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SMM June 30 Report:
In June, China's copper cathode production decreased by 3,400 mt MoM, a decline of 0.3%, but increased by 12.93% YoY. The cumulative production from January to June increased by 674,700 mt YoY, a growth of 11.40%.
The copper cathode production in June ended a four-month consecutive increase and saw a slight decline, mainly due to the following reasons: 1. Although our statistics showed that only one smelter had maintenance plans in June, the number of enterprises with decreased capacity utilization rates increased significantly. Nearly 40% of the enterprises in our survey sample had varying degrees of production cuts in June, doubling from May. This was also reflected in the decrease in copper concentrate inventory at ports, which dropped from 795,900 mt at the end of May to 623,500 mt at the end of June. 2. A smelter in north China experienced a significant decline in production due to environmental protection inspections. 3. The volume of imported copper anodes decreased in June, which also contributed to the decline in production for some enterprises. However, it is worth noting that the recent sulphuric acid price continues to rise and is expected to continue rising in July. The increase in sulphuric acid prices can effectively offset smelting losses.
In summary, the sample operating rate of the copper cathode industry in June was 85.76%, down 3.06 percentage points MoM (the main reason for the decline in the operating rate was the inclusion of a newly commissioned smelter). Among them, the operating rate of large smelters was 87.52%, down 5.21 percentage points MoM; the operating rate of medium-sized smelters was 84.87%, up 0.19 percentage points MoM; and the operating rate of small smelters was 69.37%, up 6.48 percentage points MoM. The operating rate of smelters using copper concentrates was 89.1%, down 4.2 percentage points MoM; the operating rate of smelters not using copper concentrates (copper scrap or copper anodes) was 69.1%, up 0.2 percentage points MoM.
Entering July, our statistics show that only one smelter has maintenance plans, and smelters that were previously affected by environmental protection inspections will also resume normal production, coupled with the continuous ramp-up of newly commissioned smelters in east China. The market's concern about widespread and large-scale production cuts due to losses has not materialized. Therefore, we believe that the national copper cathode production in July will further increase.
Based on the production schedules of various enterprises, SMM expects that the domestic copper cathode production in July will increase by 15,500 mt MoM, a rise of 1.37%, and increase by 122,200 mt YoY, a rise of 11.88%. The cumulative production from January to July will increase by 796,900 mt YoY, a rise of 11.47%. The sample operating rate of the copper cathode industry in July was 86.93%, up 1.18 percentage points MoM. Among them, the operating rate of large smelters was 89.41%, up 1.89 percentage points MoM; the operating rate of medium-sized smelters was 83.73%, down 1.13 percentage points MoM; and the operating rate of small smelters was 71.51%, up 2.14 percentage points MoM. The operating rate of smelters using copper concentrates was 90.5%, up 1.4 percentage points MoM; while the operating rate of smelters not using copper concentrates (copper scrap or copper anode) was 69.0%, down 0.1 percentage points MoM. Finally, we expect production to continue to rise in August, as there are still relatively few smelters with maintenance plans, and the capacity utilization rate of newly commissioned smelters continues to increase.
