SMM Exclusive: China’s Metals Output In August And Forecast For September

Copper cathode

China's copper cathode output in August was 989,000 mt, an increase of 63,100 mt or 6.8% month-on-month, and a growth of 15.5% year-on-year. The output increased 2,900 mt compared with the expected 986,100 mt. The output totalled 7.47 million mt from January to August, an increase of 771,800 mt or 11.52% year on year.

Only one smelter remained in maintenance in August. The seven smelters that undertook maintenance in July resumed production. And one smelter newly-commissioned in June continued to yield output. These factors drove a noticeable growth in output in August. In addition, sulphuric acid prices, which had dragged on copper output previously, rose across China. On the other hand, domestic blister copper supply tightened in August as the price spread between copper cathode and copper scrap shrank. This can also be reflected in the slight decline in RCs of blister copper. According to the latest statistics from SMM, as of September 1, the average RC of blister copper in the south was 950 yuan/mt, a drop of 100 yuan/mt from the beginning of August. This reduced copper output at several smelters relying on domestic blister copper. The average operating rate of copper cathode industry rose 5.53 percentage points month on month to 92.02% in August. (SMM adjusted the production capacity of a smelter in the north-west. The current total capacity in the SMM survey is 12.655 million mt/year, an increase of 80,000 mt/year).

SMM statistics showed that 5 smelters have maintenance plans in September, but the actual impact will be insignificant. One smelter in east China will be put into operation. Therefore, SMM believes that the output in September will only decrease slightly. According to the production schedules, SMM predicts that the domestic output of copper cathode in September will stand at 986,100 mt, a decrease of 2,900 mt or 0.29% from the previous month, but a year-on-year growth of 8.5%. The accumulated output from January to September is expected to stand at 8.46 million mt, an increase of 11.15% or 848,900 mt year on year. According to SMM statistics, few smelters will conduct maintenance in the fourth quarter. And a large-scale smelter will resume production from maintenance. SMM thus expects copper cathode output to continue to remain at a high level in the fourth quarter with the monthly average output exceeding 1 million mt.

Aluminium

According to SMM, in August 2023, China's aluminium production hit 3.623 million mt, up 3.9% YOY. The average daily output in August rose by 1,785 mt MoM to around 116,900 mt. From January to August, the total production reached 27.299 million mt, a 2.8% increase YOY.

In August, the proportion of liquid aluminium increased in northern and central factories but slightly declined in some southwestern factories. The overall domestic liquid aluminium ratio in August rose modestly by 0.2 percentage points to around 72.8%, up 4.8% YOY. Based on SMM's data, aluminium ingot production in August fell by 11.7% YOY. The total ingot production from January to August was about 8.18 million mt, down 12.2% YOY.

Capacity change: China's aluminium operating capacity growth slowed from the previous month in August. Yunnan's operating capacity recovered to around 5.55 million mt, up 2.03 million mt from June, thanks to the resumption of production by major manufacturers and new capacity projects. Apart from Shandong, where production fell due to a capacity transfer of over 100,000 mt, aluminium factories in other regions remained stable. SMM data shows that China's built aluminium capacity stands at about 45.19 million mt (including some not yet in operation), and operating capacity has risen to around 42.78 million mt. The national aluminium operating rate is about 94.7%, up 1.4 % points MOM.

Production forecast: Entering September, domestic supply growth began to slow, with only some transferred capacities pending production. In areas like Sichuan,some capacities were reduced earlier. Companies are undergoing upgrades with no immediate plans for resumption. Considering other regional capacity changes, SMM estimates that by September's end, China's total aluminium operating capacity may slightly rise to around 42.9 million mt, and September's total aluminium output could reach about 3.51 million mt, up 5.1% YOY. Ongoing monitoring of power and operational conditions in the southwest and other regions remains necessary.

Alumina

SMM data revealed that China's metallurgical grade alumina output in August (31 days) was 7.017 million mt, with daily output increasing by 48,000 mt/day to 226,400 mt/day. This increase was mainly due to the release of new and expanded capacities and a recovery in industry profits, leading some companies to raise production. Therefore, daily alumina production and the average daily output rose compared to July. Total production in August was up 2.2% MOM and 2.6% YOY, the latter due to the contribution from new alumina capacities. By the end of August, China's built and operating alumina capacities were 100 million mt and 82.74 million mt, respectively, with a national operating rate of 82.7%. Cumulative alumina output from January to August reached 52.69 million mt, up 2.2% YOY.

In Shanxi, the overall operating rate rose to 73.2% in August, a 4.4% increase MOM, primarily due to some expanded capacities starting production, with full production expected in September. In Henan, production varied in August. With mines in Sanmenxia still closed, certain alumina factories cut production due to ore shortages. However, alumina factories using imported or a mixed supply of ores ramped up production due to improved profit margins. Consequently, Henan's operating rate in August was 68.9%, up 4.9% MOM.

In Guizhou, the instability of ore supply led some alumina factories to cut production, resulting in an operating rate of 83.3% in August, down 1.2% MOM. In Hebei, the operating rate dropped to 83.3% in August, a 9.8% decrease MOM, due to alumina companies undergoing roasting maintenance, affecting an annual capacity of roughly 500,000 mt. In Guangxi, the operating rate increased to 92.0%, up 3.4% MOM, primarily due to the gradual release of new capacities, offsetting the impact of some companies' production line maintenance on overall alumina production. In Shandong, the operating rate was steady at 94.4%, with routine maintenance in August affecting monthly output by approximately 10,000 mt, but normal production has since resumed.

In the forecast for September, new capacities in Guangxi are expected to continue being released. In Sanmenxia, Henan, no immediate plans for mine resumption are foreseen, and local ore shortages will continue to constrain some capacities, with overall changes remaining negligible.

In Shanxi, encouraged by the recent buoyancy of spot prices due to active futures and spot trading, companies are likely to increase production, although a decline in trading activity might happen. Most firms with new expanded capacities heading for full production will likely maintain steady output except for a few firms heading for full production. Companies in Shandong, Hebei, and the southwest, which underwent maintenance in August, are planning to resume operations in early September. Consequently, SMM predicts a daily output in September of 229,000 mt/day, with a total operating capacity around 83.68 million mt, marking a YOY increase of 2.3%.

Primary lead

In August 2023, the domestic output of refined lead was 318,900 mt, a drop of 0.27% month-on-month but up 18.83% year-on-year. The cumulative output from January to August 2023 increased by 17.78% year-on-year. Total production capacities of enterprises in the survey totalled 5.84 million mt in 2023.

Major large-scale smelters in Henan Province were overhauled in August, resulting in significant output reductions. Meanwhile, smelters in Anhui, Yunnan, Hunan and other regions resumed their operations after maintenance, and high lead prices incentivised smelters to step up production in August even as lead concentrate TCs dropped. Therefore, the output growth largely offset the output reduction.

Output in September will change little in view of maintenance and output recoveries at refined lead smelters. The completion of maintenance of large-scale refined lead smelters in Henan will contribute most of the output increase. In addition, lead prices continued to be strong, and the price difference between futures and spot goods expanded, standing at a maximum of over 700 yuan/mt as of September 7. This drove smelters of deliverable lead brands to make deliveries to warehouses and lift production. On the other hand, the refined lead smelters in Inner Mongolia, mostly large-scale enterprises, plan to undertake maintenance. Their reduction in production has offset most of the expected output increase. Meanwhile, smelters normally restock lead concentrate inventories for winter production from September to October, which will tighten the supply and lower lead concentrate TCs. This will limit the output growth of smelters. China's refined lead output is estimated to increase to around 322,000 mt in September.

Secondary lead

The output of secondary lead in August 2023 was 416,900 mt, an increase of 10.97% from July and up 19.25% year on year; the cumulative output of secondary lead from January to August 2023 was 2.91 million mt, an increase of 3.83% year on year. In August 2023, the output of secondary refined lead was 358,800 mt, an increase of 7.03% from July, and a growth of 17.75% year on year; from January to August 2023, the cumulative output of secondary refined lead was 2.53 million mt, an increase of 4.05% year on year.
According to SMM research, many secondary lead smelting companies completed maintenance and resumed production in July, and their output gradually stabilised or returned to normal levels in August. Output at Anhui Tianshuo and Hunan Kangze was also relatively stable after newly-built production capacities were put into operation. In addition, the resumption of production at some small and medium-sized secondary lead smelters that had been closed for a long time has also contributed a large amount of output. During the month, the output of several companies in Anhui, Hunan, Guizhou, Inner Mongolia and other regions declined due to equipment failures, raw material shortages and other reasons; but overall, the output growth in August was still in line with expectations.
The output of secondary lead will still increase in September. A large smelter in Ningxia completed maintenance and resumed production. The output at companies in Anhui, Zhejiang and Guizhou that have undertook maintenance in August is expected to be normal in September. Some other companies with adequate inventory of raw materials are confident to increase production. In addition, the high lead prices put great pressure at some battery manufacturers, planning to ramp up production at their secondary lead smelters in September to reduce purchases of lead ingot. SMM expects China's secondary refined lead output to stand at around 398,300 mt in September.

Refined zinc

In August 2023, SMM China's refined zinc output was 526,500 mt, a decrease of 24,600 mt or 4.46% month on month, but a year on year increase of 13.78%, well below our expectations. From January to August, the cumulative output of refined zinc stood at 4.3 million mt, a year on year increase of 10.08%. Domestic zinc alloy output was 86,200 mt in August, 700 mt lower than in the previous month.

Longer-than-expected maintenance at smelters in Guangdong, Hunan, Sichuan and Inner Mongolia caused the output to miss expectations significantly. The recovery of smelters in Gansu, Shaanxi and Henan after maintenance contributed to a certain amount of output growth, though.

SMM predicts that domestic refined zinc production in September 2023 will increase by 37,100 mt or 11.85% from the previous month to 563,600 mt. The cumulative output from January to September will reach 4.868 million mt, a year-on-year increase of 10.28%; entering September, the output was basically in line with expectations. Except for routine maintenance in Inner Mongolia, Gansu and Hunan, recovery of smelters in Hunan, Yunnan, Inner Mongolia and Sichuan from maintenance will contribute most of the output increase. As the smelter maintenance is completed, the month-on-month increase in output in October is expected to exceed 20,000 mt.

Refined tin

SMM research said that domestic refined tin output was 10,621 mt in August, down 6.79% MoM and 25.41% YoY. Total output from January to August was 106,740 mt, up 4.68 YoY. A mild drop in tin ingot in August was largely pinned on shrinking tin ore supply of an Inner Mongolia-based smelter and shut-down of an Anhui-based smelter for maintenance. Most smelters kept operation stable, while a smelter in Yunnan resumed operation from maintenance, partially adding tin ingot production, and will be in normal operation in September, serving as a key driver for tin output hike by then. Tin scrap supply tightness made it tougher for smelters in Jiangxi, Guangdong, and Zhejiang to purchase goods. While tin ore supply will be ample on the near-term horizon, thanks to a slew of imported tin ore flowing into China from June to August. In addition, rising TCs of tin ore in Yunnan will be reported. Under such circumstance, tin ore-related smelters will have a peaceful and productive environment in a near future. However, if tin mines in Myanmar's Wa State remain being shut, a tin ore supply crunch in China will linger in a long run. Recently, more imported tin ingot will significantly fill domestic tin market supply.

Refined nickel

Owing to a continuous rise in output of a smelter in northwest China and a smelter in East China, Chinese refined nickel output totalled 21,800 mt in August, up 0.93% MoM and 40.65% YoY, in line with expectations. The refined nickel output may total 23,000 mt in September, up 0.55% MoM and 49.35% YoY, hinging on persistently elevated output of a smelter in northwest China and full capacity of refined nickel units of a smelter in North China. Overall, refined nickel output is expected to keep hiking in 2023.

NPI

Domestic NPI output in August was 34,700 mt in Ni content, and hiked by 4.32% MoM to 799,000 mt in physical content and 3.99% YoY in metal content. NPI prices moved upwards in August as Indonesia delayed issuance of nickel ore quotas. Based on the profit calculation of nickel ore 25 days ago, profit of NPI gradually expanded. Therefore, NPI production in August inched up. In terms of grades, August saw an increase of 5.33% MoM in high-grade NPI output at 27,400 mt in metal content and 3.99% in low-grade one at 7,300 mt in metal content. More nickel ore arrived at Chinese ports in August, most of which were used to produce low NPI. Therefore, NPI output increased in late August, meeting expectations.

It is estimated that the national NPI output in September will be around 34,700 in Ni content, little changed MoM. According to SMM research, currently, a peak season of stainless steel eliminated negative impact of the delayed issuance of nickel ore quotas on NPI output.

Indonesian NPI

Indonesia produced 117,100 mt of NPI in Ni content in August, down 1.88% MoM, but up 18.5% YoY. Output from January to August totalled 883,100 mt in Ni content, up 19.9% year-on-year. The decline in Indonesian NPI output in August was basically in line with expectations. From a policy perspective, affected by the nickel ore quota review and illegal nickel mining review, supply of nickel ore in Indonesia was tight, which led to production reductions by some nickel ore manufacturers. Newly added NPI capacity will probably be limited in September. Indonesian NPI production in September is expected to reach 113,400 in Ni content, down 3.13% MoM, but up 12.3% YoY.

Nickel sulphate

Chinese nickel sulphate output in August stood at 42,000 mt in metal content or 193,000 mt in physical content, up 5.12% on the month and 30.5% on the year. In August, ternary cathode precursors increased by about 4% compared with July. The increase in nickel sulphate production in August was largely pinned on the increase in precursor production of integrated large factories. In addition, the output of small factories remained stable compared with the previous month. Therefore, the overall nickel sulphate production edged down in August. While nickel sulphate output may inch lower by 5% in September, mainly due to rigid demand from precursor markets and weaker demand from refined nickel market. Prolonged nickel sulphate price erosions and high costs in early August had non-integrated salt plants running in the red, thereby leading to production cutbacks of some salt plants.

Battery-grade manganese sulphate

China's output of battery-grade manganese sulphate was 19,200 mt in August, up 10.98% MoM. Some producers returned to normal production in August and orders improved slightly compared with July. Due to output cuts at integrated enterprises who produce both precursors and manganese sulphate, the growth of domestic manganese sulphate output was insignificant.

Entering September, orders seemed to have dropped compared with August. Some producers indicate that downstream ternary precursor plants plan to cut production slightly. In this context, most producers have kept their production schedules for September basically unchanged from August, except for only a few who plan to ramp up production to meet sales targets. We see domestic battery-grade manganese sulphate output at 19,500 mt in September, up 1.56% MoM.

EMD

SMM data showed that China’s electrolytic manganese dioxide (EMD) output was 15,900 mt (including 2,800 mt for LMO battery, 8,900 mt for alkaline manganese battery, and 4,200 mt for zinc-carbon battery) in August, down 5.41% MoM and up 17.03% YoY. The output totalled 125,200 mt from January to August, a year-on-year decrease of 41.28%. The output reduction in August was mainly reflected in EMD that is used to produce LMO. Poor orders and cost pressure drove LMO plants to scale back production and raw material purchase. Amid moderate demand for primary battery, output of EMD that is used to produce alkaline-manganese battery and zinc-carbon battery barely changed compared with July.

Since sluggish LMO demand led to inventory accumulation of LMO-oriented EMD in August, there could be additional output cuts by LMO-oriented EMD plants in September. In contrast, output of EMD used in alkaline-manganese battery and zinc-carbon battery might see mild growth, driven by pre-holiday downstream stocking. All in all, we see domestic EMD output falling from August to 14,600 mt in September.

Mn3O4

In August, China’s trimanganese tetraoxide (Mn3O4) output was 8,200 mt (including 4,100 mt of electronics-grade Mn3O4 and 4,200 mt of battery-grade Mn3O4), down 20% MoM and 34.56% YoY. The output totalled 85,500 mt from January to August, a year-on-year decrease of 13.45%. The output reduction in August was mainly reflected in battery-grade Mn3O4, whose demand faltered as a result of massive production cuts by LMO plants. Production of electronics-grade Mn3O4 barely changed and the failure to grow was because policy stimulus in real estate market has not yet trickled into home appliance sector.

Since market players are not particularly optimistic about market outlook in September this year, production of electronics-grade Mn3O4 may barely grow and will basically hold flat with August instead. As for battery-grade Mn3O4, its demand looks likely to remain slack in September. We see domestic Mn3O4 output at 8,000 mt in September.

High-carbon ferrochrome

Chinese high-carbon ferrochrome output was at 642,400 mt in August, up 40,900 mt or 6.8% on the month and 174,400 mt or 37.26% on the year. The output in Inner Mongolia was 399,700 mt, up 16,400 mt MoM, or 4.28%, and that in Sichuan stood at 33,000 mt, up 13.01% MoM. Bids from steel mills for high-carbon ferrochrome dipped. However, snug retail ferrochrome supply triggered by early ferrochrome inventory being mopped up and persistently high scheduled stainless steel production injected confidence for ferrochrome market, thereby giving a boost to retail prices. Bolstered by start-up of new capacity in Inner Mongolia and good demand, ferrochrome output further increased. In Sichuan, with more hydropower triggered by abundant rainfall and the end of Summer World University Games, ferrochrome plants in Sichuan resumed operation.

The output of high-carbon ferrochrome in September is expected to inch up to 651,700 mt. A deep cut in ferrochrome supply will be felt from impact of persistently high scheduled stainless steel production in September. Bids from major steel mills will hike by 300 yuan/mt (Cr50%), and from small and medium-sized steel mills and some special steel mills will shoot up. Orders signed will be enough for most domestic ferrochrome plants to produce goods until mid-to-late September, and the plants will keep operating rate high. Tracking bullish ferrochrome prices, chrome ore prices will trend higher. The spot raw materials of ferrochrome plants in the southern China will still in an inverted state, and ferrochrome production will be largely dominated by inventory of raw materials.

Stainless steel

According SMM survey, stainless steel output totalled 3.217 million mt in August, up 1.66% MoM and 41.18% YoY. The output of 200-series stainless steel was up 1.7% MoM to 956,000 mt, 300-series increased by 3.28% MoM to 1.678 million mt, and 400-series trended up 0.74% MoM to 583,000 mt.

A slack season was extended into early August, and purchase aimed to meet rigid replenishing demand. Delayed issuance of nickel ore quotas and support from raw materials led to booming stainless steel market activity, and stainless steel prices mounted sharply to a high level. In August, total 400-series stainless steel output loss subject to annual maintenance of some steel mills in North China was some 20,000 mt. 200- and 300-series stainless steel saw widening profits and good orders intakes of some steel mills in August and September in East China. In addition, scheduled 25-day-maintenance of some steel mills in South China was postponed from August to November. Under such circumstance, the output of 200- and 300-series stainless steel increased significantly. For the 400 series, a state-owned steel mill in East China increased operating rate of the 400 series in order to achieve the target. In a word, stainless steel production hiked in August.

Overall, September may see high production schedules and high capacity expansion. Steel mills and traders will be upbeat about downstream demand in a peak season. Some steel mills in East China will continue to increase production of 300 series in September, seeking directions from robust demand. Social inventory witnessed moderate demand in August, but will shrink amid tight production schedules and normal delivery for stainless steel. Demand will remain better than previous years. Furthermore, a large steel mill in East China continued to stop selling and limit prices, which appeared bullish for the market outlook. Stainless steel production is expected to increase significantly in September.

EMM

China’s EMM output totalled 83,000 mt in August, up 29.43% MoM and 45.75% YoY, SMM data showed. The output totalled 695,800 mt from January to August, a year-on-year increase of 34.99%. While EMM price slump drove some producers to slash or suspend production, rising output at other major producers allowed the domestic total production to grow in August. Even though growing stainless steel production boosted EMM demand, EMM price fell as it was not a preferred choice of manganese raw material for stainless steel mills and mills mostly restocked only after EMM price went down.

As September normally marks the beginning of peak season, domestic stainless steel mills tend to ramp up production. Meanwhile, overseas stainless steel mills may also increase production. This, combined with pre-holiday stocking, should boost EMM purchase.

EMM plants in regions where cost advantage is more prominent will maintain high operating rates. We project domestic EMM output at 89,000 mt in September.

Silicon metal

SMM data show that domestic silicon metal output was 320,900 mt in August, up 13.5% MoM and 10.6% YoY. Output stood at 2.299 million mt from January to August, up 2.6% YoY.

The increase in domestic silicon metal production in August was mainly contributed by the three main production areas (Xinjiang, Yunnan, and Sichuan), as well as other small production areas in the north. Among the main production areas, output in Sichuan increased by 14,000 mt MoM, which was the largest increase. This was mainly because Sichuan was in the rainy season in August when the water and electricity supply was normal after production was disrupted by power rationing earlier. Silicon price increased by more than 1,000 yuan/mt in August, boosting production enthusiasm, with 30 furnaces being restarted. Output in Xinjiang rose 10,000 mt MoM, which was mainly driven by the resumption of production at some silicon plants in Yili after maintenance, and the commissioning of new production capacity at GCL. Yunnan has resumed production on a large scale in July, so there was only a small increase in output in August. Except for the main production areas, Inner Mongolia, Gansu, Qinghai, Shaanxi and other places also saw increases of 1,000-3,000 mt. In southern places such as Fujian and Guangxi, where costs are high, the operating rate remained low.

On September 7, the average price of SMM East China above-standard #553553 silicon metal was 14,550 yuan/mt, an increase of 1,650 yuan/mt or 13% from August 1. Thanks to the recent rise in the silicon price, some loss-making silicon companies turned to profitability, and maintenance basically ended. Some silicon companies in the north have higher production intentions than before. On the whole, it is expected that the output in September will maintain a positive growth on a MoM basis.

Polysilicon

The total polysilicon production in China in August was approximately 130,100 mt, an increase of 3.83% from July. In September, it is expected to reach 138,000 mt, with a MOM growth rate of 6.07%. The increase in domestic polysilicon production in August was mainly due to the ramp-up of new production lines and the resumption of production after maintenance. In September, the growth of domestic polysilicon production schedules will mainly come from the commissioning of new production lines from Baofeng, Shangji, Yongxiang, and GCL, etc. In addition, the end of power rationing in Leshan, Inner Mongolia and other places will also contribute to higher output.

Solar panel

According to SMM statistics, domestic solar panel production in August was approximately 53.1GW, an increase of 15.2% from July, but the gain was significantly lower than 21.5% in July. The solar panel production in September is expected to be 50.3GW, down 5% MoM. Currently, solar panel profitability failed to improve significantly. Major integrated solar panel producers had acceptable profits with cost advantages, while third- and fourth-tier ones were under pressure of losses, bringing with it production halts or cutbacks of a few small makers. Therefore, September may see solar panel output drop.

Solar cell

Actual output of solar cell in August was up 6.99% MoM at 52.6GW. Scheduled production of solar cell in September will hike by 15.61% MoM to 57.83GW. 25 companies start mass topcon solar cell production in August. Scheduled production of topcon cell in September will be 16.46GW. The N-type cell supply ratio exceeded 30% in August. From the perspective of supply and demand, ultralow solar cell supply from July to August came into an end. From September onwards, an increase in N-type cell production will lift proportion of N-type cell on the component side. Correspondingly, demand for P-type cell demand will slump.

PV glass

According to SMM statistics, a total PV glass production in China was 2.233 million mt in August, up 3.13% from July. Operating rate of some PV glass furnaces kept trending up in August, and some production lines were at full capacity. In addition, bolstered by a steep increase in scheduled module production and sustained PV glass price uptick amid rising costs, PV glass makers had greater incentive to produce, and kept operating rate high. Therefore, PV glass output continued to mount in August.

DMC

According to SMM statistics, the domestic DMC output stood at 176,400 mt in August, down 10.5% on the month. In August, the production lines of four domestic DMC companies were shut down due to losses or maintenance. The domestic operating rate dropped significantly in mid-August. As the operating rate decreased, DMC's output also shrank. However, with the recent restarts of equipment, production is expected to increase in September.

SiMn alloy

China’s SiMn alloy output totalled 969,500 mt in August, up 2.16% MoM and 57.34% YoY, SMM data showed. The output totalled 7.51 million mt from January to August, a year-on-year increase of 9.95%. Output at some producers in Inner Mongolia fell slightly in August due to equipment failure-induced maintenance, while output in Ningxia rose. High bid price by steel mills encouraged producers in Guangxi, Guizhou and Chongqing to raise production. A longer month compared with July also contributed to higher output.

Expectations for demand recovery in peak season, coupled with stocking ahead of the Mid-Autumn Festival and National Day holiday will boost SiMn alloy demand. Therefore, we see domestic SiMn alloy output growing further to 973,900 mt in September.

Magnesium Ingots

According to SMM data, the production of magnesium ingots in China reached 54,000 mt in August 2023, showing a 6.6% increase MoM, but a 26.4% YoY. The cumulative production for the year reached 485,000 mt, with a cumulative decrease of 25% YoY.

In August, the main production areas of magnesium plants were affected by the rectification of their coal-based equipment, resulting in sustained low-level production in the region. Currently, there are no relevant documents on resumption of production, and there is a strong sentiment of limited sales on the supply side. Due to the upward trend in magnesium prices, other regions have significantly increased production, resulting in a 6.6% increase MoM in magnesium ingot production in August. Considering that the resumption time in the main production areas is still uncertain and the market is entering the traditional peak season of "Golden September and Silver October," market expectations are generally positive. The supply side maintains a high level of production enthusiasm. It is expected that the domestic production of magnesium ingots will continue to grow in September, reaching approximately 56,000 mt.

Magnesium Alloys

According to SMM data, the production of magnesium alloys in China reached 27,000 mt in August 2023, showing a 2.4% increase MoM and a 2.8% increase YoY. The cumulative production for the year reached 210,000 mt, with a cumulative increase of 1.4% YoY.

In August, the domestic production of magnesium alloys continued to rebound, and market activity increased. According to sales personnel from some magnesium alloy companies, there has been an increase in overseas inquiries after the end of the summer holiday, and the volatility of magnesium prices has stimulated the effective release of domestic downstream orders to some extent. Considering that the resumption time in the main production areas of magnesium ingots is still uncertain and with the arrival of the traditional peak season of "Golden September and Silver October," it is expected that the orders for magnesium alloys will continue to recover. It is projected that the domestic production of magnesium alloys in September will be approximately 28,000 mt.

Magnesium Powder

According to SMM data, the production of magnesium powder in China reached 5,200 mt in August 2023, showing a 4.6% decrease MoM. The cumulative production for the year reached 44,000 mt.

In August, the overall operating rate of the magnesium powder market decreased as some domestic magnesium plants were hindered from resuming production due to safety supervision issues. The head of a large magnesium powder company stated that due to the sustained high prices of magnesium in the domestic market and limited willingness of downstream companies to follow suit, coupled with uncertain resumption time of some magnesium powder plants, the domestic production of magnesium powder in September may remain sluggish. According to SMM statistics, the cumulative year-on-year decrease in domestic magnesium powder production from January to August was 21%, indicating a severe contraction in the magnesium powder market. Under the influence of the sustained upward trend in magnesium prices, it is expected that the domestic production of magnesium powder will continue to decline in September, reaching approximately 5,100 mt.

Pr-Nd alloy

In August 2023, domestic production of Pr-Nd alloy was 5,242 mt, an increase of 3% MoM. The output growth in Gansu, Jiangxi and Inner Mongolia ws more obvious. The output in Zhejiang decreased to a certain extent, and the output in other regions saw less fluctuation than July.

According to SMM's understanding, there are alloy factories in Zhejiang that are affected by equipment maintenance and production. Therefore, the output in Zhejiang decreased by 22% MoM. However, affected by the increase in orders from leading companies in August, the output of Pr-Nd alloy companies in Gansu, Jiangxi and Inner Mongolia increased overall. At the same time, some local smelting companies stated that they must deliver a certain amount of allo before purchasing oxides, and the regional production of Pr-Nd alloy increased significantly. Among them, the output in Gansu and Jiangxi increased by 8% and 7% respectively, and the metal output in Inner Mongolia also increased by 5%.

Pr-Nd oxide

In August 2023, domestic production of Pr-Nd oxide was 6,083 mt, an increase of 0.3% MoM. Among them, the output in Sichuan was severely reduced, while the output in Guangdong and Shandong has increased significantly. Output in other regions was almost unchanged from July.

According to SMM research, the price trend of Pr-Nd products improved in August. The demand from alloy plants increased to a certain extent; and the debugging of separation plant equipment in Guangdong was completed. Production gradually resumed in August, and the output in Shandong increased by 21% MoM. The MoM growth rate of output in Guangdong reached 119%. Due to the Universiade in Sichuan in August, some separation plants reduced production to varying degrees, and local production decreased by 22% MoM.

Dysprosium oxide

In August 2023, domestic dysprosium oxide production was 217 mt, a MoM increase of 10.8%, with the main increase reflected in Guangdong and Jiangxi.

According to SMM's understanding, the production reduction caused by unstable equipment in Guangdong in July gradually recovered, driving production in Augustto increase significantly, with a MoM increase of 120%. Some separation companies in Jiangxi also increased production slightly in August due to sufficient supply of ion-type ores. Local dysprosium oxide production increased by 33% MoM.

Terbium oxide

China’s terbium oxide output was 44 mt in August, an increase of 8.2% MoM .

According to SMM statistics, the production of separation plants in Guangdong has gradually recovered, and its output in August increased by 225% month-on-month. Some separation plants in Jiangxi have increased production to a small extent when their production raw materials are relatively sufficient, and their terbium oxide production increased by 8% MoM.

Molybdenum concentrates According to incomplete statistics from SMM, the production of molybdenum concentrates in China was approximately 17,400 mt in August 2023, showing a 4.4% increase MoM.

It is understood that molybdenum terminal consumption demand was strong in August, and molybdenum concentrate prices showed a slight upward trend under the effective promotion of demand. This stimulated the production enthusiasm of molybdenum mining companies, which generally maintained a high output rate. Furthermore, some small and medium-sized molybdenum mines that had undergone inspection and maintenance also resumed normal production. Therefore, the overall output of molybdenum concentrates increased steadily in August.

Entering September, there are no signals of production reduction or maintenance from mainstream molybdenum mines in the market. It is expected that the production of molybdenum concentrates will remain stable this month.

Molybdenum Iron

According to incomplete statistics from SMM, the production of molybdenum iron in China was approximately 16,700 mt in August 2023, showing a 5.6% increase MoM.

In August, the total bidding volume for molybdenum iron by major steel mills was about 12,000 mt, exceeding 10,000 mt for the fifth consecutive month. The low-priced molybdenum iron resources in the market have been mostly consumed, and the inventory of molybdenum iron was also at a low level. In order to meet the continuous demand for molybdenum iron from steel mills, molybdenum iron smelters were operating at full capacity, with most of them scheduling production for 20-30 days. Some smelters have also started new furnaces to increase output, resulting in a significant increase in molybdenum iron production this month.

In September, molybdenum-containing steel production has not decreased, and there is a possibility of advance stocking before the October Golden Week holiday. It is expected that the production of molybdenum iron will continue to increase slightly this month.

Silver

According to statistics from SMM, the actual production of #1 silver in China in August 2023 was 1,388.854 mt, with 974.854 mt coming from mined silver. This represents an increase of 2.9% MoM and is relatively stable compared to the same period last year. The increase in production in August can be attributed to the following reasons: First, the price of lead has increased, leading to a higher amount of silver associated with lead production. Second, the price of silver in August was relatively higher than in July, prompting raw material suppliers to ship their products to smelters for processing. The decrease in production can be attributed to two factors: First, adjustments in production plans; and second, variations in silver content in raw materials. The increase in production outweighed the decrease, resulting in a slight overall increase in silver production in August.

In terms of macro factors: On the negative side, the seasonally adjusted non-farm employment data in the United States for August remained unchanged at 187,000, which was higher than the expected value of 170,000. On the positive side, the unemployment rate in the United States for August was announced at 3.8%, higher than both the previous value and the expected value of 3.5%. Market participants are now waiting to see if the Federal Reserve will raise interest rates this month.

Antimony Ingots

According to SMM's research and statistics, the actual production of antimony ingots in China in August 2023 was 7,458 mt, with the overall production falling below 7,500 mt, representing a significant decrease of 7.22% MoM. Customs data shows a sharp decline in the import volume of other antimony ore and concentrates in July this year, reaching 2,803.56 mt, which is significantly lower compared to the 3,699.72 mt of the previous month. Many market participants believe that the supply of imported antimony raw materials may enter a relatively tight situation in the future. Meanwhile, the domestic antimony mining resources are currently facing limited availability due to restricted sales. SMM predicts that the national output of antimony ingots in September 2023 may experience a certain degree of reduction compared to August 2023, considering the scarcity of mining resources.

Sodium Antimonate

According to SMM's research and statistics on major sodium antimonate manufacturers in China, the production of sodium antimonate in August 2023 was 3,780 mt, representing a slight decrease of 4.18% compared to July. Looking at the detailed data, out of the 10 surveyed manufacturers by SMM, two were still in a state of suspension in August. While production remained normal for other sodium antimonate manufacturers, the output of some factories saw a significant decline. Although there were slight increases in production for some manufacturers in August, the overall production of sodium antimonate in China experienced a small decline. Some manufacturers indicated that the recent noticeable upward trend in antimony prices has made it increasingly difficult to procure raw materials, which is one of the reasons for the decrease in sodium antimonate production. Given the likelihood of a continued overall upward trend in antimony prices in September, as well as steady production of photovoltaic glass, SMM predicts that the probability of a further decline in national sodium antimonate production in September is low, and the probability of maintaining stability is high.

Refined bismuth

According to SMM's research and statistics on bismuth manufacturers in China, the production of refined bismuth in August 2023 was 2,299.893 mt, which once again exceeded 2,000 mt, representing a significant increase of 17.61% compared to July's national production. Looking at the detailed data, out of the 24 surveyed manufacturers by SMM, seven factories were in a state of suspension in August, a decrease of two compared to July. In terms of production changes among manufacturers, eight factories saw a certain degree of increase in output, while four factories experienced a decline. This resulted in an overall increase of 17.61% MoM in refined bismuth production in August. SMM predicts that there is a high possibility of maintaining stable production of refined bismuth nationwide in September, with a slight possibility of a small increase as well.

Overall, despite the increase in refined bismuth production in China in August, the market for bismuth raw materials remains tight. Manufacturers were fiercely competing for bismuth raw materials, and a recent high-priced bid for bismuth concentrate by Shizhuyuan Nonferrous Metal is one of the notable examples. Additionally, Yuguang Gold & Lead recently conducted an open tender for its 200-mt bismuth ingots, and official reports indicate a successful transaction at a price of 59,000 yuan/mt. Many market participants believe that this price is relatively high for a large quantity transaction of 200 mt, instilling strong confidence in the market. After all, the current market is indeed facing a shortage of raw materials, and there is intense competition among manufacturers for these resources. The reduction and suspension of production by several manufacturers in the past two months further support this observation. Coincidentally, market rumors suggest that the tender for over 200 mt of crude bismuth from Shui Kou Shan has also been successfully concluded, with a bidding coefficient as high as 93.81. Market participants indicate that with such a high coefficient, the winning bid would be equivalent to a price of 56,286 yuan/mt. If a 5% quality surcharge is added and converted to refined bismuth, the price could reach as high as 63,000 yuan/mt. This calculation does not include other associated pricing factors, making the price astonishingly high. However, although the accuracy of this conversion method is questionable, the repeated successful bids in the recent bismuth market have brought significant confidence to the market.

Silver Nitrate

In August, the production of silver nitrate in China showed a slight decline MoM. The total production of qualified manufacturers with sales qualifications was 777 mt, which represents a 0.5% decrease MoM. According to market research, these manufacturers account for approximately 80% of the market share. Therefore, it can be estimated that the total production of silver nitrate in China in July was around 971 mt. The production of silver nitrate in the current month fluctuates due to various factors. One reason for the increase is the increased demand from downstream enterprises, as they engage in minor stockpiling ahead of the National Day holiday. According to SMM research, the demand from downstream sectors, including the photovoltaic industry, accounted for approximately 530 mt in August. The demand from traditional industries such as reagents, catalysts, imaging, and electrical alloy silver powder remained relatively stable, ranging from 100 to 200 mt per month. Starting from July and August, the market has been waiting for silver prices to fall to prepare for downstream stockpiling. In September, new enterprises in the downstream battery sector are expected to emerge, while some companies need to stock up for the National Day holiday. As a result, SMM predicts that silver nitrate production will remain steady in September.

Titanium Dioxide

According to SMM data, the production of titanium dioxide in China was 330,000 mt in August 2023. This represents an increase of 6.2% MoM but a decrease of 13.6% YoY. The cumulative production for the year reached 2.53 million mt, with a cumulative decrease of 3.2% YoY.

Following the conclusion of the World University Games, titanium dioxide manufacturers in the Sichuan region gradually resumed production. Influenced by the arrival of the traditional peak season, downstream manufacturers chose to stock up in advance, which increased the enthusiasm of titanium dioxide enterprises. As a result, the total domestic production of titanium dioxide increased by 20,000 mt MoM. Based on the current operating conditions of the companies, the titanium dioxide market has seen a recovery in orders MoM, and there is a shortage of supply for certain types of titanium dioxide. It is estimated that the domestic production of titanium dioxide in August will continue to grow, reaching approximately 340,000 mt.

APT

According to incomplete statistics from SMM, the production of APT in China in August 2023 was approximately 11,200 mt, representing an increase of 1.6% MoM.

In August, the weak demand for tungsten continued both domestically and internationally, and the APT market maintained a low inventory operation with a focus on essential purchases. Some smelters chose to shut down for maintenance during this period, which reduced the output of APT to some extent. In addition, as the tungsten price slightly increased in the context of a rising tungsten concentrate market in August, some APT refining enterprises followed the trend and raised their prices, which eased the inverted pricing situation. As a result, the production of some smelters increased. With fluctuations in both directions, the production of APT in August remained basically unchanged compared to July.

Entering September, the tungsten market will move out of the traditional offseason, and terminal consumption is expected to further recover with support from various policies. It is predicted that the production of APT may have a small increase this month.

Lithium carbonate

China’s lithium carbonate output stood at 45,022 mt in August, down 1% MoM, but up 51% YoY. In terms of spodumene-based smelters, some cut output due to raw material shortages, while others resumed production after maintenance or put new projects into operation, driving up the total output. In terms of lepidolite-based smelters, decline in externally sourced raw material and maintenance disrupted production. Regarding salt lake-based smelters, their production sustained growth, driven by seasonal factors. As for battery scrap-based smelters, some reduced production for upgrading production lines, while some who source raw material externally shut down due to losses, causing the total output to drop.

In September, even though new projects are ramping up production, the total output may decline as falling lithium carbonate price will keep smelters who source raw material externally in loss-making territory and force them to cut production. We see domestic lithium carbonate output at 42,154 mt in September, down 6% MoM and up 29% YoY.

Lithium hydroxide

China’ lithium hydroxide output stood at 25,352 mt in August, down 4.8% MoM and up 46% YoY. Lithium hydroxide inventories were stubbornly high. Downstream order pick-ups were slow amid sluggish demand for high-nickel battery, and demand showed little sign of significant improvement any time soon. Lithium hydroxide prices kept falling amid oversupplied market. The price inversion between lithium hydroxide and lithium carbonate persisted and even expanded, leaving lithium hydroxide smelters with no intention of increasing production. Some smelters have switched to production of lithium carbonate instead. We see domestic lithium hydroxide output at 25,059 mt in September, down 1.2% MoM and up 3.8% YoY.

Cobalt sulphate

In August, the production of cobalt sulphate in China was 7,402 mt in metal content, representing a 12% decrease MoM and a 15% increase YoY.
From January to August, the cumulative production of cobalt sulphate in China reached 57,085 mt in metal content, with a growth of 18% YoY. On the supply side, the downward trend in cobalt sulphate prices in August led to higher intermediate costs for raw material cobalt salt producers. Additionally, downstream purchasing demand has been weak since mid to late July, resulting in an overall decline in operating rates. Some companies have converted their cobalt sulphate production lines to produce cobalt chloride due to the higher metal price premium of cobalt chloride compared to cobalt sulphate. Recycling companies have faced difficulties in recovering black powder and maintaining high coefficients, leading to a decrease in production. On the demand side, the production of ternary precursors increased in August. However, major integrated precursor manufacturers rely mostly on self-supplied cobalt salts, resulting in weaker external demand. The downstream market has shown cautious sentiment, focusing on digesting previous inventories.
It is estimated that in September, on the demand side, the overall production of ternary precursors will decrease, leading to a decline in cobalt demand. On the supply side, integrated enterprises will see a decrease in operating rates due to weakened downstream demand. Production from smelters will decline due to difficulties in black powder recovery and temporary mismatches in intermediate products. Additionally, the Hangzhou Asian Games may have an impact on cobalt salt production in the Zhejiang region. The expected production of cobalt sulphate in September is 7,015 mt in metal content, representing a 5% decrease MoM and a 3% increase YoY.

Co3O4

In August, the production of Co3O4 in China was 6,898 mt, representing a 5% decrease MoM and a 40% increase YoY.
From January to August, the cumulative production of Co3O4 in China reached 48,115 mt, with a decrease of 2% YoY.
On the raw material side, the prices of cobalt intermediates and cobalt salts continued to decline in August, leading to weaker cost support and continuously lower transaction prices for Co3O4. On the demand side, LCO companies showed a strong cautious sentiment due to the downward trend in lithium cobalt prices, focusing on purchasing only essential needs. On the supply side, due to poor downstream orders and high inventories in some companies, there was an overall reduction in production for Co3O4 companies.
It is expected that in September, on the cost side, the price of cobalt salts will rebound in early September, providing stronger cost support for Co3O4. On the demand side, as new devices are gradually released at the end of August and in September, it will drive an increase in production for LCO companies, leading to higher demand for specific types of Co3O4. In addition, there may be some speculative buying in the downstream market due to the slight rebound in Co3O4. On the supply side, leading Co3O4 companies will increase production due to the incremental orders from new device releases. However, some companies may see a temporary reduction in orders for specific product models, resulting in stable but slightly increased overall Co3O4 production. The expected production for September is 6,918 mt, representing a 0% increase MoM and a 6% increase YoY.

Ternary cathode precursor

In August, the production of ternary cathode precursor in China was 81,918 mt, an increase of 4% MoM and a 2% increase YoY.
From January to August, the cumulative production of ternary cathode precursor in China reached 528,072 mt, with a 4% increase YoY.
In August, there was an overall increase in the driving force for ternary cathode precursor in China. The prices of nickel-cobalt raw materials remained low, leading to some companies building up their inventories. Leading battery manufacturers increased their self-supply of precursor materials, resulting in reduced outsourcing volume for some ternary cathode precursor companies. Additionally, the low-price strategy of some ternary cathode precursor companies proved effective, leading to an increase in downstream orders and a rise in production rates.
In September, both domestic and international demand for ternary cathode materials showed poor performance. Uncertainty in lithium prices led to cautious procurement in the downstream market and a pessimistic outlook. Leading domestic precursor manufacturers reduced their inventories, and high-nickel production decreased significantly. Overseas demand for ternary cathode materials continued to weaken, resulting in a noticeable decline in production for companies with a large export proportion of ternary cathode precursor. Furthermore, due to the expectation of the National Day holiday, some precursor material factories advanced their production scheduling to September. Overall, the production of ternary cathode precursor in China in September was 78,270 mt, representing a 4% decrease MoM and an 11% decrease YoY.

Ternary cathode materials

In August 2023, the production of ternary cathode materials in China was 56,167 mt, a slight decrease of 1% MoM and a 4% decrease YoY. In terms of demand, the power market in China showed a stable and modest growth, while overseas demand continued to be weak. In the digital market, due to stable end-consumer demand and the continuous decline in raw material prices, there was a small decrease in orders. Overall, the demand side showed a weak and stable trend, resulting in a slight decline in ternary cathode materials production and a stronger effect on leading companies, with divergent trends in production rates between large and small enterprises. Entering September, the further weakening of overseas demand and clear signals of reduced high-nickel production have had an impact. There is no significant expectation of increased demand in the domestic power and digital sectors, coupled with the continuous decline in raw material prices and a weak outlook for increased demand in the future. Battery companies are cautious in stocking ternary cathode materials, prioritizing inventory digestion, which also implies a downward trend in mid-nickel production. In September 2023, the production of ternary cathode materials in China was 52,867 mt, a 6% decrease MoM and a 22% decrease YoY.

From January to August 2023, the cumulative production of ternary cathode materials in China was 400,607 mt, a slight increase of 1% YoY.

Iron phosphate

In August, China's iron phosphate production reached 121,700 mt, with a decrease of 0.2% MoM and an increase of 59.8% YoY. The cumulative year-on-year growth stood at 91%. In terms of the market, lithium carbonate prices declined in August, leading LFP enterprises to reduce raw material purchases and focus on inventory digestion. As a result of decreased procurement activity by LFP enterprises, the demand for iron phosphate was suppressed, resulting in a slight decline in production and sales compared to July. On the cost side, production costs increased in August. The prices of phosphoric acid and industrial-grade ammonium phosphate, as well as other auxiliary materials such as hydrogen peroxide, rose. Overall, costs increased slightly by 400-500 yuan/mt. In September, with high production costs, the enthusiasm for iron phosphate production weakened, and production plans were arranged according to orders. Additionally, new production capacities that came online in the first half of the year will contribute a small amount of incremental output. It is estimated that in September 2023, iron phosphate production will reach 127,000 mt, with an increase of 4.4% MoM and an increase of 41.2% YoY.

LFP

In August, China's LFP production reached 130,790 mt, with a decrease of 5.8% MoM and an increase of 44.5% YoY. The cumulative year-on-year growth stood at 53.2%. On the cost side, the price of the main raw material, lithium carbonate, continued to decline, while the price of iron phosphate slightly increased at the end of the month, resulting in a decrease in production costs. On the supply side, due to the decline in lithium carbonate prices, battery manufacturers extended their delivery times. LFP enterprises reduced production and prioritized inventory digestion, leading to a decrease in overall supply. On the demand side, battery manufacturers and the entire downstream sector showed a cautious attitude, refraining from buying in the face of price declines and waiting for lithium carbonate prices to stabilize before making purchases. In September, the downstream and terminal supply and demand are expected to remain relatively flat, with leading companies possibly accepting orders at lower prices to gain market share. It is estimated that in September 2023, LFP production will reach 138,940 mt, with an increase of 6.2% MoM and an increase of 24.0% YoY.

LCO

In August, China's LCO production reached 6,796 mt, with an increase of 2% MoM and an increase of 20% YoY. On the supply side, there was a slight increase in LCO cathode supply from July, mainly due to the ramp-up of production capacity from a leading cathode company, while other LCO companies saw slight decreases or maintained stability in output. The digital terminal market continued to perform weakly in August, leading to fewer and more frequent orders for battery manufacturers, who sought to lower their raw material inventory risk as much as possible. In response to poor demand, cathode material factories cleared inventory at reduced prices to secure more downstream orders and maintain sales volume. At the end of August, the temporary release of a new terminal model increased market activity and attention, resulting in increased orders for LCO battery companies and cathode factories. As there are still new models expected to be released in September, a small boost in demand for digital consumer products is anticipated, along with a further increase in production schedules. It is estimated that LCO production in September will reach 7,418 mt, with an increase of 9% MoM and an increase of 6% YoY.

LMO

China’s LMO output stood at 8,041 mt in August, down 20% MoM and up 41% YoY. Orders for LMO were sluggish as falling lithium carbonate price kept downstream LMO battery makers cautious about raw material purchase, with transactions being limited and driven by essential needs. Most LMO plants have priced in perceived decline in future lithium carbonate price when making quotes to buyers. A handful of small and medium-sized LMO plants who were unable to bear losses closed for over half a month.

Downstream enterprises normally start stocking up in September in preparation for Singles’ Day shopping festival (November 11), but this year might see a somehow different picture since a majority of battery makers will try to avoid excessive inventory amid volatile lithium carbonate price. There is a general pessimistic view towards demand outlook for September, with very few producers planning to ramp up production. We see domestic LMO output at 6,887 mt this month, down 14% MoM, but up 15% YoY.