SMM Exclusive: China's Metals Output In September And Forecast For October

SHANGHAI, Oct 11 (SMM) –

Copper cathode

China's copper cathode output in September was 1.01 million mt, an increase of 23,000 mt or 2.3% month-on-month, and a growth of 11.3% year-on-year. The output increased 25,900 mt compared with the expected 986,100 mt. The cumulative output from January to September was 8.4861 million mt, an increase of 874,800 mt year-on-year, an increase of 11.49%.

Although four smelters undertook maintenance in September, the overall impact was not significant. We believe that there are several reasons for the higher-than-expected production in September: 1. Several smelters slightly reduced operating rates due to the National Day holidays in October and they rushed to produce in September; 2. The production capacity of several smelters in Shandong and north-west China was released, and the output increase was significant. 3. The commissioning of a new smelting plant in east China also contributed to part of the output growth. Domestic blister copper supply tightened in September as the price spread between copper cathode and copper scrap shrank. This was also reflected in the decline in RCs of blister copper. According to the latest statistics from SMM, as of end-September, the average RC of blister copper in the south was 850 yuan/mt, a drop of 100 yuan/mt from the beginning of September. Therefore, some smelters reduced output. The average operating rate of copper cathode industry rose 2.19 percentage points month on month to 94.21% in September.

In October, according to SMM statistics, three smelters have maintenance plans, and the operating rates of many smelters in October will be slightly lower than that in September due to holiday factors. Therefore, we believe that the output in October will decrease slightly to less than 1 million mt. According to the production schedules, SMM predicts that the domestic output of copper cathode in October will stand at 996,000 mt, a decrease of 16,000 mt or 1.58% from the previous month, but a year-on-year growth of 10.5%. The accumulated output from January to October is expected to stand at 9.48 million mt, an increase of 11.39% or 969,600 mt year on year. SMM understood that three smelters started production in October, but only one of them actually yielded output. The other two will not yield output until November. Therefore, we expect that domestic copper cathode production will return to more than 1 million mt in November.

Aluminium

According to SMM statistics, China's domestic aluminium production for September 2023 was 3.523 million mt, up 5.5% YoY. The average daily production of aluminium in September rose by 554 mt MoM, reaching approximately 117,400 mt. From January to September 2023, China's cumulative aluminium production reached 30.822 million mt, up 3.13% YoY. In September, operations for domestic aluminium billet plants and other downstream enterprises who use molten aluminium remained stable overall, with the alloying ratios in some plants showing an upward adjustment. The proportion of domestic molten aluminium output increased by 0.4% MoM and 4.9% YoY to around 73.2%. According to SMM's molten aluminium ratio data, the volume of domestic aluminium ingots in September was down by 10.9% YoY. From January to September 2023, the total volume of domestic ingots was about 9.12 million mt, down 12% YoY.

In September, there was a slight increase in China's operating capacity for aluminium. This was mainly due to the ongoing commissioning of capacity transfer projects in regions such as Yunnan and Guizhou. Only a few companies underwent minor maintenance, and capacity changes in other regions were minimal.

According to SMM statistics, China's installed capacity for aluminium stood at about 45.19 million mt as of the end of September. This includes capacities that have been built but not yet operational, and capacities that have not yet been phased out. The operating capacity for aluminium in China rose to around 42.94 million mt. The national operating rate for aluminium smelters was about 95%, an increase of 0.3 percentage points MoM.

As we move into October, significant fluctuations in China's aluminium supply are not anticipated. The concentrated resumption of production has been largely completed, and larger resumptions are not expected within the year. The capacity awaiting resumption is mainly in regions like Liaoning, Yunnan, Guizhou, and Sichuan, totaling around 1.29 million mt. However, most of these do not have the conditions for a quick resumption, with other capacities are under construction or being idled due to a lack of quotas.

Currently, the aluminium industry is profitable, with many companies focusing on maintaining stable production and not planning short-term voluntary reductions. Additionally, hydropower supply is stable in areas like Yunnan, so the province's aluminium production is expected to remain steady in the short term.

Considering capacity changes in other regions, SMM predicts that by the end of October, the total aluminium operating capacity in China may stabilize at around 42.95 million mt. The total aluminium production in October (31 days) may reach about 3.64 million mt, an increase of 6.7% YoY. It remains crucial to continuously monitor the electricity situation in the southwest and other regions, as well as the operations of aluminium companies.

Alumina

According to SMM data, China's production of metallurgical-grade alumina in September (30 days) was 6.732 million mt, with an average daily production of 224,400 mt, down 2,000 mt/day MoM. This decrease was mainly due to a part of the production capacity in Guangxi being shut down because of ore supply shortage. Maintenance at some alumina plants in Shandong and Shanxi also affected overall operating rates, leading to a decrease in average daily production in September compared to August. Compared to August, total production in September fell by 4.1% MoM. However, alumina production in September increased by 0.4% YoY. As of the end of September, China's installed capacity for alumina was 100 million mt, with an operating capacity of 81.9 million mt, and a nationwide operating rate of 81.9%. From January to September, China's cumulative alumina production was 59.422 million mt, up 2.0% YoY.

In the Shanxi region, the overall operating rate in September was 72.8%, slightly down by 0.4% MoM. This decline was mainly due to line maintenance at some alumina factories, affecting an annual capacity of 550,000 mt. However, a new capacity of 500,000 mt from a Shanxi alumina factory reached full production in September.

In the Henan region, the overall operating rate in September was 72.7%, up by 3.8% MoM. This increase was largely driven by some alumina factories that use imported or a mix of imported and domestic ores, which ramped up their production in September due to improving profit margins.

According to SMM's research, mines in the Sanmenxia area remain halted with no short-term expectations for production resumption.

In the Guizhou region, certain alumina factories maintained low production due to ore supply instability, keeping the provincial operating rate steady at 81.6% in September.

In the Hebei region, the operating rate in September reached 87.5%, up 4.2% MoM. This was mainly due to some alumina factories in Hebei resuming production in September after August maintenance, affecting a capacity of 500,000 mt, which led to a rise in production.

In the Guangxi region, the operating rate decreased from 92.0% in the previous month to 89.0%. This was primarily due to an alumina factory ceasing production for 10 days due to tight ore supply, affecting an annual capacity of 330,000 mt, and some other companies undergoing maintenance in September, affecting an annual capacity of 250,000 mt.

In the Shandong region, the provincial operating rate fell from 94.4% in August to 90.9% in September. This was mainly due to a large alumina factory in Shandong undergoing maintenance in September that affected an annual capacity of 1 million mt, but it has now resumed normal production.

Forecast:

In the upcoming month, the Guangxi region is set to partially recover its previously halted production capacity, albeit at a slow pace. However, due to planned maintenance in October, a slight decrease in total output is anticipated.

In Henan's Sanmenxia area, there are no immediate plans for mine resumption, hence the ongoing ore supply deficit is expected to continue limiting some capacity, with no significant MoM change.

Companies in Shanxi, which were under maintenance in September, resumed operations in early October. However, rising costs in alumina ore and caustic soda may impede further production increases. In contrast, all companies in Shandong and Hebei that underwent September maintenance have resumed production.

Therefore, SMM predicts that the daily average alumina production in October will be 227,000 mt/day, and the total operating capacity is projected to be about 83.02 million mt, up 5.6% MoM.

Primary lead

In September 2023, the domestic output of refined lead was 315,900 mt, a drop of 0.94% month-on-month but up 7.04% year-on-year. The cumulative output from January to September 2023 increased by 16.45% year-on-year. Total production capacities of enterprises in the survey totalled 5.84 million mt in 2023.

According to the survey, the production of most refined lead smelting enterprises in September did not change much compared with August. Only a few large smelting enterprises had production changes. There were large enterprises in Henan recovering after maintenance, while smelting enterprises in Henan and Inner Mongolia undertook maintenance. Therefore, the increase and decrease in production in September were roughly balanced. The supply tightness of lead concentrate has intensified due to the starting of stockpiling for winter production, and TCs were lowered further. Some smelting companies in Yunnan, Hunan and other places experienced a shortage of raw materials, and their actual output was lower than the planned amount in September.

In October, medium and large lead smelting companies in Yunnan and Jiangxi are undergoing maintenance. At the same time, many smelting companies in Henan and Inner Mongolia resumed production after maintenance. It is expected that refined lead output will grow in October. The weather in the north has turned colder, and the difficulty of mining lead concentrates in high-altitude areas will increase. In addition to factors such as transportation, the supply of lead concentrates in the market will become increasingly tight. Against this background, the TCs of imported lead concentrate have been gradually lowered recently. The SMM TCs of domestic lead concentrate in October were 800-1,100 yuan/mt with metal content, and the TCs of Pb 60% imported lead concentrate were $30-50/dmt. Output at refined lead smelters is likely to fall short of expectations due to raw material shortages. SMM expects China's refined lead output to increase to 324,000 mt in October.

Secondary lead

The output of secondary lead in September 2023 was 458,200 mt, an increase of 9.91% from August and up 42.34% year on year.The cumulative output of secondary lead from January to September 2023 was 3.3645 million mt, an increase of 7.81% year on year. In September 2023, the output of secondary refined lead was 401,900 mt, an increase of 12.01% from August, and a growth of 35.46% year on year; from January to September 2023, the cumulative output of secondary refined lead was 2.93 million mt, an increase of 7.47% year on year.
According to SMM survey, many secondary lead smelters increased production in September; secondary lead companies whose output declined due to routine maintenance and equipment failures in August basically recovered in September; some secondary lead smelters that had been suspended for a long time resumed production, and newly-built production capacity was commissioned. Although some companies in Anhui, Henan and other regions reduced production during the month due to raw material shortages, environmental protection-related control during the Asian Games and equipment failures, the increase in production in September was still in line with expectations.
Entering October, the newly built refined lead capacity of a smelter in Shanxi gradually stabilised after being put into operation, and a large smelter in Jiangxi contributed more output growth after resuming production. Although some medium and large smelters have maintenance plans, secondary lead production may still increase in October. SMM expects China's secondary refined lead output to stand at around 420,800 mt in October.

Refined zinc

In September 2023, China's refined zinc output was 544,000 mt, a growth of 17,400 mt or 3.31% month on month, and a year on year increase of 7.94%, below our expectations. From January to September, the cumulative output of refined zinc stood at 4.85 million mt, a year on year increase of 9.84%. Domestic zinc alloy production in September was 88,200 mt, an increase of 2,000 mt from the previous month.

Longer-than-expected maintenance at smelters in Inner Mongolia and Gansu as well as delayed production resumption in Sichuan and Hunan resulted in significantly lower-than-expected output. The recovery of smelters in Inner Mongolia, Hunan and Yunnan after maintenance contributed to most of the output growth.

SMM predicts that domestic refined zinc production in October 2023 will increase by 50,300 mt from the previous month to 594,200 mt, a year-on-year increase of 15.59%; the cumulative output from January to October will reach 5.442 million mt, an increase of 10.44%. Except for a small number of enterprises in Hunan that were shut down for maintenance, smelters in other regions basically maintained normal production, with output increasing significantly. In November, except for the maintenance of some smelters in Yunnan, smelters will maintain normal production, and the overall output is expected to remain high.

Refined tin

According to SMM research, domestic refined tin production in September stood at 15,430 mt, up 45.28% MoM and 2.2% YoY. The cumulative output from January to September was 122,170 mt, an increase of 4.36% YoY. Domestic tin ingot production rebounded significantly in September. The growth was mainly brought by the resumption of a large smelting enterprise in Yunnan after maintenance. Most smelting companies that mainly use scrap tin as raw materials maintained stable production, except for several companies with minor output changes.

Entering October, a smelting company in Yunnan may cut tin ingot production amid tin ore procurement issue. In addition, the production of two smelting companies in Jiangxi dipped slightly due to the National Day holiday. But most maintained stable production during the holiday. In September, there was barely any imported tin ore from Wa State, Myanmar. Domestic buyers purchased some tin ore from southern Myanmar. Although the technical transformation of Yinman Mining Co., Ltd. afflicted to Inner Mongolia Xingye Silver & Tin Co., LTD. may bring tin ore increase, if the mining ban in Myanmar's Wa State extends, domestic tin ore supply could tighten further.

Refined nickel:

Chinese refined nickel output totalled 22,100 mt in September, up 1.4% MoM and 43.18% YoY, hang onto August’ increase, in line with expectations. The gain in output was largely pinned on a continuous rise in newly added electrowinning nickel capacity, a north-west China-based smelter’s production ramp-up and demand recovery.

October will witness an estimated refined nickel output of 22,800 mt, up 2.94% MoM and 48.05% YoY, driven by a north-west China-based smelter running at full capacity and production ramp-up of a south China-based smelter. Electrowinning nickel output will probably be in an upward spiral in the second half of 2023.

China NPI

China’s NPI output was 34,500 mt in nickel content and 790,000 mt in physical content, down 1.13% MoM, but output in metal content was up 9.61% YoY. Since Indonesia delayed issuance of nickel ore quotas in August, nickel ore prices have remained high. In addition, tight nickel ore supply during the year and cost support lingered. While demand weakness from stainless steel was reported amid fallout of macro sentiment, thereby tipping domestic NPI producers into mild production cuts. In detail, September saw high- and low-grade NPI output at about 27,300 mt in Ni content and 7,200 mt in Ni content respectively, down 0.49% MoM and 1.31% MoM.

It is estimated the Chinese NPI output in October will be 34,000 mt in nickel content, down 1.44% MoM. According to SMM research, sustained weakness in demand from stainless steel, defying expectations of a peak season in September and October, offered few supports for high NPI prices. Furthermore, nickel ore prices remained elevated. Under such circumstance, NPI producers suffered narrowing profits.

Indonesia NPI:

In September 2023, Indonesia's NPI output was 120,200 mt in nickel content, up 2.65% MoM and 19% YoY, bringing total output in 2023 so far to 1.0033 million in nickel content, up 19.8% YoY. As of early October, Indonesia's review of nickel ore quotas and illegal nickel mining continued. Nickel ore supply crunch in Indonesia lingered. Although output of high-grade NPI in physical content of some local makers hiked, their nickel grade crept down. As high prices of high-grade nickel matte deterred buyers, some producers switched to NPI production in September, thereby pushing up high-grade NPI production in Indonesia. Projected Indonesia's NPI output in October will be 120,100 mt in nickel content, down 0.1% MoM, but up 13.6% YoY.

Nickel sulphate

In September 2023, China’s output of nickel sulphate was 37,000 mt in metal content, or 168,000 mt in physical content, down 12.89% MoM and 11.02% YoY. The main reason for the sharp decline in nickel sulphate production is that poor demand prevented nickel sulphate prices from rising while MHP prices rose due to short supply, which caused nickel salt manufacturers to suffer losses. Although the order volume of downstream precursor plants improved in September compared with August, they found high-priced nickel sulphate hard to accept as their profit situation was poor. Due to the drop in nickel prices, the price difference between nickel sulphate and refined nickel shrank. As a result, refined nickel smelters slowed down purchasing nickel sulphate.

In October, raw material shortages are expected to persist, which could sustain gains in raw material prices. Demand has not improved significantly. In this context, nickel sulphate output is expected to continue to decline, falling 3% from September.

Battery-grade manganese sulphate

China produced 22,000 mt of high-purity manganese sulphate in September, up 13.4% MoM. The increase in the production was mainly due to two factors. One was that more ternary precursor producers picked up high-purity manganese sulphate ahead of the Mid-Autumn Festival and the National Day holiday, resulting in an increase in scheduled production of high-purity manganese sulphate makers. The other one was that higher operating rate of high purity manganese sulphate producers to improve safety stocks, given low inventory of low-priced high purity manganese sulphate. In a word, the operating rates of most high-purity manganese sulphate makers increased in September.

With a significant drop in inventory for two consecutive months, most high-purity manganese sulphate producers will be willing to keep operating rate high in October. At the same time, bolstered by typically year-end production rush to be seen in November, ternary precursor makers will have more demand for high-purity manganese sulphate in October. It is expected that high-purity manganese sulphate output in October will be 25,500 mt in physical content, up 15.91% MoM.

Electrolytic manganese dioxide

SMM data showed that Chinese electrolytic manganese dioxide (EMD) output was 14,700 mt (including 400 mt for LMO battery, 9,700 mt for alkaline manganese battery, and 4,500 mt for zinc-carbon battery) in September, down 7.85% MoM, but up 13.7% YoY. EMD output in the first nine months of 2023 stood at about 139,900 mt, down 38.14% YoY. The decrease in EMD production mainly occurred in EMD for LMO battery. The main reason is that production of LMO cathode materials shrank sharply amid tepid trading sentiment. In addition, high costs unfolded. Under such circumstance, demand for LMO appeared muted. In contrast, the output of EMD for alkaline manganese battery and zinc-carbon battery hiked, largely pinned on battery factories picking up more goods due to the holidays.

Entering October, despite primary battery market heading into a peak season, limited demand for EMD will probably be reported under the sway of macro sentiment. Meanwhile, some EMD producers resumed operation. EMD output in October is projected to be about 15,400 mt.

Mn₃O₄

SMM data showed that in September 2023, Chinese Mn₃O₄ output was 9,400 mt (including 4,900 mt of electronics-grade Mn₃O₄ and 4,500 mt of battery-grade one), up 15.12% MoM, but 35.78% YoY. Mn₃O₄ output in the first nine months of the year stood at about 94,900 mt, down 16.34% YoY. The output of electronic-grade and battery-grade Mn₃O₄ both increased. Underpinned by a peak season and replenishing demand for the holiday, electronics-grade Mn₃O₄ producers obtained more orders. The increase in battery-grade Mn₃O₄ output mainly stemmed from the fact that leading LMO makers increased the proportion of Mn₃O₄ used. Furthermore, newly added capacity of some Mn₃O₄ producers was hiking.

Given bearish LMO market, some Mn₃O₄ producers carried out maintenance during the holiday. Therefore, October will witness shrinking battery-grade Mn₃O₄ production and stable electronic-grade one. Mn₃O₄ output in October is expected to be 8,400 mt.

High-carbon ferrochrome

Chinese high-carbon ferrochrome output was 652,300 mt in September, up 1.54% on the month, and 7.82% on the year. The output in Inner Mongolia was 405,000 mt, up 1.33% MoM, and that in Sichuan stood at 47,000 mt, up 42.42% MoM. September witnessed higher bid price and robust demand from stainless steel mills with high scheduled production, giving ferrochrome producers great incentive to keep production high. Abundant rainfall and ample hydropower supply led to higher high-carbon ferrochrome output in Sichuan. In Hunan, Guizhou, and Guangxi, factors, like high electricity charges at peak power times and previously insufficient procurement of chrome ore, elevated prices of raw materials and a weakening of spot prices, put most ferrochrome producers on staggered production for 8-16 hours. The operating rate in Inner Mongolia stood high, and barely grew in the absence of new capacity.

The output of high-carbon ferrochrome in October is expected to be 626,000 mt, slightly lower than that in September. Suppressed by weaker-than-expected demand in a peak season, stainless steel prices crept down, leading to producers to suffer losses, and news of stainless steel production cuts were frequently reported. Under such circumstance, slumping demand for high-carbon ferrochrome will probably be reported. South China-based ferrochrome plants will see insufficient inventory of raw materials. In addition, chrome ore spot prices will remain elevated. Market sentiment will appear bearish. Therefore, some south China-based ferrochrome plants are more likely to cut productions. Thanks to cost advantage in the north, large manufacturers were not yet in losses. Furthermore, it will be difficult to restart production after shutting down in winter. It is expected that the high-carbon ferrochrome output in north China may remain stable.

Stainless steel

According to SMM survey, the domestic stainless steel output totalled 3.222 million mt in September, up 0.47% MoM and 16.76% YoY. The output of 200-series stainless steel fell 0.42% MoM to 952,000 mt, 300-series dropped 1.14% MoM to 1.644 million mt, and 400-series hiked by 7.38% MoM to 626,000 mt.

In early September, with a big bulge in stainless steel prices amid Indonesia’s delay in issuance of nickel ore quotas, stainless steel plants carrying high expectations for a peak season scheduled high production. Therefore, high production remained for several consecutive months. However, actual demand was weak in September. Under such circumstance, spot supply overhang occurred, tipping spot prices into a rapid drop. Robust nickel raw material prices were reported. Therefore, loss-making stainless steel mills turned to maintenance and production cuts. In addition, owing to heavy rains and other unexpected reasons at some South China-based mills, the actual production in September was about 100,000 mt less than the original schedule, with most of the reduction being 300 series stainless steel. Underpinned by normal operating rate of downstream sectors amid stable industrial demand, 400 series stainless steel production mounted, in spite of rising nickel raw material prices.

In October, in-plant and social inventory will remain high. Furthermore, demand sluggishness and limited downward space for high-grade NPI prices will lead to prolonged stainless steel price erosions before and after the Mid-Autumn Festival and the National Day holiday, leaving agents with weak willingness to pick up goods. Therefore, stainless steel mills will suffer serious losses. One leading stainless steel mill in East China may take the lead in reducing production. And more production cutbacks of stainless steel plants are expected to be monitored.

EMM

China produced 80,900 mt of EMM in September, down 2.61% MoM and 103.56% YoY, according to SMM statistics. EMM output in the first nine months of 2023 was some 776,700 mt, up 30.9% year-on-year. September saw stable scheduled production at most EMM plants and restart of some EMM plants from maintenance. However, two south China-based EMM producers’ production cutbacks and halts were cited as a major factor fuelling the drop in EMM output in September. On the demand side: Rising output of crude stainless steel in China was reported in September and replenishing demand was monitored during the National Day holiday. Therefore, there were more demand from steel mills. However, given EMM spot and futures prices, EMM was still lack of advantages among raw material buyers. EMM market was under pressure amid rigid demand from downstream sectors.

In October, an industry meeting decided that EMM prices will fluctuate along with market changes, members shall operate only 70% of their capacity each month. If the production is carried out throughout the month, then the goods produced for 9 days will be delivered to the public warehouses, with transaction prices of 9,000 yuan/mt. According to scheduled production of EMM plants, EMM supply in October is expected to be approximately 97,600 mt.

Silicon metal

According to SMM statistics, China's silicon metal production in September was 356,300 mt, up 11% on the month and 10.2% on the year. The total output was 2.6552 million mt in the first nine months of 2023, up 3.52% year-on-year.

According to SMM data, above-standard 553# silicon metal prices in East China were 15,400 yuan/mt on September 28, an increase of 2,500 yuan/mt, or 19%, from July 30. Losses-generated silicon metal production cuts in May-July led to destocking in the industry. In addition, active demand from polysilicon persistently pushed up silicon price in August-September. Under such circumstance, with higher profits, more silicon plants, most notably in north China, resumed operation from maintenance. The biggest increase in domestic silicon production in September was monitored in Xinjiang, Sichuan, Shaanxi and Inner Mongolia. The operating rate of large silicon plants in Xinjiang hiked, but the overall growth rate was in a slow pace. Xinjiang GCL started operations at eight new furnaces with 33,000KVA capacity for each. Most production areas showed output increases in September.

The operating rate during the rainy season in Sichuan and Yunnan reached its annual high level. By the end of October, it will transition from the rainy season to normal water level season. Silicon producers will keep operation normal in October. There will still room for operating rate to move up in north China, while operation resumption will partially occur in south China, like Guangxi. Therefore, domestic silicon production will continue to pick up in October.

Polysilicon

In September, China's actual polysilicon production reached 135,000 mt, up 3.7% MoM. Production fell short of expectations due to an unexpected explosion in Inner Mongolia and equipment failures in certain factories, while inventory remained relatively low. In October, with the resolution of equipment issues in key enterprises and the initiation of new production lines, polysilicon production is forecasted to significantly increase to 148,600 mt.

PV module

SMM data reveals that China's PV module production in September was approximately 47.78GW, down 5.27% MoM. The profitability of photovoltaic modules has not significantly improved, with third- and fourth-tier companies still burdened by losses. Consequently, some smaller factories opted to cut down or halt production, leading to a drop in September's expected production. In October, the operational rates of small factories are unlikely to change significantly, with the increase primarily attributed to first- and second-tier companies. Notably, one first-tier company is expected to contribute an increase of nearly 1 GW.

Solar cell

In September, China’s solar cell production was 52.60 GW, up 6.99% MoM. The planned production for September was 57.83 GW, up 15.61% MoM. 25 enterprises have commenced mass production of Topcon solar cell, with the estimated production of Topcon solar cells in September reaching 16.46GW. The supply proportion of type-N solar cell has surpassed 30%. From a supply-demand perspective, the total solar cell supply has overcome the most acute shortage experienced in July and August. Post-September, with the increased production of type-N solar cell, the proportion of type-N cells in modules will also rise, consequently reducing the demand for type-P solar cell.

PV glass

SMM data reveals that the total production of PV glass in China in September was 2.16 million mt, down 3.42% MoM. In September, China's production capacity expansion slightly increased, with the pace of new capacity ramp-up proving satisfactory. However, due to fewer days in September compared to August, total output for September saw a slight decline MoM. With three new furnaces ignited in September, future production volume growth is anticipated. In October, it is expected that some newly added production lines will achieve full production.

DMC

According to SMM, China's DMC production in September was approximately 186,300 mt, up 5.61% MoM, demonstrating a steady production rise. In September, some domestic DMC companies completed maintenance and resumed operations, leading to a partial recovery of the overall industry operations. Improving profit of DMC in September bolstered companies' willingness to resume operations. In October, domestic DMC companies' operating rates are expected to show mixed trends, but the overall trajectory is likely to be a slight increase, with October's production anticipated to display steady growth.

SiMn alloy

Chinese SiMn alloy output stood at 987,400 mt in September, up 1.85% on the month and 36.61% on the year, SMM data showed. SiMn alloy output in the first nine months of 2023 stood at about 8.498 million mt, up 12.5% year-on-year. A big part of the reason behind the gain in output in September was rising operating rate in southern China, such as Guangxi, Guizhou, Yunnan and other regions, though the overall output was little changed in north China. Moderate bids from steel mills and positive news-aided SiMn alloy futures price uptick explained for the rising operating rate.

Notwithstanding restart of some furnaces from maintenance, SiMn alloy output was under greater pressure stemming from energy consumption restrictions in Pingluo and Shizuishan. Therefore, the overall SiMn alloy production in October is projected to be stable at about 992,400 mt.

Magnesium ingot

According to SMM data, China's magnesium ingot output stood at 53,000 mt in September, 2.4% MoM and 35% YoY, bringing total output in the first nine months of 2023 up to 538,000 mt, down 26% YoY.

September saw production cuts and halts of magnesium plants in main production area amid equipment issue. Currently, there was no relevant resumption-related documents. The production cuts will linger. Aside from policy factor, maintenance of a few magnesium ingot plants in the main production areas was also responsible for the drop in magnesium ingot output. The plants already resumed normal operation. Current inventory of magnesium plants in the main production areas shrank to a safe level. With forthcoming peak season in Q4, magnesium ingot production in other regions is expected to hike. An estimated domestic magnesium ingot production will increase to 55,000 mt in October.

Magnesium alloy

According to SMM data, China's magnesium alloy output was 26,000 mt in September, down 0.8% MoM and 5.7% YoY, bringing total output in the first nine months of 2023 up to 235,000 mt, up 0.5% YoY.

Weighed down by sluggish foreign trade demand, fraught competition among magnesium alloy sellers appeared in September. Low magnesium alloy prices caused a few magnesium alloy producers to switch to magnesium ingot production. October will see weaker-than-expected order intakes in domestic magnesium alloy market. Given that magnesium alloy plants will schedule their production based on their sales, magnesium alloy output in October is expected to remain around 27,000 mt.

Magnesium powder

According to SMM data, China's magnesium powder output was 5,100 mt in September, down 2.1% MoM, bringing total output in the first nine months of 2023 up to 49,000 mt.

Prolonged production cuts at some magnesium plants, triggered by safety supervision issues in the north, kept the overall operating rate of magnesium power market low. The person in charge of a large magnesium powder company said that downstream buyers were reluctant to accept current magnesium powder prices amid high price of magnesium ingots and weak profits of steel mills. Upcoming replenishing demand from outside China will probably bring with a mild pick-up of magnesium powder market. It is expected that domestic output of magnesium powder in October will inch up to 5,300 mt.

Pr-Nd oxide

In September 2023, domestic production of Pr-Nd oxide was 6,317 mt, a month-on-month increase of 3.8%, among which the output in Sichuan and Guangdong saw substantial growth. Output in other regions showed minor changes from August.

According to SMM research, factories in Sichuan that were suspended in August due to the Universiade had basically resumed normal production in September. Local production of Pr-Nd oxide increased by approximately 28% MoM. In Guangdong, separation plants who were previously disrupted by equipment problems had basically resumed normal production. Local production of Pr-Nd oxide rose by approximately 28.6% MoM.

Pr-Nd alloy

In September 2023, domestic Pr-Nd alloy production stood at 5,400 mt, a month-on-month increase of 3%. The output growth in Zhejiang and Sichuan was relatively prominent, while that in other regions was basically unchanged from August.

According to SMM, due to the increase in purchases by downstream magnetic material companies, Pr-Nd alloy plants correspondingly increased their operating rates. The month-on-month growth rate of Pr-Nd alloy output in Zhejiang was approximately 12%. While orders were climbing in Sichuan, the production reduction and shutdown of some alloy plants caused by the Universiade also ended, lifting output by 15.5% MoM. Downstream magnetic materials companies reported that downstream order volume was rising after the National Day. It is expected that the output of Pr-Nd alloy will rise on a monthly basis in October.

Dysprosium oxide

In September 2023, domestic dysprosium oxide output was 219 mt, a month-on-month increase of 1%, with the growth primarily contributed by Guangdong.

According to SMM, as the operations of separation plants in Guangdong further recovered and orders gained in September, local dysprosium oxide output increased by 9% MoM.

Terbium oxide

In September 2023, domestic terbium oxide output stood at 45 mt, a month-on-month increase of 3.8%, among which Guangdong and Guangxi witnessed a large MoM growth.

According to SMM statistics, the production of separation plants in Guangdong further resumed, and terbium oxide output in September rose by approximately 8% MoM. Plants in Guangxi also increased production due to the rising order volume, with output up 29% MoM.

Molybdenum concentrate

According to SMM statistics, China's molybdenum concentrate output in September was some 17,500 mt, up 0.7% MoM. At this stage, high operating rate of molybdenum concentrate mines was felt from impact of strong demand from downstream molybdenum-containing steel products and big profits. In addition, domestic molybdenum mines, according to SMM survey, will have few plans of maintenance or production reduction in October. High molybdenum concentrate output is expected to remain this month.

Ferromolybdenum

SMM data showed that Chinese ferromolybdenum output dipped 4% MoM to 16,200 mt in September. The main recipe for the drop was some production cuts or shut-down for regular one-to-two-week maintenance.

Bolstered by replenishment demand from steel mills before the National Day holiday, most ferromolybdenum smelters will extend their scheduled production into mid-to-late October. Furthermore, the smelters’ raw materials appeared ample. Therefore, there will be high likelihood of stable ferromolybdenum output in October. In addition, stainless steel production reduction starting October will exert negative impact on ferromolybdenum market, but to a limited extent.

Silver

According SMM statistics, 1# silver output stood at 1,353.609 mt (including 994.609 mt of mineral silver), down 2.5% MoM and 5.5% YoY. The drop was pinned on two things. One was that there was shutdown of a few silver plants for maintenance. The other one was that high prices of crude silver and recycled silver-containing scrap were reported with high silver prices. Buying appetites for silver in September was muted after some companies purchased large quantities of silver in August. It is expected that there will be more raw materials in October and the output will rebound. There were also some silver producers increasing output for three reasons. The reasons were: 1 Mining companies were relatively active in shipping because of high prices; 2 The silver content in raw materials appeared volatile; 3 Increasing production aimed to meet production schedule.

Macroeconomic aspects: Bullish aspect; The ADP employment number in the US in September was 89,000, lower than the previous value of 177,000 and estimated one of 153,000. The unemployment rate in the country was 3.8%, unchanged from the previous value, but 3.7% higher than expected. Bearish aspect: The number of initial jobless claims in the US in the week ending September 30 was 207,000, higher than the previous value of 204,000 and lower than the expected value of 210,000. The non-farm payrolls this country after seasonal adjustment in September was 336,000 people, lower than the previous value of 187,000 and the expected value of 170,000. Economic data mixed. Meanwhile, tensions in the Middle East were tense. If surrounding areas are involved, it may push up prices of safe-haven metals such as gold and silver.

Silver nitrate

High domestic silver prices led to weak buying appetites from downstream sectors in September. Domestic silver nitrate manufacturers with sales qualifications produced 733 mt in September, a month-on-month decrease of 5.7%, but a year-on-year increase of 25%. The surveyed output accounted for approximately 80% of a total domestic silver nitrate production in September at 916 mt. Silver nitrate output declined in all regions in September, mainly due to high silver prices driving buyers to restock only based on rigid demand or to digest their own inventory. In September, hyper-elevated domestic silver price narrowed gap to foreign silver prices. Meanwhile, the overly high domestic silver prices also led downstream buyers to take a prudent approach to meet rigid demand. Despite forthcoming replenishing demand for raw materials and silver producers working overtime for production, raw materials required for production had been refilled in advance. At the same time, silver producers took days off at the end of September for the Mid-Autumn Festival holiday. Under such circumstance, silver nitrate output inched lower in September. Booming demand from downstream sectors and post-holiday silver nitrate price erosions will probably push up silver nitrate production in October.

Antimony ingot

According to SMM survey, China antimony ingot (including antimony ingot, converted crude antimony, cathode antimony, etc.) output in September 2023 was 7,469 mt, barely unchanged from 7,458 mt in August. Customs data said that China’s imports of other antimony ore sand and concentrate were 1,300.39 mt in August. Market participants said that various reasons such as mines’ reluctance to sell and geopolitics will still hinder imports of antimony ore, while domestic antimony ore tightness will linger amid a growing reluctance to sell among domestic mines. Many market participants noted that domestic inventory of antimony products was shrinking to a low level, partially due to feedstock shortfalls. In addition, output of finished antimony products also appeared low. Under such circumstance, many manufacturers started restricting sales because the inventory dropped to a low point that must be controlled, and even approached the theoretical negative inventory state. Many manufacturers also report that their orders were even scheduled until the end of October. Predictions of difficulty of a big gain in output of many antimony product producers will leave little likelihood of supply surplus and a slew of inventory on the near-term. A fewer low-cost goods in the market will bring with it few biddings. Moreover, a lack of antimony ore or other raw materials currently fuelled suppliers’ reluctance to sell. Players said that the reason for imported antimony price slip was exchange rate changes. Interest rate hikes led to volatile international exchange rate, meeting expectations. In addition, the settlement of imported goods was dominated by the dollar. Actually, imported price fluctuations were normal.

Sodium antimonate

According to SMM’s survey of major sodium antimonate producers, China's sodium antimonate output in September was 4,260 mt, up 12.7% from 3,780 mt in August. Among the 10 survey targets of SMM, there was shutdown of one producer, a mild drop in output of three and normal production of the rest. The output of four producers edged higher, of which, one resumed production from a technical upgrade, explaining for a steep sodium antimonate production increase in September. There was a spike in antimony prices. Difficulty in purchasing raw materials remained. Despite this, more replenishing demand was reported, and expected demand after the National Day holiday will probably occur. However, robust demand from PV sector gave a boost to sodium antimonate production. And some manufacturers said that finished product inventories hiked. Antimony market may keep firming up in October, and terminal buyers will continue to be optimistic about the outlook for antimony products in a short term. In addition, PV glass production will be stable. Under such circumstance, SMM predicted that Chinese sodium antimonate production in October is unlikely to diminish, and may stand stable if there is no restart.

Refined bismuth

According to SMM survey of bismuth makers, China's refined bismuth output in September was 2,296.898 mt, down 0.13% MoM. Among the 24 survey targets of SMM, five makers stopped production in September, 2 less than in August, but those who had resumed operation aimed to produce crude bismuth. Refined bismuth output of all makers changed little in September. This also made antimony ingot production in September unaltered, compared with the previous month. SMM predicted high likelihood of stable refined bismuth output in October, but the output may shrink amid a bismuth supply crunch.

According to customs data, China's exports of wrought bismuth, bismuth products, and unwrought bismuth, shredded bismuth scrap were 339.15 mt in August, up 2.8% from July. The export volume of bismuth oxide in August was 387.69 mt, down 34.4% from July.

Titanium Dioxide

According to SMM data, China’s titanium dioxide production in September was 300,000 mt, with a decrease of 9.2% MoM and a 6.0% increase YoY. The cumulative production reached 2.83 million mt, down 2.3% YoY.

As the sixth wave of price hikes occurred in late September, a stalemate situation emerged between sellers and buyers. Downstream markets showed a lower willingness to accept higher titanium dioxide prices. Titanium dioxide companies shifted their focus to fulfilling early orders, and new order volumes were limited. Some companies in the industry held a pessimistic view of the future market. Under the influence of this sentiment, some titanium dioxide companies slightly reduced production, coupled with the reduction in output from leading enterprises, resulting in a slight decrease in total titanium dioxide production in September. Industry insiders indicate that there is currently a shortage of spot titanium dioxide in the market, and some companies are prioritizing order shipment. Based on the current operating conditions of companies, it is estimated that titanium dioxide production will maintain growth in October, reaching approximately 320,000 mt.

APT

According to SMM statistics, the production of APT in China in September was approximately 11,400 mt, with a 2.3% increase MoM. Currently, due to weak downstream demand and inverted profit margins in the tungsten market, APT smelters were mostly focusing on fulfilling long-term production contracts rather than actively stockpiling at higher levels. The slight increase in APT production is mainly due to the resumption of normal production after maintenance/production shutdowns in some smelters.

Entering October, there are fewer signs of additional consumption demand in the tungsten market. With the main focus on destocking in the downstream market, APT production is expected to maintain stability with limited possibilities for further growth.

Lithium Carbonate

In September, the production of lithium carbonate in China was 41,724 mt, a decrease of 7% MoM but an increase of 27% YoY. In terms of lithium extraction from spodumene, although there were new projects ramping up and production switching, many enterprises reduced or halted production due to outsourcing and raw material issues, resulting in a decrease in spodumene-based lithium carbonate production. As for lithium extraction from lepidolite, a reduction in externally sourced ore combined with plant maintenance led to a continued decrease in lepidolite-based lithium carbonate production. In terms of lithium extraction from salt lakes, seasonal factors resulted in an overall decrease in production. In terms of recycling, high costs and losses, coupled with a decrease in battery scrap, led to a reduction in recycled lithium carbonate production. It is expected that in October, although there will be ongoing production ramp-ups from switching projects, the declining lithium salt prices will cause continued losses for smelters who rely on external raw materials, forcing them to reduce or halt production. Additionally, a leading enterprise is expected to undergo maintenance, further contributing to a decrease in production. The production in October is projected to be 38,613 mt, a decrease of 7% MoM but an increase of 13% YoY.

Lithium hydroxide

In September 2023, the production of lithium hydroxide in China reached 23,999 mt, a decrease of 5% MoM and 1% YoY. The supply and demand situation for lithium hydroxide further deteriorated in September. With the continuous decline in lithium hydroxide prices, many manufacturers were unable to cover their production costs. As a result, more manufacturers chose to switch to producing lithium carbonate or significantly reduce their production. Some manufacturers only retained contract manufacturing lines and focused on traditional areas such as lubricants, resulting in a significant decrease in the overall supply of the industry. On the demand side, due to the substantial price decline of lithium hydroxide, the demand from downstream high-nickel segment remained weak in the domestic market. Meanwhile, overseas market demand continued to decrease. Downstream manufacturers mainly relied on long-term contracts and sporadic orders to replenish their inventories, indicating a low overall purchasing willingness. With high industry inventory and slow destocking, the supply and demand for lithium hydroxide is expected to remain weak in the short term. SMM predicts that in October, the production of lithium hydroxide will reach 23,491 mt, a decrease of 2% MoM and a decrease of 11% YoY.

Cobalt Sulphate

In September, the production of cobalt sulphate in China was 6,723 mt in metal content, a decrease of 9% MoM and 1% YoY. The main reasons for the decrease in production are as follows: Firstly, the production in the Hangzhou region was affected by the Asian Games, which had an impact on the overall output. Secondly, some companies experienced temporary raw material shortages due to difficulties in recycling black mass and delays in the arrival of cobalt intermediates at ports. Thirdly, the demand for cobalt sulphate itself was weak due to the slow recovery in the EV sector. On the other hand, the demand for cobalt chloride saw some increase, driven by the new models from Huawei, leading to certain companies switching to the production of cobalt chloride. These three factors combined resulted in the decrease in cobalt sulphate production in September.

In October, due to the market’s cautious outlook on future demand in the EV sector and the difficulty in acquiring low-priced raw materials, coupled with the inability to pass on the cost increase to downstream, the market is expected to continue destocking. The estimated cobalt sulphate production in October is 6,559 mt in metal content, a decrease of 2% MoM and 12% YoY.

Co3O4

In September, the production of Co3O4 in China was 7,268 mt, an increase of 5% MoM and 12% YoY. The main reason for the increase in production is the demand driven by new models from Huawei, leading to increased production schedules among LCO companies and an increase in Co3O4 demand, particularly concentrated among major players. Although some companies experienced production reductions or shutdowns, growing production at major manufacturers resulted in a growth in total Co3O4 production.

In October, due to some companies still fulfilling orders from September and spot prices rising due to the rebound in cobalt salt prices, the operating rate of various factories is expected to remain relatively high. The estimated production for October is approximately 7,616 mt, an increase of 5% MoM and 19% YoY.

Ternary Cathode Precursor

In September, the production of ternary cathode precursor in China was approximately 74,806 mt, down 9% MoM and 15% YoY. The cumulative production from January to September was 602,877 mt, up 1% YoY.

On the supply side, ternary cathode precursor companies had relatively large inventories at the end of the quarter, leading to a significant decrease in production. The domestic market is dominated by low-nickel ternary cathode precursors, with relatively stable sales in automotive sector and some incremental growth. In addition, the increase in domestic sales driven by new battery projects contributed to a slight increase in production. However, the overseas power battery market showed a significant decline, with some companies significantly reducing their production of high-nickel precursors due to poor export orders. In terms of series, the proportion of medium and low nickel precursors saw a slight increase, while that of high-nickel ones decreased.

Entering October, the demand outlook for the overseas power battery market in the fourth quarter is poor, and the export orders for ternary cathode precursors may further decline. The domestic demand for high-nickel precursors in the power battery sector is also weakening. Combined with the fact that some precursor companies continue to reduce their inventories in October, there is an expectation of downward production adjustment. The estimated production of ternary cathode precursor in China for October is 71,235 mt, a decrease of 5% MoM and 22% YoY.

Ternary cathode material

In September 2023, the production of ternary cathode material in China was 55,397 mt, down 1% MoM and 18% YoY. From January to September 2023, the cumulative production was 456,004 mt, down 2% YoY.

In terms of demand, the overall domestic power battery market remained stable, with a certain decline in demand for high-nickel ternary cathode materials, and a slight increase in demand for medium and low nickel ternary cathode materials. Due to poor sales of cars powered by high-nickel batteries in overseas markets, ternary cathode material companies have reduced their production levels. On the digital front, downstream battery cell factories have digested some inventory, but due to sporadic terminal orders and a continuous decrease in lithium prices, downstream purchases of cathode materials remained on an as-needed basis. The digital market remained stable and has not shown significant improvement.

After entering October, the demand for high-nickel ternary cathode materials from domestic and overseas battery factories continued to weaken, resulting in further production cuts by leading ternary cathode material enterprises. In addition, some battery cell factories had excess inventory, and thus prioritized clearing the stock in October, resulting in a decrease in the production of medium and low nickel materials. In October 2023, the production of ternary cathode material in China is projected to be 52,437 mt, down 5% MoM and 25% YoY.

Ferric Phosphate

In September, China's ferric phosphate production was 116,100 mt, – down 4.6% MoM and an increase of 29.1% YoY. Output in the first nine months surged 79.3% YoY. The production was lower than market expectations. Downstream LFP companies reduced raw material purchases and lowered production rates to avoid losses from falling lithium prices, resulting in inventory reduction. Downstream companies were unable to complete the pick-up of ferric phosphate orders that were confirmed in late August and early September, leading to some order cancellations or postponements to October. The reduction in downstream demand resulted in a decline in ferric phosphate production. In terms of cost, the production cost slightly increased in September. The prices of phosphoric acid and TMAP increased slightly at the beginning of the month but stabilized later. As for iron sources, ferrous sulphate prices decreased by 30% and iron block prices remained stable. Other auxiliary materials such as hydrogen peroxide increased in price, resulting in a slight increase in overall costs ranging from 100 to 300 yuan/mt. In October, although the price of hydrogen peroxide declined, the production cost of ferric phosphate remained high. It is difficult for the downward transmission of additional costs, and the enthusiasm of ferric phosphate companies for production is average, focusing on fulfilling orders. Ferric phosphate production in October 2023 is expected to be 110,400 mt, –down 5.7% MoM and an increase of 15.6% YoY.

LFP

In September, China's LFP production was 127,490 mt, down 2.5% MoM and an increase of 13.8% YoY. Production from January to September rose 46.5% YoY. The cost of LFP was affected by the continuous decline in the price of its main raw material lithium carbonate, resulting in a continuous decrease in overall production costs. On the supply side, due to the decline in the price of lithium carbonate, downstream cautious purchasing resulted in reduced production by LFP companies. LFP companies were willing to sell at low prices to reduce the sustained losses of their products. LFP companies prioritized destocking. In terms of demand, battery cell companies, especially energy storage battery cell companies, were not actively purchasing LFP due to weak terminal demand. The perceived demand boom is unlikely to occur in October, as downstream and terminal markets are flat, and there is likely to be no pre-holiday stocking willingness in the fourth quarter. Therefore, LFP enterprises are cautious in production scheduling, resulting in reduced production. The LFP production in October 2023 is expected to be 118,540 mt, a decrease of 7.0% MoM and an increase of 31.0% YoY.

LCO

In September, the production of LCO in China was 7,980 mt, with a 17% increase MoM and a 14% increase YoY. The discussion and anticipation of new digital products in the market increased as new models were released in September, which enhanced consumers’ willingness to purchase and upgrade their devices. Since new models were usually not readily available in stock, mobile device manufacturers prepare corresponding raw material inventory through pre-sale orders and place battery orders with upstream battery cell factories. In addition to new product releases, September was also an important time for LCO material manufacturers and battery cell factories to prepare for the Double 11 Shopping Festival, driving an evident increase in LCO production due to the recovery of terminal digital demand during this period compared to previous months. In October, there will continue to be new product releases in the digital consumer market leading up to the Double 11 Shopping Festival. Additionally, October is a stage for overseas markets to stock up for year-end shopping festivals. Although the projected production for October is expected to be lower than September, it will still maintain a relatively high operating rate compared to the off-season for the digital industry. The estimated production for October is 7,837 mt, a decrease of 2% MoM and an increase of 7% YoY.

Lithium manganese oxide

China’s lithium manganese oxide (LMO) output stood at 7,340 mt in September, down 9% MoM, but up 22% YoY. Lithium carbonate prices plummeted. In addition, battery cell manufacturers with poor expectations for LMO market had muted demand for LMO. Therefore, LMO producers saw a dramatic fall in orders in September. Shored up by the holiday and some battery cell plants’ expectation of stable lithium carbonate prices, a few battery cell plants will have demand for LMO. At the same time, with upcoming Singles’ Day shopping festival (November 11) in China, most LMO producers will be upbeat about trading sentiment in mid-to-late October, and their primary scheduled production will increase this month, compared with September. LMO output is expected be 8,196 mt in October, up 12% MoM and 33% YoY.