Copper Cathode Production Increased Significantly as Expected in December but Will Decline Again in January [SMM Analysis]

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December 31, 2024 News:

        In December, SMM China's copper cathode production increased by 90,400 mt MoM, up 8.99%, rose 9.62% YoY, and exceeded expectations by 8,700 mt. From January to December, production increased by 620,500 mt YoY, a growth of 5.42%.

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        Copper cathode production in December increased significantly as expected, mainly due to the following reasons: 1. Smelters that underwent maintenance earlier gradually resumed production; 2. Newly commissioned smelters continued ramping up production; 3. Some smelters boosted production at year-end; 4. The statistical period for some smelters in December was from the 26th of the previous month to the 31st of the current month (normally from the 26th of the previous month to the 25th of the current month), and the extended statistical period also contributed to the significant increase in December production.

In summary, the sample operating rate of the copper cathode industry in December was 87.73%, up 7.29 percentage points MoM. Among them, the operating rate of large smelters was 92.53%, up 7.72 percentage points MoM; medium-sized smelters, 78.73%, up 8.35 percentage points MoM; and small smelters, 69.86%, down 1.15 percentage points MoM. The operating rate of smelters using copper concentrates was 92.1%, up 8.5 percentage points MoM, while smelters not using copper concentrates (using copper scrap or anode plates) had an operating rate of 77.7%, up 2.1 percentage points MoM.

Entering January, after the production surge in December, many smelters experienced varying degrees of production decline due to tight copper concentrates and blister copper supply (as of December 27, the SMM Imported Copper Concentrates Index (weekly) was $6.91/mt, and the SMM Domestic Blister Copper RCs in South China (weekly) was 800 yuan/mt). Additionally, the shorter statistical period in January also contributed to the production decline. Affected by the implementation of reverse invoicing across regions, copper scrap supply decreased in January, leading to a more significant production decline in smelters producing copper cathode from copper scrap.

    According to SMM's production schedule data, domestic copper cathode production in January is expected to decrease by 88,200 mt MoM, a decline of 8.05%, but increase by 37,500 mt YoY, a growth of 3.87%. The sample operating rate of the copper cathode industry in January is expected to be 80.70%, down 7.03 percentage points MoM. Among them, the operating rate of large smelters is expected to be 84.49%, down 8.04 percentage points MoM; medium-sized smelters, 73.28%, down 5.45 percentage points MoM; and small smelters, 67.71%, down 2.15 percentage points MoM. The operating rate of smelters using copper concentrates is expected to be 85.1%, down 7 percentage points MoM, while smelters not using copper concentrates (using copper scrap or anode plates) are expected to have an operating rate of 69.5%, down 8.2 percentage points MoM, ending three consecutive months of increases and returning to a decline.