China's copper cathode output in October fell by 29,400 mt MoM, down 2.62% MoM but up 9.63% YoY, with a cumulative increase of 11.96%. The October copper cathode production declined by 29,400 mt, slightly less than expected.
Reasons are as follows. First, eight smelters underwent maintenance in October, involving 2.2 million mt of primary smelting capacity; SMM estimates the impact on copper cathode output reached 54,900 mt. Some smelters reported that copper anode remained difficult to procure, amplifying the impact on cathode production during maintenance. Second, copper prices hit record highs in October, widening the price difference between primary metal and scrap, which slightly eased the tight supply of copper anode. However, specific implementation details of Document No. 770 in Jiangxi and Anhui remain unclear, leading to regional disparities in the procurement difficulty of copper anode; some smelters indicated that increased supply of copper anode and scrap contributed to higher production.
In summary, the operating rate for the sampled copper cathode industry in October was 81.65%, down 2.41 percentage points MoM. Among them, large smelters recorded an operating rate of 83.61%, down 4.59 percentage points MoM; medium-sized smelters were at 80.26%, up 1.34 percentage points MoM; small smelters were at 66.56%, up 6.67 percentage points MoM. The operating rate for smelters using copper concentrates was 85.4%, down 3.1 percentage points MoM; for those primarily using copper scrap or anode, the rate was 63.3%, up 1.0 percentage point MoM. Entering November, based on SMM's market communication, five smelters are scheduled for maintenance, involving 1.5 million mt of primary smelting capacity, with an estimated impact of 48,000 mt.
Reportedly, some smelters postponed maintenance from October, shifting more impact to December. However, certain enterprises began maintenance in October with prolonged durations, affecting both November and December. Currently, high copper prices have widened the price difference between primary metal and scrap, benefiting smelters using scrap or anode, but Document No. 770 remains unclear, requiring the market to factor in this uncertainty in the longer term. SMM expects copper cathode output in November to decrease by 4,000 mt MoM, down 0.37% MoM but up 8.21% YoY, with a cumulative YoY increase of 11.62%. Looking ahead to December, production is expected to increase slightly following concentrated maintenance in October-November; however, record-high copper prices throughout the year have dampened smelters' willingness to ramp up production by year-end, and December output is projected to see only a modest rise.
