Copper Cathode Production in April Exceeded Expectations with an Increase, Expected to Continue Rising in May [SMM Analysis]

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SMM, April 30:

     In April, China's copper cathode production increased by 3,600 mt MoM, a rise of 0.32%, and up 14.27% YoY. The cumulative production from January to April increased by 415,100 mt YoY, a growth of 10.63%.

      In April, copper cathode production exceeded expectations by 9,400 mt, mainly due to the following reasons: 1. Despite maintenance plans at four smelters in April, a new smelter in east China commenced operations, and the capacity utilization rate of a smelter in southwest China continued to rise. 2. Although copper scrap procurement was challenging in April, many smelters indicated that they had purchased sufficient copper scrap in March. Additionally, the volume of imported copper anodes rebounded in April, leading to an increase in production at smelters that do not use copper concentrates (copper scrap or copper anodes), as reflected by the rise in their operating rates (up 3.7 percentage points to 71.9% in April). 3. Although sulphuric acid prices have pulled back from their previous highs recently, they remain at a relatively high level, still able to offset the losses of smelters. 4. Despite the decline in the monthly import copper concentrate index to -$37.68/dmt in April, down $16.65/dmt MoM, resulting in increased losses for smelters, the inventory of copper concentrates at major domestic ports continued to rebound (from 575,200 mt in mid-March to 835,600 mt at the end of April), increasing the supply available to smelters.

      In summary, the sample operating rate of the copper cathode industry in April was 87.79%, up 0.11 percentage points MoM. Among them, the operating rate of large smelters was 91.15%, down 0.28 percentage points MoM; the operating rate of medium-sized smelters was 82.76%, up 1.39 percentage points MoM; and the operating rate of small smelters was 71.39%, down 0.24 percentage points MoM. The operating rate of smelters using copper concentrates was 91.5%, down 0.2 percentage points MoM; the operating rate of smelters not using copper concentrates (copper scrap or copper anodes) was 71.9%, up 3.7 percentage points MoM, reflecting the increase in operating rates due to the increased supply of raw materials.

       Entering May, according to our statistics, five smelters currently have maintenance plans, with an estimated affected volume of around 21,000 mt. However, smelters that underwent maintenance in April have resumed normal production, with the volume of production resumptions even exceeding the impact of maintenance. Additionally, due to the still abundant inventory of copper concentrates at ports, no smelters have significantly cut production due to ore shortages. Therefore, total production in May is still rising slightly.

        Based on the production schedules of various smelters, SMM expects domestic copper cathode production in May to increase by 4,200 mt MoM, a rise of 0.37%, and up 121,300 mt YoY, a growth of 12.03%. The cumulative production from January to May is expected to increase by 536,400 mt YoY, a growth of 10.92%. The sample operating rate of the copper cathode industry in May is expected to be 88.16%, up 0.36 percentage points MoM. Among them, the operating rate of large smelters is expected to be 91.56%, up 0.41 percentage points MoM; the operating rate of medium-sized smelters is expected to be 84.83%, up 2.08 percentage points MoM; and the operating rate of small smelters is expected to be 64.60%, down 6.79 percentage points MoM. The operating rate of smelters using copper concentrates is expected to be 92.1%, up 0.6 percentage points MoM; the operating rate of smelters not using copper concentrates (copper scrap or copper anodes) is expected to be 71%, down 0.9 percentage points MoM. Finally, we expect production to continue increasing in June, as few smelters have maintenance plans in June.