China may increase copper imports in the next few months

Due to the difficulties encountered in dealing with copper smelting by-products, Chinese copper smelters are forced to reduce copper production and China may have to increase copper imports in the next few months.

China’s increase in copper imports should support copper prices; copper prices have fallen by about 8% this year. The treated exhaust of copper and zinc can produce **. The smelter must deal with these swiftly, because manufacturers usually do not have huge storage space, so selling ** is very important for smelting copper concentrates. Last year, about one-third of the 84 million tons of raw materials used in China's fertilizer production came from smelting companies. The annual capacity of China's copper smelting is expected to increase by 620,000 tons this year and the acid production capacity will increase by approximately 2.2 million tons. However, a number of analysts and smelter sources pointed out that the cooling of the Chinese economy has led to a decline in demand this year, coupled with excess production capacity, thus oversupply.

Tai Wenwen, a market analyst at Sunsirs, pointed out that prices have dropped by at least a quarter since the beginning of this year, and dropped to 140-160 yuan per ton in the most-used Shandong province. (22.87 - US$26.13), before the peak of usage at the end of the year, may further decline.

The above is the ex-factory price, which was about 600 yuan two years ago and 1,550 yuan in 2008.

Ban Wenwen pointed out that the low price of import **, the sale price in China's ports is about 30 US dollars per ton, but also put pressure on prices. "Now is not a question of price, but a problem with no place at the smelter," she said. The trading manager of a smelter in Gansu said that the company is willing to use the price of more than 100 yuan per ton to allow buyers to buy away, but few people are required.

The manager stated that "** production is a very tough problem for refineries and production may be affected in the second half of the year," and he refused to be named because he was not authorized to speak to the media.

** Deterioration of the situation**

** The problem is not new to Chinese smelters.

Jiangxi Copper (17.63, -0.30, -1.67%) was forced to cut copper production at the beginning of 2008 because snowstorm weather damaged the roads in many provinces, resulting in slower shipments and insufficient storage space. Jiangxi Copper is China's largest copper producer and can produce more than 2.5 million tons per year**.

Due to overcapacity and weak economy, this problem has deteriorated this year. Exports are not a viable option for many refineries because of the fierce international competition from Japanese and Korean smelters. In this environment, it is highly possible to reduce production. Yang Changhua, chief copper analyst at research firm Antaike, said that if smelters cannot sell **, they may reduce copper concentrate smelting.

As the refinery is faced with the problem of shortage of alternative raw material scrap copper, and several companies such as Jiangxi Copper have begun to cut production in the first half of the year, copper concentrate smelting will be the key to China's copper production in the second half of the year. The above-mentioned Gansu smelter trading manager estimates that due to weak demand and a shortage of scrap copper supplies, China’s refined copper production this year may fall from 5.6 million tons in 2012 to about 5.2 million tons.