Year-End Surge: December Domestic Copper Cathode Production Exceeds Expectations and Hits Record High [SMM Analysis]

In November, SMM China's copper cathode production increased by 9,400 mt MoM, a rise of 0.94%, up 4.61% YoY, and exceeded expectations by 24,200 mt. Cumulative production from January to November increased by 524,400 mt or 5.02% YoY. In November, we added two new survey samples with a combined capacity of 350,000 mt/year, bringing the total surveyed capacity to 14.875 million mt/year.

One reason for the significant increase in November copper cathode production was the addition of two new surveyed companies. Excluding these two, the production only slightly increased from the original estimate. Despite the spot order TC for copper concentrates remaining at historical lows in November, with the SMM Imported Copper Concentrates Index (monthly) at $10.38/mt as of November 29, up $0.24/mt MoM, the increased supply of blister copper and copper anode boosted smelter production enthusiasm. As of November 29, SMM Blister Copper RCs in South China (monthly) was 1,050 yuan/mt, up 300 yuan/mt MoM. Additionally, the accelerated commissioning of new smelters also contributed to the higher-than-expected production.

In summary, the sample operating rate for the copper cathode industry in November was 80.44%, down 0.75 percentage points MoM. The operating rate for large smelters was 84.8%, up 1.17 percentage points MoM; for medium smelters, it was 70.38%, down 6.69 percentage points MoM; and for small smelters, it was 71.02%, up 2.17 percentage points MoM. The operating rate for smelters using copper concentrates was 83.6%, down 1.1 percentage points MoM, while for those not using copper concentrates (using copper scrap or copper anode instead), it was 75.6%, up 11.4 percentage points MoM.

Entering December, smelters that had previously undergone maintenance (SMM statistics show that seven smelters with a combined smelting capacity of 1.99 million mt underwent maintenance in November) gradually resumed production, contributing an additional 51,400 mt. Only three smelters are scheduled for maintenance in December, which is one reason for the significant increase in December production. Additionally, smelters newly put into operation continued to accelerate their production, contributing an additional 34,900 mt. Lastly, some smelters increased production in December to meet their annual production plans.

Based on the production schedules of various companies, SMM expects December domestic copper cathode production to increase significantly by 81,700 mt MoM, a rise of 8.13%, and up 87,400 mt YoY, a rise of 8.75%. Cumulative production from January to December is expected to increase by 611,800 mt or 5.35% YoY. The sample operating rate for the copper cathode industry in December is expected to be 86.86%, up 6.43 percentage points MoM. The operating rate for large smelters is expected to be 91.03%, up 6.23 percentage points MoM; for medium smelters, it is expected to be 78.56%, up 8.17 percentage points MoM; and for small smelters, it is expected to be 73.2%, up 2.18 percentage points MoM. The operating rate for smelters using copper concentrates is expected to be 90.70%, up 7.1 percentage points MoM, while for those not using copper concentrates (using copper scrap or copper anode instead), it is expected to be 79.5%, up 3.9 percentage points MoM, with the copper scrap supply increasing for three consecutive months. Finally, we expect January 2025 production to decline again (as some smelters will reduce production load due to the upcoming Chinese New Year holiday) but remain above 1.04 million mt.