[Cu] CBI Survey - Operating Rates at Domestic Copper Smelters

SHANGHAI, May 5 (CBI China) -- A recent CBI survey of 23 major domestic copper smelters revealed the following insights:

    1) Operating Rates

    According to the survey, the average operating rate at the 23 copper smelters was 73.0% during April, down 3.9% MoM. Operating rates at large smelters remained stable, while operating rates at smelters with capacity of 100-300kt/yr were 72.4%, down 8.3% MoM, and due mainly to low operating rates of Ningbo Jintian Copper (Group) Company, which was a new addition to the survey group.  In general, raw material supply improved, and output of copper smelters is recovering slowly. However, overall operating rates experienced declines due to maintenance at Tongling Nonferrous Metals (Group) Inc.

    2) Copper Concentrate Demand Soars, Scrap Copper Supply Improves

    Imports of scrap copper were 330kt during March, up significantly compared to January’s 180kt, and helped ease the current tight supply. In addition, spot TC/RC of copper concentrate has been reduced to USD 30-40/mt/Cents 3-4/lbs. As the SHFE/LME copper price ratio remains high, Chinese demand for copper concentrate increased sharply, leading to significant declines in spot TC/RC. The increases in the copper concentrate purchases also contributed to increases in domestic refined copper output.

    3) Forecast of May Prices

    According to the survey, 66% of smelters believe copper prices will fall further. The previous rise for copper prices lacked the support from fundamentals, and current consumptions were weak, so the prices will dip gradually. Among those smelters, 93% of them believe LME copper price will fall to USD 4,000/mt, while the remaining 7% of them believe LME copper price will likely slip to USD 3,800/mt. 17% of smelters predict copper price will continue the fluctuating trend. They said copper price has fallen back to the reasonable level after several rounds of significant adjustments. Meanwhile, the continuous declines in domestic and LME inventories will help limit the downward room for copper price, so copper price will move narrowly. 13% of smelters were uncertain about May prices, as current price fluctuations have been out of expectations. The remaining 4% of smelters believe copper price will rebound, as recent copper price corrections were the preparation for the next rebound of copper price. 

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