Industry Info

China’s copper, aluminium output rises to record high

China's production of refined copper rose 2.9% month-on-month to a second straight monthly record in October due to increased supply of raw material and new capacity, while its aluminium output also reached a record.

Data from the National Bureau of Statistics showed on Monday that production of refined copper hit 637,958 tonne in October, compared with the previous record of 620,086 tonne in September. The October production was up 22.9% from October 2012.

Record monthly production in the world's top producer and consumer of refined copper may mean that domestic supply will continue to be plentiful in the coming weeks, weighing on local prices and making spot imports unattractive.

“Supply of raw material concentrates was very plentiful, with imports reaching over 1 million tonne in September, supporting strong copper production in October,” Yang Changhua, chief copper analyst at state-backed research firm Antaike, said.

New capacity came on line in the past few months and has gradually increased production. Antaike has estimated that at least 200,000 tonne of capacity started production in the third quarter and that China will add a total of 570,000 tonne of new smelting capacity and over 1 million tonne of refining capacity in 2013.

Strong treatment and refining charges for imports of raw material concentrate, with spot charges at two-year highs, have been encouraging smelters to run at full capacity, sources at smelters said.

Overseas suppliers of copper concentrates to China pay the charges and deduct those charges from prices based on London Metal Exchange copper prices when they sell those concentrates to smelters. That means higher charges will ma-ke prices of the imports lower.

Some smelters have increased sales of refined copper in the spot market for cash due to expectations of a cash crunch in the domestic market ahead of the year-end, a trader at a large copper smelter said.

Demand from northern Chinese provinces has shown signs of slowing. The trader said a few clients from the northwestern province of Xinjiang had already cancelled term purchases for December and also may cancel January buying as the harsh winter cuts outdoor work.

In the first 10 months of 2013, production of refined copper rose 13.67% to 5,579,689 tonne, the data showed.

Primary aluminium production, for which China also ranks as top producer and user, rose 5% on the month to a reco-rd 1,951,134 tonne in October, up from the previous record of 1,863,433 tonne in August 2013. October production was up 11.87% from October 2012.

High-cost smelters had limited production due to low domestic aluminium prices, which have fallen about 6% so far this year.

Low-cost new capacity in northern and northwestern provinces boosted production, however, traders said.

Xinjiang in the northwest, a new powerhouse for aluminium production, replaced central Henan as the largest aluminium-producing province with 285,965 tonne in October, closely followed by Henan, which produced 284,665 tonne.

Production of primary aluminium was at 18,161,163 tonne in the first 10 months of 2013, up 9.2% from the same period in 2012.

Source: Financial Express