SMM Analysis On China October Copper Cathode Production And November Forecast

In October, SMM China's copper cathode production decreased by 8,600 mt MoM, a decline of 0.86%, but increased by 0.19% YoY, and exceeded expectations by 2,200 mt. The cumulative production from January to October increased by 480,100 mt YoY, a rise of 5.06%. Although new smelters were commissioned in October, the production ramp-up was slower than expected due to tight raw material supply. Additionally, five smelters underwent maintenance, leading to a MoM decline in October's production. However, the decline was less than expected, mainly due to the recent ample supply of blister copper and copper anode (the implementation of the Fair Competition Review Regulations was delayed, increasing copper scrap supply). The processing fee for copper anode plates rebounded in October, reaching 550 yuan/mt as of November 1, up 150 yuan/mt from the previous month. Furthermore, the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) was 64.2%, up 1.5 percentage points MoM, as per SMM statistics.

In summary, the sample operating rate of the copper cathode industry in October was 81.18%, down 1.41 percentage points MoM. Among them, the operating rate of large smelters was 83.63%, down 1.1 percentage points MoM; medium-sized smelters' operating rate was 77.08%, down 3.52 percentage points MoM; and small smelters' operating rate was 68.84%, up 1.06 percentage points MoM. The operating rate of smelters using copper concentrates was 84.7%, down 1.3 percentage points MoM, while the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) was 64.2%, up 1.5 percentage points MoM.

Entering November, SMM statistics show that seven smelters will undergo maintenance, involving a rough smelting capacity of 1.99 million mt, a significant increase from the 1.04 million mt capacity involved in October. Concentrated maintenance of smelters is the main reason for the production decline in November. Additionally, the tight supply of copper concentrates (as of November 1, the imported copper concentrates index was $11.09/mt, still at a historical low) has slowed the production ramp-up of some newly commissioned smelters, contributing to the production decline in November.

Based on the production schedule of various smelters, SMM expects domestic copper cathode production in November to decrease by 14,800 mt MoM, a decline of 1.49%, but increase by 20,100 mt YoY, a rise of 2.09%. The cumulative production from January to November is expected to increase by 500,200 mt YoY, a rise of 4.79%. The sample operating rate of the copper cathode industry in November is expected to be 79.72%, down 1.47 percentage points MoM. Among them, the operating rate of large smelters is expected to be 82.94%, down 0.69 percentage points MoM; medium-sized smelters' operating rate is expected to be 72%, down 5.08 percentage points MoM; and small smelters' operating rate is expected to be 71.02%, up 2.18 percentage points MoM. The operating rate of smelters using copper concentrates is expected to be 82.80%, down 1.9 percentage points MoM, while the operating rate of smelters using non-copper concentrates (using copper scrap or anode plates instead) is expected to be 64.90%, up 0.7 percentage points MoM, with the increase in copper scrap supply leading to a continuous rise in this operating rate for two consecutive months. Finally, the number of smelters planning maintenance in December will significantly decrease, and production is expected to rise again. SMM expects the total production in 2024 to reach 11.9389 million mt, an increase of 498,800 mt YoY, a rise of 4.36%.