SMM Copper Cathode January Production Analysis & February Forecast
In January, SMM China's copper Cathode production reached 969800 tons, a decrease of 29600 tons month on month, a decrease of 2.96%, a year-on-year increase of 13.65%, and an increase of 116500 tons; And it increased by 16200 tons compared to the expected 953600 tons.
There are several reasons for the month on month decrease in production in January:
1. Due to statistical cycle issues, the number of days counted in January is relatively small (some companies have a statistical cycle of 1.1-1.25, which is about 5 days less than normal months), resulting in a decrease in statistical production;
2. A smelter in the southwest has started to relocate, resulting in a significant decrease in its output; 3. Two smelters have maintenance actions;
4. Some smelters experienced a slight decrease in production due to the tight supply of crude copper.
The reason for exceeding the expected output is that:
1. Two newly ignited smelters have started releasing production, and the new production is not low;
2. Some smelters have requirements for a successful start, with production exceeding the original plan in January;
3. Some smelters experienced a decrease in operating rates during the Spring Festival, and their operating rates were increased in January to make up for the decrease in February. In summary, we believe that the overall operating rate of the electrolytic copper industry in January was 85.18%, a decrease of 3.95 percentage points compared to the previous month.
Entering February, two smelters have maintenance plans, one of which is a minor maintenance, and many smelters have lowered their operating rates due to the Spring Festival. These factors are all the reasons for the decrease in production in February. In addition, we have conducted the latest research on whether the historically low processing fees for copper concentrate, which is the most concerning issue in the market, will affect the production of smelters. As of February 2, the SMM imported copper concentrate index (weekly) was reported at $22.08 per ton, a decrease of $5.86 per ton from the previous period's $27.94 per ton. The smelters purchased spot copper concentrate for production, and currently suffer a loss of 894 yuan per ton. In order to cope with ultra-low processing costs, according to our understanding, some smelters have advanced their maintenance time, and two smelters plan to reduce the grade and quantity of copper concentrate added to the furnace. While ensuring normal production without stopping the furnace, the grade of copper concentrate added to the furnace is kept to the lowest level. However, due to the time difference (it takes some time from feeding to output), the production of these smelters with reduced furnace input was not affected in February, and it is expected that the reduction will only occur in March.
Based on the production schedule of each company, SMM predicts that the domestic copper Cathode production in February will be 959400 tons, a decrease of 10400 tons compared to the previous month, a decrease of 1.07%, and a year-on-year increase of 51600 tons, a growth of 5.68%. The cumulative production from January to February is expected to be 1.9292 million tons, a year-on-year increase of 9.55% and an increase of 168100 tons.
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