This is a roundup of China’s base metals output in August. SMM surveyed major producers in the market to obtain first-hand information for calculation.
China produced 5.92 million mt of alumina in August, down 0.1% from a year ago. Overall output in January-August came in at 46.18 million mt, up 1.8% from the corresponding period last year.
Daily output averaged 191,000 mt, just up 0.1% from July as recovered production from maintenance was mostly offset by reductions at some refineries. Short supplies of bauxite in Shanxi and Henan provinces affected these refineries.
SMM expects daily output in September to stand 1.4% greater than August, as some refineries would recover production and as imported materials are likely to ease shortages of domestic bauxite. September’s output is expected to come in at 5.81 million mt with daily output averaged at 194,000 mt.
China produced 3.11 million mt of primary aluminium in August, up 1.5% year on year. This brought the overall output in January-August down 1.8% from the corresponding period last year, stand at 24.05 million mt, SMM data showed.
There is about 37.36 million mt of primary aluminium capacity in operation across the country as of the end of August and about 4.54 million mt of idle capacity. Operating rates in August came in at 89.2%, down 0.3 percentage point from July as costs and losses grew.
Some capacities with high costs in Gansu, Shaanxi and Henan provinces were shut permanently and this shrank operating volumes.
Commissioning of new capacities is likely to remain slow in the short term. Most of the new capacities are located in Inner Mongolia and Guangxi. Newly-commissioned capacities are unlikely to exceed 200,000 mt across the country in September, SMM expects.
SMM estimates September’s output to come in at 3.03 million mt, up 3.8% from the same period last year. While the small output in September 2017 would support annual growth into positive territory, the annual change for the January-September period is likely to be in a contraction, of 1.2%.
China’s nickel output in August fell 19.24% on the year and came in at 11,400 mt. From January-August, output declined 9.76% from last year and stood at 95,100 mt.
August’s figure stood 8.61% lower than the level seen in July as two producers undertook maintenance and their production was affected.
The maintenance work would continue into September and is expected to bring the monthly output down 500 mt or 4.04% to 10,900 mt, SMM expects.
Nickel pig iron (NPI)
China’s NPI output in August grew 13.1% from July to stand at 38,500 mt in nickel content, up 3.14% on a yearly basis. Overall output came in at 292,300 mt in nickel content, 11.89% higher than the same period last year.
Steady production across producers in Inner Mongolia grew output of high-grade materials by 15% month on month to 34,100 mt in nickel content. About 4,296 mt in nickel content of high-grade NPI was produced in Inner Mongolia in August, up 123% from July.
Meanwhile, China’s output of low-grade NPI stayed flat at 4,300 mt in nickel content.
Producers in Inner Mongolia are likely to further step up output in September. This is expected to push overall NPI output up 5.78% from August to stand at 40,700 mt in nickel content.
China produced 37,900 mt of nickel sulphate in physical volumes in August. This translates to 8,337 mt in metal content, up 33.09% from July. Output at producers surveyed by SMM stood at 36,000 mt in physical volumes. Domestic production during January-August registered at 273,200 mt in physical volume, up 38.38% year on year.
Output in August rebounded after restrictions were lifted at a major producer in south China. The company treated solid waste slag as required by the government and agreed to dispose all accumulated waste residue within a designated time. It is expected to maintain normal operation for the rest of the year. Another producer in the south is still undergoing rectification for solid waste slag treatment, and may return to operation by the end of this year.
Production is expected to grow to 39,600 mt in September, or 8,707 mt in metal content, driven by output resumption of small and medium-sized producers. This will be up 4.44% from August.
Resumption after maintenance raised output of refined zinc across Chinese smelters to 418,700 mt in August, up 2.52% from July, but down 6.11% from a year ago. Total output in the first eight months of the year gained 0.66% on the year and stood at 3.52 million mt.
Resumed volumes were limited as some smelters ended maintenance last month. Profit margins remained thin even as higher concentrate treatment charges (TCs) offset part of losses across smelters when zinc price slumped. Some showed less production enthusiasm given nationwide environmental probes and technical difficulties.
Chihong Zinc & Germanium in Hulunbuir of Inner Mongolia, Xing’an Copper & Zinc Smelting, Chifeng Zhongse Zinc, and Gansu Chengzhou Mining Group resumed part of their production. Bayannaoer Zijin Nonferrous Metal underwent regular overhaul, and Hanzhong Zinc Industry cut production slightly last month.
Output of refined zinc is expected to grow 14,600 mt from August to stand at 433,200 mt in September. This will be down 8.31% from a year ago. Year-to-date output through September is likely to decrease 0.41% on the year. Most smelters will recover from maintenance this month, but resumed volumes will remain limited. Western Mining in Qinghai province plans to conduct maintenance in September.
China’s primary lead output fell unexpectedly by 2.93% from July, to 248,000 mt in August. This dipped 13.16% from a year ago, and brought production during January-August down 9.49% on the year, to around 1.94 million mt.
Output declined as unexpected environmental checks prompted some smelters in Henan and Yunnan provinces to undertake rectification works last month. Large-scale smelters in Henan restarted maintenance in at the end of August as lead prices fell close to costs, and as technical upgrades destabilised supplies across smelters in Anhui province.
We expect output to climb up to 249,000 mt in September as Anhui Tongguan Nonferrous Metals recovers from technical upgrading and Chihong Zinc & Germanium may end maintenance. Meanwhile, maintenance at some smelters in Henan will last till the middle of this month, and those undertook technical upgrades in Henan and Yunnan are unlikely to resume operation in October. Some smelters in the north-west and north-east plan to start maintenance in the second half of September.
China’s output of refined tin grew 14.4% from July to stand at 13,964 mt in August as production at smelters that were affected by environmental probes returned to normal, SMM research found.
Some smelters in Yunnan province told SMM that poorer ore grades dragged down their output.
Output is likely to extend its gains to some 14,500 mt in September as China Tin Group will further recover production. The Guangxi-based tin-making giant did not resume production until the start of August and this limited its monthly output.
Yaang Pipe Industry Co., Limited (www.yaang.com)