to six. As a result, we expect smelter output to increase first and then decrease in the coming months.

SMM estimates the domestic copper cathode output to be 902,100 mt in July, down 1.72% MoM and up 7.4% YoY. The the output is expected to amount to 6.46 million mt from January to July, a year-on-year increase of 10.53%.

Aluminum

According to SMM statistics, China’s aluminum output was 3.37 million mt in June, an increase of 0.14% YoY. The domestic daily average aluminum output increased by 207 mt MoM to 112,200 mt in June. In H1, the domestic aluminum output totalled 20.11 million mt, a year-on-year increase of 2.81%. Poor demand weighed on aluminum billet conversion margins in June, diving billet plants to lower operating rates, hurting demand for liquid aluminum. In response, aluminum smelters cut the share of their liquid aluminum output. SMM data showed that the share of liquid aluminum output dropped 3.5 percentage points MoM to 72% in June.

Changes in capacity: Operating aluminum capacity in Yunnan added 260,000 mt MoM in June, driven by production resumptions at the end of the month. Operating aluminum capacity in Guizhou added 120,000 mt after a local smelter completed equipment upgrading. However, operating aluminum capacity in Shandong fell 250,000 mt due to capacity transfer. According to SMM statistics, as of July 7, the installed aluminum capacity in China was about 45.19 million mt (including new capacity that has not been put into production and capacity that will be eliminated in the future), while the operating capacity has increased to around 41.073 million mt, leaving the operating rate at about 90.9%, an increase of 0.5 percentage point MoM.

Production forecast: In July, the domestic operating aluminum capacity will continue to grow, mainly contributed by Yunnan, which has granted 4.194 million kilowatts of power load for local smelters to resume production. SMM estimates that more than 800,000 mt of aluminum capacity in Yunnan will have been resumed by the end of July. Sichuan has imposed power rationing recently due to tight power supply, but local aluminum smelters were unaffected as of July 7 and are at low risk of output cuts this year. SMM expects that by the end of July, the total domestic operating aluminum capacity may exceed 41.8 million mt. In July (31 days), the total domestic aluminum output will reach about 3.55 million mt, a year-on-year increase of 1.72%. Market players should keep a close eye on power supply and the operations of aluminium smelters in south-west China and other regions in the future.

In view of sluggish downstream consumption in the off-season and supply growth, SMM predicts that the aluminum ingot social inventories will climb to around 600,000 mt at the end of July.

Alumina

SMM data revealed that China's daily average output of metallurgical-grade alumina in June was 215,000 mt in June, up 200 mt MoM. This increase resulted from resumption of operations in Henan, Guizhou, and Chongqing, along with newly added capacity. June's operational days were fewer than May, leading to a 3.3% decrease MoM in total output to 6.46 million mt. June output also saw a 4.2% drop YoY, due to the closure of high-cost alumina capacity from high-cost areas like Shanxi, Henan and Inner Mongolia as well as low operating rates. As June ended, China's installed alumina capacity was 100.25 million mt, with an operating capacity of 78.58 million mt, and a national operating rate of 78.4%.

The operating rate in Shanxi was 68.4%, down 4.6 percentage points MoM, due to the constrained supply of domestic ore. In Henan, the reclamation policy curbed Sanmenxia's ore output, further straining ore availability. Refineries in Henan warned of loss if forced to switch to imported ore, as high production costs would deter them from increasing output. This brought an operating rate of 63.3%, down 1.3% MoM. The operating rate in Guizhou increased by 9.5 percentage points to 84.5% and in Shandong, up 2.2 percentage points to 90.4%, due to the end of maintenance in June. The operating rate in Hebei remained at 90.6% with new capacity running steadily and anticipated to reach full production soon. Guangxi saw a drop from 90.6% to 86.2%, due to the rainy season and tightened ore supply.

Anticipated new capacity in Shandong and Hebei is set to boost production in July. However, Henan might maintain production cuts due to issues like high production and ore costs further cuts expected. The resumption of aluminium smelters in Guangxi and Guizhou stimulated demand. But due to restricted mining, refineries are predicted to conduct flexible production. SMM expects the daily average output in July to be around 213,000 mt/day, with total operating capacity close to 77.66 million mt.

Primary lead

In June 2023, the national primary lead production reached 293,100 mt, representing a month-on-month decrease of 5.42% and a year-on-year increase of 24.56%. From January to June 2023, the cumulative production experienced a year-on-year increase of 16.9%. The total production capacity of the companies surveyed in 2023 amounted to 5,835,700 mt.

According to the survey, primary lead production experienced an expected decline in June. The primary reason for this decrease was the high number of maintenance operations at lead smelting enterprises, particularly in regions such as Henan and Yunnan. Several companies in these areas were undergoing maintenance, with many of them being large-scale enterprises, leading to a considerable reduction in production. At the same time, the supply of lead concentrate was tight, especially for high-grade concentrates, which faced fierce market competition, resulting in insufficient raw material supplies. As a result, lead smelting enterprises in regions like Hunan and Yunnan were forced to passively reduce their production levels. Consequently, the overall production experienced a decline for three consecutive months, with the decrease in June surpassing expectations.

Entering July, the output of primary lead is expected to stop declining and start increasing again, as lead smelting companies complete their maintenance and gradually resume production. With major lead smelting companies finishing maintenance, production resumes in areas like Henan, Yunnan, Shandong, and Inner Mongolia, contributing to the majority of the increased output. Although some enterprises in Hunan and Henan are undergoing maintenance or facing raw material shortages during this period, the resulting decrease in production is not significant enough to disrupt the overall upward trend in output for July.

In summary, SMM forecasts that the production of primary lead will stop declining and shift to an upward trend in July, with an increase of over 20,000 mt, reaching 319,000 mt.

Secondary lead

In June 2023, the output of secondary lead was 339,000 mt, which was down 8.23% compared with May and down 8.11% year-on-year; the cumulative output of secondary lead from January to June 2023 was 2.0511 million mt, a cumulative decrease of 0.03% year-on-year. In June 2023, the output of secondary refined lead was 310,500 mt, a decrease of 4.73% from May and a decrease of 1.99% from last year; the cumulative output of secondary refined lead from January to June 2023 was 1,818,300 mt, a year-on-year decrease of 1.92%.

In June, the domestic production of secondary refined lead decreased more than that in May. In June, several large smelters had production equipment failures and maintenance, such as Hunan Jinyi, Shandong Zhongqing, etc. Therefore, the operating rate of large-scale smelters in June decreased by 3.07 percentage points compared with May; the production situation of medium-sized refineries did not change much compared with May, so the operating rate in June was basically the same as that in May; For small smelters, tThere were many shutdowns due to losses, so the operating rate in June fell by 7.15 percentage points compared with May.

The expectation for consumption recovery has not yet been realized, and the price of lead fluctuated within a narrow range. At the same time, the price of waste batteries, the raw material, remained high, thus secondary lead smelters were facing greater operating pressure. According to SMM research, some small smelters indicated that they would continue to suspend production in July, and some large smelters indicated that they would increase or reduce production in July; however, production resumptions and release of new capacity will lead to an increase in the output of secondary refined lead in July. If the consumption of lead-acid batteries improves in the middle and late July, the trend of lead prices is relatively optimistic, and the supply of waste batteries as raw materials may become relatively less tight. The operating rate is expected to increase to 59.21%.

Refined zinc

SMM data showed that the domestic refined zinc output stood at 552,500 mt in June, down 2.13% MoM and 13.1% YoY. The output reached 3.23 million mt in H1, a year-on-year increase of 8.59%. Alloy output at domestic zinc smelters was 78,227 mt in June, which was 7,720 mt lower than in the previous month.

In June, the reduction of domestic smelters was mainly concentrated in Guangxi, Henan, Shaanxi, Hunan and other places, and the overall impact was less than expected, mainly because the supply of zinc concentrate was relatively abundant and some smelters resumed or raised production. Some secondary zinc smelters intend to increase production in advance considering the summer power cut and high electricity prices.

SMM predicts that domestic refined zinc production in July 2023 will decrease by 8,000 mt MoM to 544,500 mt, but an increase of 14.42% year-on-year; the cumulative output from January to July will reach 3.771 million mt, an increase of 9.4% year-on-year; Production is relatively stable at most smelters. Except for some smelters in Hunan who will reduce production, other regions have entered a regular maintenance cycle, and the maintenance is mainly concentrated in Inner Mongolia, Shaanxi and Gansu. In August, the routine maintenance of domestic smelters will increase, and the overall output is expected to further decrease.

Refined tin

According to SMM research, domestic refined tin production in June was 14,223 mt, down 9.18% from May, but up 37.35% from last year,. Output in H1 rose 2.4% YoY. Domestic refined tin production in June was basically in line with previous expectations. The reduction was mainly due to the maintenance of a smelting company in Guangxi, the reduction of production by two smelting companies in Jiangxi due to the shortage of raw materials, and the reduction in output of a smelting company in Anhui.

However, in July, a smelting company in Yunnan said that due to the shortage of tin ore, it reduced its production. Output at a smelting company in Jiangxi recovered slightly, and a smelting company in Guangdong resumed production. It is expected that the domestic refined tin output in July will be 14,140 mt, which is basically the same as in June. According to the traditional maintenance period, it is estimated that a large domestic smelting enterprise may carry out maintenance in late July or August, which will have a greater impact on domestic tin ingot production. The Wa state of Myanmar may ban mining in August, but there are still a lot of low-grade tin ore stocks in the local area. It is not ruled out that after the mining ban, the local ores will still be exported to China after beneficiation. Yinman Mining will ramp up production in mid-July after the technological transformation is completed. Its output of tin ore in the third quarter is expected to be 1,276 mt in metal content, and the output in the fourth quarter will reach 3,583 mt in metal content. Domestic tin ingot social inventories are now nearly four-year high of 11,766 mt. As such, the domestic tin ingot market will not be tight in Q3.

Refined nickel

China’s refined nickel output stood at 20,400 mt in June, up 9.39% MoM and 31.06% YoY. According to SMM research, although nickel prices fluctuated greatly during June and the profit margin of electrowinning nickel was not stable enough, the new electrowinning nickel production lines maintained normal production schedules, and the output of electrowinning nickel in North China and South China continued to climb.

SMM sees China’s refined nickel output at 21,300 mt in July, up 4.27% MoM and 32.81% YoY. The output of refined nickel will continue to rise in July, mainly because a smelter in Northwest China, which was shut down due to maintenance problems, is expected to resume production in July, but it will take time to reach full capacity. In addition, it is expected that the output of some electrowinning nickel production lines in South China will still be climbing during July.

NPI

NPI output in China stood at 33,200 mt in nickel content in June or 784,000 mt in physical content, with the physical content showing month-on-month increase of 0.18% and year-on-year decrease of 2.62%. In June, the overall price of NPI fluctuated and went down. The ore price stabilized, but the price of coal was still in the downward range, thus the profit of the NPI plants was maintained. Overall, NPI profit margins in June was relatively considerable, and stainless steel mills maintained high production schedules in June, so NPI plants slightly increased production. High-grade NPI output rose 3.12% MoM to 26,400 mt in nickel content in June. Some high-grade NPI plants stopped production due to unexpected weather, but most plants raised production to a certain extent due to high profit. Low-grade NPI output fell1.01% MoM to 7,200 mt in Ni content in June. Although the profits of low-grade NPI-stainless steel integrated enterprises were better than those of 300-series stainless steel in June, some factories were affected by local policies or maintenance, causing the production of low-grade NPI to be slightly reduced.

It is estimated that the domestic NPI output will rise 3% MoM to 34,800 mt in nickel content in July. In July, due to cost decline, some high-grade NPI plants still had production momentum, but the demand from stainless steel mills may weaken to a certain extent. Overhaul of some NPI plants in July may end.

Indonesian NPI

Indonesian NPI output in June was 121,700 mt, an increase of 6.05% month on month and 21.7% year on year. In H1, output rose 17.6% YoY to 642,600 mt in nickel content. In June, some high-grade nickel matte production lines were switched back to NPI, while the new NPI production lines were relatively limited, and the main NPI projects were basically completed in the first half of the year. Therefore, the NPI output in June increased only slightly compared with May, and the growth rate slowed down compared with May. On the cost side, after the sharp drop in nickel prices, the benchmark price of nickel ore in Indonesia has declined. However, due to the limited profit margins of Indonesian mines, the mining volume has declined, which gave some support to ore prices. Coal prices continued to fall. Due to the differences in technology among different NPI enterprises, the profit situation is also quite different, and some enterprises still have incentive to produce. However, with the fall in NPI prices, the driving force for the production of NPI may weaken. Although some high-cost Indonesian NPI factories cut production, other enterprises raised production, so the overall production increased. NPI output in Indonesia is estimated at 123,300 mt in nickel content in July, up 1.29% MoM and 20.1% YoY. New projects will be limited.

Nickel sulphate

China’s nickel sulphate output stood at 35,100 mt in metal content and 159,500 mt in physical content in June, up 7.16% on the month and up 29.82% on the year. Nickel sulphate prices kept hiking in June. As nickel sulphate remained low, prices of raw materials that adopts the backward pricing method of battery-grade nickel sulphate was also at a relatively low level. The improvement in the profitability of nickel sulphate led nickel sulphate producers to increase production. From the demand side, in June, a big rally in domestic e-bike battery and electronics markets significantly increased the output of cobalt sulphate from 5 and 6-series in China. Demand for nickel sulphate hiked, and the output of nickel salt increased. In July, low scheduled production of precursor indicated no significant increase in demand and tight supply of raw materials. It is expected that the output of nickel sulphate will increase slightly by 3.07% to 36,200 mt in metal content in July.

Battery-grade manganese sulphate

China produced 22,000 mt of high-purity manganese sulphate in June, up 58.27% MoM. On the supply side, according to SMM's understanding, as downstream ternary precursors kept steadily increasing output this month, delivery of high-purity manganese sulphate improved, thereby making for operation resumptions of high-purity manganese sulphate enterprises. However, with high inventory, most high-purity manganese sulphate enterprises basically produced for captive use. At the same time, there were more manganese salt integrated precursor enterprises to produce manganese sulphate solution. On the whole, the overall operating rate of battery-grade manganese sulphate increased compared with the previous month.

In July, according to SMM, notwithstanding stable demand from end-users, the proportion of ternary batteries was gradually compressed. Therefore, scheduled production of ternary cathode materials stayed low, including ternary precursors. For cautious high-purity manganese sulphate enterprises, planned production in July will basically be the same as that in June. In July, the output of high-purity manganese sulphate is expected to be about 22,500 in physical content, up 2.27% MoM. 

Electrolytic manganese dioxide

SMM data showed that the Chinese electrolytic manganese dioxide (EMD) output was 11,100 mt (including 2,000 mt for LMO battery, 5,700 mt for alkaline manganese battery, and 3,300 mt for zinc-carbon battery) in June, up 2.46% MoM but down 51.17% YoY. EMD output in the first six months of 2023 stood at about 64,800 mt, down 62.99% YoY. The main reason for the increase in output in June was that robust demand for LMO made for more productions of electrolytic manganese dioxide (for LMO), in spite of less production of electrolytic manganese dioxide (for zinc-carbon battery).

In July, bolstered by some operation resumptions in June and good downstream demand, scheduled production of different types of electrolytic manganese dioxide plants will inch higher to about 11,300 mt.

Mn3O4

In June, Chinese Mn3O4 output was 11,300 mt (including 4,200 mt of electronics-grade Mn3O4 and 7,100 mt of battery-grade Mn3O4), up 6.02% MoM and down 9.84% YoY. The output in the first six months of the year totalled about 67,000 mt, down 7.33% on the year. 

Growing downstream LMO production boosted demand for Mn3O4 and encourage Mn3O4 producers to increase production.

The onset of off season for electronics sector in July will drive Mn3O4 producers to lower operating rates slightly, but the overall operating rates will remain at a high level. Output is estimated at 11,100 mt in July.

High-carbon ferrochrome

SMM data reveals that in June 2023, China's high-carbon ferrochrome production experienced a notable increase to 600,300 mt, with a month-on-month growth of 69,400 mt, or 13.07%, and a year-on-year increase of 19,800 mt, or 3.41%. Production in Inner Mongolia reached 375,000 mt, with a month-on-month increase of 38,000 mt, or 11.38%. In Sichuan, production amounted to 41,000 mt, with a month-on-month surge of 35.76%. In June, mainstream stainless steel factories increased their high-carbon ferrochrome purchasing prices by 200 RMB/50 base mt, surpassing market expectations. At the end of May, the arrival of chrome ore at ports rose, leading to a drop in ore prices. Furthermore, the onset of the abundant water season in Sichuan caused a reduction in electricity prices. Consequently, the overall cost center for ferrochrome moved downward, allowing ferrochrome manufacturers to recover some profits and boost production enthusiasm.

In July, high-carbon ferrochrome production is projected to reach 582,000 mt, experiencing a slight decrease compared to June's output. Although steel purchasing prices in July have decreased by 200 RMB/50 base mt, they still surpass previous market expectations. Stainless steel social inventory remains consistently low, and in July, steel mills are maintaining elevated production levels, leading to a robust demand for ferrochrome. Even though the majority of southern regions are facing cost inversion and limited electricity supply in Leshan, Sichuan, large northern ferrochrome manufacturers can still preserve minimal profits under the current steel purchasing prices. Moreover, the initiation of multiple new large-scale submerged arc furnaces will help maintain high ferrochrome production levels.

Stainless steel
Based on SMM research, in June 2023, the nationwide stainless steel production totaled approximately 3,018,400 mt. This represents a decrease of around 2.47% compared to May and a year-on-year increase of about 11.28%.

In terms of different series, the production of 200-series stainless steel amounted to approximately 899,600 mt, experiencing a month-on-month decrease of around 3.22%. The production of 300-series stainless steel reached approximately 1,577,800 mt, showing a month-on-month increase of about 1.50%. Meanwhile, the production of 400-series stainless steel was approximately 543,200 mt, with a month-on-month decrease of around 0.99%.

In June, the traditional industry entered its off-season, resulting in generally weak end-user market demand and modest transactions. Despite this, the 200-series stainless steel maintained a certain profit margin due to favorable cost conditions, prompting some steel mills to shift production from the 300-series to the 200-series. However, annual maintenance and unexpected shutdowns at several steel mills in June negatively impacted the production of 200-series stainless steel, leading to a slight decrease in overall output.

In the case of the 300-series, a substantial price drop in June further contracted profit margins. This continuous decline in prices led stainless steel mills to adopt a cautious attitude towards 300-series production. Nevertheless, some steel mills resumed production of the 300-series, resulting in little change to its overall output.

The 400-series stainless steel continued to experience losses, and with high inventory levels, billet production remained stable.

In July, a slight overall decrease in production is expected. The 200-series will be impacted by maintenance and shutdown plans at some steel mills, resulting in a minor reduction in output. In contrast, the 300-series experienced a decrease in social inventory levels in June, with limited stock available in the spot market. August's order transactions were satisfactory, and stainless steel mills took measures to support prices, leading to a modest price rebound compared to the previous month. Consequently, the 300-series is projected to see an increase in production. However, overall market demand remains underwhelming, with procurement primarily driven by essential demand, and the growth in output will be relatively small.

As for the 400-series, prices continue to operate at weak and stable levels, but ferrochrome prices have consistently been high, and the negative profit margin situation has not improved. Therefore, a slight reduction in production is anticipated in July.

EMM

SMM data reveals that in June 2023, China's EMM production reached 59,600 mt, marking a 21.22% decrease month-on-month and a 39.11% decline year-on-year. Between January and June 2023, China's total EMM production amounted to approximately 554,200 mt, representing a 56.15% year-on-year increase.

The primary reason for the production decline in June is that while large factories mostly maintained their previous operating rates, the majority of small and medium-sized factories entered a production suspension phase in June. These suspensions typically lasted from early June to July 10th, leading to an overall reduction in production for the month.

Regarding demand, China's total crude stainless steel production witnessed a slight decrease in June, primarily affecting the 200-series and 300-series stainless steel. This minor reduction led to an insignificant month-on-month change in overall production. However, EMM continues to be at a disadvantage in the selection of manganese raw materials for steel mills. Downstream industries are primarily focused on essential procurement, putting pressure on the price trend.

As July begins, there is a slight decrease in the production schedule for 200-series stainless steel, while the 300-series stainless steel production schedule has increased. This may result in a modest overall production increase for steel mills. On the other hand, overseas markets may enter a summer vacation phase, and due to geopolitical instability, maintenance periods could be extended compared to earlier stages, contributing to overall weak demand.

The supply side has not achieved the desired inventory reduction effect, as previous production cut plans have not been as effective. Consequently, the intensity of production cuts may further increase this month. Based on a production survey of manganese factories, the supply side's reduction is expected to continue in July, with an estimated production of around 49,900 mt.

Silicon metal

Based on SMM statistics, China's silicon metal production in June reached 265,000 mt, representing a month-on-month decrease of 6,000 mt or 2.3%, and a year-on-year decrease of 43,000 mt or 14%. From January to June 2023, the cumulative production of silicon metal amounted to 1,693,000 mt, sustaining a year-on-year increase of 3.7%, although the growth rate has noticeably decreased.

In June, silicon metal prices experienced low-level fluctuations, while raw material prices remained stable. Excluding the Southwest region—where costs fell due to seasonal electricity price adjustments—costs in other regions were mostly unchanged. Consequently, companies have endured losses for an extended period, causing the operating rate of silicon enterprises in the north to decline. Moreover, operating levels in southern areas like Fujian, Guizhou, and Hunan have consistently remained low.

In June, the increase in silicon metal production primarily came from Sichuan and Yunnan provinces. In Sichuan, water levels transitioned from average to abundant, and electricity prices were adjusted to their lowest point of the year. However, the enthusiasm for resuming production among silicon enterprises was limited, with only partial resumption leading to a month-on-month increase of approximately 13,000 mt in June. The rainy season in Yunnan was delayed, resulting in a gradual resumption of production between June and July, particularly in late June and early July.

In most other regions, production saw varying degrees of reduction, with the largest decrease occurring in Xinjiang. The main reason for this decline was that major factories adjusted their production plans in late June due to pressures from costs and inventory, resulting in large-scale production cuts. Additionally, some other silicon factories also reduced production and maintained low operating levels.

Entering July, the primary source of increased silicon metal production comes from the capacity release of factories in Yunnan resuming production at the end of June and early July. Although Sichuan is experiencing an abundant water period, limited rainfall and a strained power supply make production recovery prospects less promising. The scale and timing of resumption at major factories in Xinjiang are still uncertain, while other silicon enterprises in the region have plans to increase production. In other smaller production areas, there is little definitive intention to resume operations in July. Taking into account the varying start-up situations across regions, the production in July is anticipated to experience a slight month-on-month increase, but with a relatively modest growth rate. In terms of overall supply and demand, a de-stocking state is expected to persist.

Polysilicon

According to SMM statistics, domestic polysilicon output in June was about 121,300 mt, up 5.48% from May, and domestic polysilicon supply continued to grow. Due to profits in early June and expectation for a decline in future profits, polysilicon manufacturers stepped up production. Later, as polysilicon prices fell sharply, some second and third-tier producers stopped production for maintenance. However, new production capacity of first-tier enterprises continued to ramp up production.

PV module

According to SMM statistics, the domestic PV module output in June was about 38.3GW, down 8.5% from May. Due to sharp drop in upstream PV prices, end users took a wait-and-see approach. some projects were delayed. Poor profits dented production enthusiasm. However, end users and module producers began to raise production schedules as market prices may have hit bottom. The domestic PV module output is estimated at 45GW in July.

SiMn alloy

SMM data shows that in June 2023, China's total silico-manganese alloy production reached 946,700 mt, a 1.36% month-on-month increase and a 14.69% year-on-year growth. Between January and June 2023, the country's silico-manganese production amounted to approximately 5,592,000 mt, with a cumulative year-on-year growth of 1.05%.

The primary driver of June's production increase was the reduction in electricity costs in Yunnan, resulting in increased operations for enterprises and varying levels of growth in major northern production areas. In contrast, the Guangxi and Guizhou regions experienced production declines due to high electricity costs and falling silico-manganese alloy prices, leading to more enterprises reducing or ceasing operations. Overall, growth in cost-advantaged regions balanced out the decline in disadvantaged areas, allowing the nationwide silico-manganese production to continue its upward trend in June.

As July begins, expectations for further maintenance shutdowns in southern regions persist, while no changes to production schedules are anticipated for alloy plants in the major northern production areas. Consequently, the overall silico-manganese production in July is projected to decrease to around 930,500 mt.

Magnesium ingot

SMM data shows that China's magnesium ingots output stood at 53,000 mt in June, down 9% MoM and 35.3% YoY. From January to June, the output totalled 380,000 mt, a drop of 24.6% YoY.

In June, the rectification policy of magnesium factories in the main production area was implemented, the effect of supply reduction in the main production area was obvious, and the situation of oversupply in the magnesium market was effectively alleviated. Judging from the current production schedule of magnesium plants, due to the hot weather and sluggish downstream demand, some magnesium plants are expected to take maintenance measures in July. It is estimated that the domestic output of magnesium ingots in July will continue to decline compared with June, and stand at about 51,000 mt.

Magnesium alloy

SMM data shows that China's magnesium alloy output stood at 25,700 mt in June, up 0.7% MoM and 3.9% YoY. From January to June, the output totalled 155,000 mt, up 2.6% YoY.

Supported by the recovery of domestic trade demand, the operating rate of domestic magnesium alloys in June increased compared with the previous month. Sales personnel of some magnesium alloy factories said that the performance of domestic orders in June was relatively good. Although the performance of overseas trade continued to be sluggish, considering that lower magnesium prices has reduced the cost pressure, it is expected that the output of magnesium alloys in July will be relatively stable at about 26,000 mt.

Magnesium powder

SMM data shows that China's magnesium powder output fell to 5,000 mt in June. From January to June, the output totalled 33,000 mt.

The magnesium powder market continued to slump in June. Affected by fluctuations in raw material prices, downstream purchases were generally more cautious. Magnesium prices were still cost inefficient, even after declines. With weak steel industry, magnesium powder demand will remain poor. SMM data expects that China's magnesium powder output will be 5,000 mt in July.

Praseodymium-neodymium oxide

In June 2023, domestic production of Pr-Nd oxide reached 6,194 mt, representing a 7.9% month-on-month increase. Notable growth in production was observed in Guangdong, Guangxi, and Jiangsu regions, while other areas experienced relatively small fluctuations in output compared to May.

According to SMM research, the import volume of rare earths from Southeast Asia has recently decreased. However, after May, most market participants held bearish outlooks on future prices, leading to an increase in shipment volume from mining operations. The abundance of raw material supply prompted some enterprises to raise their production levels.

As the third quarter approaches, some companies have preemptively increased production to keep up with schedules ahead of anticipated power restrictions. In particular, the Jiangsu region saw a production growth of nearly 40%, while the Guangxi region experienced a 20% increase. In Guangdong, previously suspended enterprises resumed production in June, causing a significant 200% month-on-month surge in the production of Pr-Nd oxide.

Praseodymium-neodymium alloy

In June 2023, domestic production of Pr-Nd alloy reached 5,268 mt, representing a 6.5% month-on-month increase. Regions including Jiangxi, Shandong, and Sichuan saw varying levels of production growth, while other areas experienced relatively small fluctuations in output compared to May.

According to SMM, to prevent the impact of high-temperature power restriction policies on production during the third quarter, some metal factories in southern regions proactively increased their output to ensure timely order deliveries. As a result, many southern areas saw increased production. Specifically, the month-on-month production growth in Jiangxi reached 37.7%, while Sichuan experienced a 12.6% increase. In Shandong, following the completion of factory safety inspections in May, production returned to normal in June, yielding a month-on-month output growth of 20%.

Pr-Nd oxide

Dysprosium oxide

In June 2023, domestic production of dysprosium oxide reached 203 mt, marking a 7.4% increase month-on-month. This growth was primarily driven by the Guangxi and Guangdong regions.

SMM reports that some enterprises in Guangdong and Guangxi reduced or halted production in May due to factors such as equipment and factory relocations. However, they resumed production sequentially in June. Furthermore, the continuous high import volume of ion-adsorption ores led to a pessimistic sentiment among mining suppliers, resulting in an increased willingness to ship their products. Consequently, dysprosium oxide production in Guangdong surged by 105% compared to May, while the Guangxi region saw a month-on-month production growth of 12.5%.

Terbium oxide

In June 2023, domestic production of terbium oxide reached 42.5 mt, seeing a 7.6% month-on-month increase, with Guangdong, Guangxi, and Jiangxi regions experiencing significant growth.

According to SMM statistics, despite a 9% month-on-month contraction in the import volume of unlisted rare earth oxides from Southeast Asia in May, there was still a 300% increase compared to the previous year. The production of medium and heavy rare earths continued to grow, bolstered by the abundant supply of ion-adsorption ores. In particular, the Guangdong region saw a 100% month-on-month growth in terbium oxide production, while the Guangxi and Jiangxi regions experienced increases of 12.5% and 11%, respectively.

Molybdenum concentrate

SMM data show that China’s molybdenum concentrate output was 16,700 mt in June, up 2% MoM. In June, the price of molybdenum concentrate rose steadily due to strong terminal demand. Although the profit growth was not as expected, the overall rise was impressive. Except for some private mines that have not been able to start full-scale operation due to environmental protection factors, most mines maintained a relatively high operating rate or full production, so the domestic supply of molybdenum raw materials remained stable.

Entering July, molybdenum mining enterprises have no maintenance plan for the time being. It is expected that the output of molybdenum concentrate in July will remain stable or will continue to grow slightly.

Ferromolybdenum

SMM data show that China’s ferromolybdenumoutput was 16,100 mt in June, up 6% MoM. In June, the bid volume of mainstream steel mills for ferromolybdenum continued to exceed 10,000 mt, maintaining strong and stable demand, which made ferromolybdenum smelters more active in scheduling production. In addition, as the molybdenum price continued to rise last month, the profit improved, so the operating rate of some ferromolybdenum plants with sufficient raw material supply increased, resulting in a steady increase in ferromolybdenum output. Entering July, the off-season of the market is approaching, thus the possibility of an increase in ferromolybdenum output is small. As steel mills have not shown any obvious signs of production reduction recently, SMM expects that ferromolybdenum output will remain stable in July.

Silver

According to SMM research and statistics, the actual output of China's 1# silver in June 2023 was 1,372.762 mt. This was down 1.9% MoM, but up 11% YoY. The reasons for the decrease in output from the previous month were as follows: 1. The raw materials recycled by some enterprises decreased; 2. The output of some enterprises decreased due to maintenance; 3. The silver grade in ore fluctuated. The reasons for the YoY increase in output are: 1. catching up with the production plan in the middle of the year; 2. Overhaul was completed or about to be completed; 3. The silver grade of ore fluctuated.

Antimony ingot

According to SMM research and statistics, China's antimony ingot (including antimony ingot, crude antimony conversion, cathode antimony, etc.) output in June 2023 was 7,629.5 mt, a sharp increase of 7.67% compared with the previous month. According to customs data, the import volume of other antimony ore and its concentrate from January to May this year reached 17,445.29 mt, which almost doubled compared with 9,852.17 tons in the same period last year. If this continues, the import volume of antimony ore will return to 2020’s level. However, there is a huge gap between the antimony price in 2020 and the current antimony price, which has aroused the concerns of many market participants, and many market participants said that if this continues, the supply of antimony raw material will become abundant in the future, which will affect the antimony price.

Refined bismuth

According to SMM survey, the output of refined bismuth in China was 2,418.1 mt in June, down 5.89% MoM. On the whole, many market participants reported that bismuth raw material supply has tightened recently. Environmental protection inspection team has started a new round of environmental protection inspections in some areas of Hunan, which will force some bismuth manufacturers to stop production one after another. It is expected that the production of refined bismuth will continue further in July, which may support bismuth prices. From the perspective of demand, the demand from various downstream areas has not changed much, and the overall rigid demand was weak. At present, the willingness of the terminal to stock up or the buying interest of speculative players has shown signs of slow recovery. The short term supply-demand dynamics of domestic refined bismuth market may change, which will support bismuth prices.

Since the environmental protection inspection team has started a new round of environmental inspections in some areas of Hunan, SMM expects that the national production of refined bismuth in July will continue to drop sharply.

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 636 mt of silver nitrate in Jun, up 9.2% MoM. The total output of silver nitrate nationwide stood at 669 mt. The main reason for the increase in silver nitrate production in June is that the downstream silver powder plants entered the period of mass production and stocking. Entering the third quarter, photovoltaics power stations began to prepare for the fourth quarter's capacity installation, and the upstream has entered the peak production season, so SMM expects silver nitrate production to rise steadily in July.

Titanium dioxide

SMM data shows that China's titanium dioxide output stood at 290,000 mt in June, down 5.3% MoM and 15.8% YoY. From January to June, the output totalled 1.89 million mt, a drop of 5.3% YoY.

In June, the operating rates of domestic titanium dioxide enterprises continued to decline compared with the previous month. Affected by the sluggish downstream demand, the price of titanium dioxide continued to be under pressure. In July, the quotations of leading enterprises were adjusted downward, and the market sentiment was obviously bearish. According to some titanium dioxide enterprises, due to the downturn in the industry, the production reduction of titanium dioxide is more common, and some enterprises have indicated that they will take production reduction measures this month. It is expected that domestic titanium dioxide production will continue to decline in July, reaching about 280,000 mt.

Ammonium paratungstate (APT)

According to SMM statistics, the domestic APT output stood at 10,800 mt in June, down 6% on the month.

Entering June, the demand for tungsten products in the terminal manufacturing industry has not picked up. With high tungsten raw material prices, enterprises in the middle and lower reaches of the tungsten market are facing the risk of losses. The continuous reduction of orders and losses brought about by the high cost have limited the enthusiasm of APT smelters for production scheduling. Except for long-term orders, there are very few spot stocks.

Entering July, most smelting enterprises have stated that they have plans for maintenance and shutdown, and it is expected that APT output will continue to shrink.

Lithium carbonate

China’s lithium carbonate output stood at 41,123 mt in June, up 23% MoM and 30% YoY. Production of lithium carbonate from various feedstocks increased in June. In terms of spodumene-based smelters, although some production lines were overhauled, many smelters resumed production due to the increase in ore supply. In terms of lepidolite-based smelters, enterprise who were previously affected by environmental protection supervision resumed production one after another and some new production lines were put into operation, thus the overall production increased significantly. In terms of salt lake enterprises, the seasonal increase in production and the ramp-up of new capacity allowed the overall output to maintain growth trend. In terms of scrap-based smelters, many companies added new production lines due to the impact of rising lithium prices. With technological upgrades, lithium carbonate production increased significantly. Driven by brisk lithium ore purchases and ramp-up of new capacity, SMM estimates that China’s lithium carbonate output will climb 8% MoM and 47% YoY to 44,508 mt in July.

Lithium hydroxide

China’ lithium hydroxide output stood at 25,867 mt in June, up 3% MoM and 21% YoY. The main reasons for the increase in output is increase in ore supply and production recovery from maintenance. Lithium hydroxide stocks built up in June due to poor demand. It is expected that demand for high-nickel ternary products will recover in July, which will boost lithium hydroxide demand. The power problems in Sichuan and the maintenance of natural gas pipelines in Jiangxi will affect production. SMM predicts that the domestic output will stand at 25,215 mt in July, down 2.5% MoM and but up 27% YoY.

Cobalt sulphate

China’s cobalt sulphate output stood at 7,493 mt in metal content in June, up 16% MoM and 17% YoY. The output amounted to 41,292 mt in metal content in the first six months of this year, up 16% YoY. 

On the demand side, due to precursor enterprises’ rush to meet mid-year targets and some precursor  companies’ low proportion of cobalt sulphate long-term orders, the demand for cobalt sulphate in the spot market increased. In addition, due to the delay in the arrival of imported cobalt intermediate products from top mining companies, there was a shortage of cobalt raw materials in the market. The demand for cobalt salts from refined cobalt and Co3O4 producers also increased. On the supply side, the increase in cobalt sulphate output in June mainly came from integrated precursor manufacturers.

In July, ternary cathode precursor market may weaken. However, some precursor integrated enterprises will increase the share of low and medium-nickel precursor, which will translate into better demand for cobalt. And because the price of cobalt is still in an upward trend, cobalt salt enterprises may maintain stable production. SMM sees China’s cobalt sulphate output at 7,499 mt in metal content in July, up 0.1% MoM and 19.2% YoY.

Tricobalt tetraoxide (Co3O4)

The output of Co3O4 in China stood at 7,883 mt in June, up 12% MoM and 34% YoY. The output amounted to 33,987 mt in the first six months of this year, down 15% YoY. 

Improving electronics market and an increase in the e-cigarette market boosted orders at some Co3O4 plants. Some listed companies stepped up production to meet mid-year targets. The output is expected to be 7,628 mt in July, a decrease of 3% month-on-month and a year-on-year decrease of 81%.

Ternary cathode precursor

Domestic ternary cathode precursor output stood at 73,959 mt in June, a month-on-month increase of 6%e, up 20% MoM and 11% YoY. With the end of stocking cycle, consumer demand was beginning to show signs of decline. Domestic and overseas demand for precursors from NEV market was poor. However, some companies rushed to meet mid-year targets, boosting the overall production. Entering July, mid-year targets have been met, thus production will slow down. Demand from power battery and electronics sectors will be weak. China’s ternary cathode precursor output is estimated at 67,286 mt in July, down 9% month-on-month and 3% year-on-year.

The YTD output will be 367,530 mt in January-July, up 2% YoY.

Ternary cathode materials

Domestic ternary cathode material output stood at 55,190 mt in June, up 1% MoM and 5% YoY. Demand in the domestic power battery market recovered slightly, but overseas power was relatively weak, and orders have shown signs of weakening. Buyers from the e-bike and digital markets stocked up in advance, driven by mid-year consumer festival and rising lithium price. With the end of stocking cycle, procurement demand gradually dropped in the second half of the month. Output of 5 and 6-series precursors increased slightly, while that of 8-series weakened slightly. Entering July, e-bike and digital demand continued to weaken, while the domestic power battery market saw a small increase. Demand in overseas power battery is not expected to improve. Domestic ternary cathode material output is estimated at 56,119 mt in July, up 2% MoM and 1% YoY.

The domestic ternary cathode material output is estimated at 287,474 mt in January-July, up 1% year-on-year.

Iron phosphate

China produced 123,980 mt of iron phosphate in June, up 27% month-on-month and 119% year-on-year. The monthly output hit a new high. The cumulative output surged 96% YoY in H1. The production and sales of iron phosphate continued to rise due to strong demand from LFP. Due to the stability of products and large production capacity, medium and large iron phosphate enterprises have advantages in negotiating orders and prices. They received more orders and increased operating rates. In terms of cost, the market price of phosphorus chemical industry stabilized, and the price of ferrous sulphate rose steadily at the end of the month, and the cost increased slightly. SMM predicts that the domestic iron phosphate output will stand at 130,102 mt in July, up 5% MoM and 88% YoY, driven by growing downstream demand.

LFP

China produced 141,106 mt of LFP in June, up 27% month-on-month and 91% year-on-year. The cumulative output surged 56% YoY in H1. On the whole, the lithium iron phosphate market improved in June. On the supply side, the operating rate of leading enterprises remained high, and their orders were sufficient; the operating rate of small and medium-sized enterprises rose slightly. At the same time, considering the impact of high temperature and power cuts that may come at the end of July, some enterprises increased production in advance. On the demand side, the production and sales of the new energy vehicle industry continued to pick up slightly. After the rapid recovery in Q2, the energy storage market is expected to stabilise in Q3. The recovery of the terminal market drove up the production of leading battery companies, and they were actively picking up goods. On the cost side, lithium carbonate prices saw small fluctuations in June, while iron phosphate prices stablised. SMM predicts that the domestic LFP output will stand at 145,879 mt in July, up 3% MoM and 57% YoY. There may be power rationing.

LCO

China’s LCO to output stood at 7,653 mt in June, up 11% MoM and 39% YoY. On the supply side, the overall output of various companies in June increased compared with May, because many companies rushed to meet mid-year targets. On the demand side, due to the rising prices of raw materials, downstream battery cell factories stocked up low-priced lithium cobalt oxide in advance. Although the overall digital demand in the second quarter recovered compared with the first quarter, the degree of improvement was not as good as expected, and the demand in July and August is expected to be relatively weak. It is difficult for the demand for lithium cobalt oxide to show a strong increase in the short term. SMM predicts that the domestic LCO output will be 7,082 mt in July, down 7% MoM, but up 26% YoY. 

LMO

China’s LMO output stood at 14,691 mt in June, up 9% MoM and 268% YoY. Battery cell factories stood on the sidelines and were cautious about buying. Previously received orders allowed LMO plants to maintain stable production. Some LMO enterprises put new capacity into operation in June. As many LMO enterprises were already running close to full capacity in May, output growth was limited in June. Entering July, inquiries in LMO market declined. Battery cell factories had sufficient inventories and restocked based on rigid demand. July is the off-season for consumer electronics. LMO output is expected at 11,165 mt in July, a month-on-month decrease of 24% and but year-on-year increase of 105%.

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