Exclusive: China's base metals output in May

SHANGHAI, Jun 10 (SMM) – This is a roundup of China's base metals output in May 2019, from an SMM survey of major producers.

Copper

Copper cathode production across China in May fell more than expected, as an unexpected facility breakdown, safety checks and credit issues exacerbated the impact from maintenance across smelters.

China produced 633,500 mt of copper cathode in May, down 10.33% from April and 15.23% from May 2018. This lowered production in the first five months by 1.57%, to 3.55 million mt. SMM had expected copper output to fall nearly 70,000 mt on the month to 638,000 mt in May.

The acid system at Chifeng Jinfeng broke down in May, while local security checks affected copper production at Xinjiang Wuxin. Output at Shandong Eastern Copper shrank due to financial loan issues across the province.

More maintenance works and the slow ramp-up of new and restarted capacities have limited the growth in copper production this year. Affected production in January-May stood close to the amount throughout the whole year of 2018, at 192,000 mt.

Capacity utilisation at Chalco’s new smelter in Ningde has yet to reach 80%, while Guangxi Nanguo Copper delayed its next feeding of raw materials to the end of June. Chifeng Jinfeng did not put its first stage into operation until May 18, which delayed the project's commissioning and ramp-up to full capacity.

A smaller discount of copper scrap against copper cathode kept secondary copper smelters operating at a lower rate.

China’s production of copper cathode is expected to recover to 704,900 mt in June, as smelters recover from concentrated maintenance. This would still lower year-on-year output by 2.43%.

Output in the first half of 2019 is estimated to stand at 4.25 million mt, down 1.72% from a year ago.

Shandong Eastern Copper is likely to struggle to recover in June, while Zhongyuan Gold Smelter, Jiangxi Copper at Qingyuan, Fuye Group and Zijin Copper will conduct maintenance. Some smelters told SMM that they planned to extend maintenance and cut production, given tight supplies of copper scrap and concentrate.

Alumina

China's production of metallurgical-grade alumina in May decreased 1.39% on the year to 5.97 million mt, as maintenance, technical upgrade, and environmental probes affected output.

Daily alumina output averaged 193,000 mt in May, down 1,000 mt from April. About 70.3 million mt of capacity on an annualised basis were in operation last month, down 336,000 mt from April and down 990,600 mt from April 2018. Output in January-May remained 4.29% higher on the year, standing at 29.56 million mt.

Last month, maintenance at Guangxi Huayin and suspension for the technical upgrade at East Hope's Lingshi refinery affected their production. Guangxi Xinfa halted a production line. Jiaokou Xinfa and Xiaoyi Huaqing were ordered to shut for environmental rectifications.

Operating capacity at Xinghua Technology started to recover from a low of 350,000 mt in May. Recovery at Guizhou Huafei, Luyu Bochuang, Bosai Group's Shuijiang project continued to contribute to higher output. SMM also learned that Shandong Weiqiao and Chinalco Huaxing further hiked their operating capacity from April.

Production at Jiaokou Xinfa will grind to halt in June, and this may lower domestic output of alumina by 3.97% on the year, to 5.73 million mt in June. Annualised operating capacity in June is expected to decrease by 2.88 million mt on the year and by 600,900 mt on the month, standing at 69.7 million mt.

This month, production at Luyu Bochuang and Bosai Group's Shuijiang project will continue to ramp up after resumption. Guangxi Huayin is set to end maintenance, and Xinghua Technology will recover full operation. Refineries of Chinalco Huaixng, Chinalco Mining, Guangxi Xinfa, and East Hope Sanmenxia will expand their operating capacity.

Aluminium

Production of primary aluminium in the first five months of 2019 continued to stand lower than a year ago as capacity in operation remained low despite a buildup in May.

Output in January-May declined 1.3% year on year to stand at 14.56 million mt, while output in May came in at 3.04 million mt and was down 1% from a year earlier.

By the end of May, domestic primary aluminium capacity in operation stood at an annualised 35.81 million mt, up 643,000 mt from the end of April but down 377,000 mt from a year ago. New capacity and recovery at smelters in Gansu, Yunnan, Guangxi, and Qinghai lifted the operating capacity from April.

An additional 210,000 mt in operating capacity is expected in June, as smelters of Suyuan, Zhaotong, Meixin, and Zhongrun will expand or restart capacity.

SMM expects production of primary aluminium to stand at 3.01 million mt in June, down 0.4% from a year ago. This will lower output in the first half of 2019 by 1.2% on the year, to 17.57 million mt.

Nickel

Production of refined nickel in China held stable in May, rising 2.62% from April to 12,900 mt due to the longer month. Output stood 5.7% higher than May 2018.

With steady production across smelters, output of refined nickel is expected to fall 2.56% to 12,600 mt in June.

Nickel pig iron (NPI)

NPI output declined 0.31% from April to 47,800 mt in Ni content in May, up 28.13% from May 2018.

On a month-on-month basis, output of high-grade NPI fell 1.58% to 41,000 mt in Ni content as the impact of environmental probes in Shandong and Jiangsu at the end of the month and maintenance at plants in the north and south offset higher output at a large plant in Shandong.

For low-grade materials, output grew 8.14% to 6,800 mt in Ni content last month, bolstered by the restart of a plant in the east at the end of April as well as the production recovery from maintenance at northern stainless steel mills.

China’s NPI output is expected to expand 4.59% month on month to 50,000 mt in Ni content in June.

Fewer maintenance works and a reprieve from environmental pressure are expected to boost output of high-grade materials by 5.2% to 43,100 mt in Ni content this month, while the further recovery across the plant in the east and steelmakers in the north is expected to grow output of low-grade materials by 0.94% to 6,900 mt in Ni content.

A low-grade NPI plant in the east switched to other products. This, together with maintenance at southern stainless steel mills, will cap gains in the production of low-grade NPI.

Nickel sulphate

In May, China produced 11,440 mt in Ni content of nickel sulphate, which translated to 52,000 mt in physical content, up 32.15% on the year and 5.8% on the month.

Production recovery at a nickel sulphate plant in the north and the ramp-up of new capacity across a slew of precursor and nickel sulphate plants accounted for the month-on-month gain in output.

Nickel sulphate producers, however, saw disappointing sales last month, due to the upcoming new energy vehicle subsidy cuts and fire incidents. This led to production cuts at some plants with integrated production of precursors and nickel sulplate, and the delay of new capacity construction.

China’s output of nickel sulphate is expected to extend its gains in June, expanding 3.62% month on month to 53,900 mt, in view of a further recovery at the nickel sulphate plant in the north.

Zinc

Production of refined zinc in China extended its increase in May as high profit margins and recovery after capacity relocation and environmental probes bolstered output.

China produced 480,200 mt of refined zinc in May, up 4.14% from April and 13.49% from May 2018. Surveyed capacity remained unchanged at 6.085 million mt/year.

Chihong Zinc & Germanium and Baiyin Nonferrous, and Zhuzhou Smelter and Hanzhong Zinc accounted for the increase as they resumed after maintenance and ramped up production after recovery. A higher grade in zinc concentrate used as raw materials and resumption at some small smelters also boosted output. West Mining and Mengzi Mining & Metallurgy underwent maintenance in May.

Anhui Tongguan and Chengzhou Mining will conduct maintenance in June but overall zinc production will continue to expand this month as Zhuzhou Smelter steps up production on its second production line and West Mining and Huludao Zinc recover from maintenance. Higher profits will also spur output at some smelters.

Zinc output is expected to grow 4.4%, or 21,100 mt month on month to stand at 501,300 mt in June, up 16.56% from June 2018. This will raise the year-over-year growth in output in January-June to 2.1%, from a decline of 0.41% in January-May.

Lead

Primary lead production across China shrank as expected in May, as the impact of maintenance exceeded production recovery.

Output of primary lead came in at 247,700 mt in May, down 3.69% from April and 1.12% from May 2018.

This brought production in the first five months to 1.26 million mt, with a year-over-year increase of 5.4%. The January-April period registered a larger advance of 7.11%, as the Chinese New Year holiday, environmental restrictions and adverse weather hampered production in the same period last year.

Yunnan Chihong recovered from maintenance in May, while Hunan Jingui, Yinxing and Chifengshan Gold, Silver & Lead began maintenance in the second half of the month.

Output of primary lead is expected to extend its declines in June, falling some 30,000 mt month on month to 217,000 mt, in anticipation of maintenance and production cuts at smelters.

Maintenance across Hunan Jingui, Chifengshan Gold, Silver & Lead and Guangxi Hechi Nanfang will continue through June, while Hanzhong Zinc Industry, West Mining and Shandong Humon will begin maintenance. Most of those smelters are large or medium-sized.

Smelters faced weak lead prices and lower concentrate treatment charges. Some of them may curtail production this month.

Tin

Production of refined tin in China shrank 1.27% on the month in May, standing at 13,734 mt, as a shortage of feedstock such as ore and waste materials cut output.

Maintenance at some smelters in Jiangxi province affected local production in May. Those smelters have returned to normal production as of June 10. Most domestic smelters maintained stable operation last month.

Tin ore remained in tight supply as a drought in Myanmar suspended local concentrating mills. The upcoming rainy season there will also affect the delivery of tin ore, and this may extend the supply tightness of feedstock and lower output of refined tin to 13,300 mt in June, SMM estimates.