SMM Cu Survey: Operating Rates Fall Further at Domestic Copper Smelters

SHANGHAI, Aug. 16 (SMM) – A recent SMM survey of 23 major domestic copper smelters (total capacity: 4.163 million mt) revealed the following insights:
 
1) Operating Rates Fall Further 
According to the SMM survey, the average operating rate at the 23 domestic copper smelters was 87.34% in August, down from 89.26% in June.  Since some copper smelters conducted unit maintenance in July, operating rates were lower. Supply of scrap copper increased due to rising copper prices, and the price gap between refined and scrap copper expanded due since scrap copper prices did not keep pace with refined.  As a result, some copper producers with scrap copper as raw material increased production, helping limit the drop in overall operating rates. 

2) Refined Copper Inventories Increase, Tight Raw Material Supply Eased
The recent SMM survey also shows that total inventories of refined copper at the surveyed producers reached 50,700 mt in July, up from June levels.  SMM believes that the low purchasing interest after price increases was behind the growing refined copper inventories, but also because smelters had not yet delivered long-term contract goods while the survey was under way. 

At present, TC/RC of copper concentrate is USD 17-20/mt (cents 1.70-2.00/lbs), up significantly from previous levels.  Although the existing TC/RC is still lower than the psychological level acceptable by copper smelters, price gains indicate that supply shortages have been eased.  Copper smelters with scrap copper as the raw material said scrap copper supply has improved significantly over the past several days, and that many producers were building stocks in large quantities.  Some cargo-holders were still unwilling to move goods due to an optimistic outlook, but existing market supply is able to meet current production needs at copper smelters.  

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