China Copper Output Gains 7.6% Even After Smelters Vow Cuts

  • First half increase comes as treatment fees increase: Guotai
  • Monthly zinc, lead output both at highest since June 2015

China, the world’s top producer of refined copper, boosted output by 7.6 percent in the first half as margins rose, even after smelters pledged late last year to cut output to shore up prices.

Production increased to 4.03 million metric tons in the first six months, the National Bureau of Statistics said on its website Wednesday. It compares with a 9.4 percent gain in the first half of last year. June production climbed to 686,000 tons from 680,000 tons last month, though less than 693,000 tons a year ago.

Smelters have ramped up output after margins rose amid ample raw material supplies. China’s top refiners had pledged in December to cut output by 350,000 tons this year as prices collapsed, although Jiangxi Copper Co., the nation’s biggest smelter, said in May that the country’s total output may remain around last year’s level due to the addition of new capacity.

“Small refiners are running at full capacity after spot treatment fees rose to above $100 a ton,” Ji Xianfei, an analyst with Guotai Junan Futures Ltd., said by phone from Shanghai. “The nation’s total output will definitely expand this year.”

The spot treatment charges Chinese smelters levy miners to process ore into the refined metal increased to $103 a ton last month, the highest since February 2015, according to Bloomberg Intelligence.

Copper in London has risen 5.3 percent this year to close at $4,984 a ton on Tuesday, rebounding from a six-year low in January of $4,331 a ton amid a broader commodities rally. The metal still lags others, with zinc and nickel surging 39 percent and 19 percent, respectively, over the period.

Zinc production fell 0.9 percent to 3.03 million tons in the first half and stood at 541,000 tons last month, the highest since June 2015, according to the statistics bureau. Lead output gained 2.8 percent to 1.97 million tons including a rise to 369,000 tons in June, also the most in a year.

Copper on the London Metal Exchange was down 0.9 percent as of 10:17 a.m. in Shanghai. Zinc was 0.3 percent lower, while lead fell 0.4 percent.

— With assistance by Winnie Zhu

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