HONG KONG, May 24: Jinchuan Group Ltd, China’s third-largest copper producer, has shut a 200,000 tonne-a-year facility due to a raw scrap shortage, which could reduce its refined copper output by more than 16 percent this year, an executive said on Friday.
The move followed output cuts earlier this week by fourth-largest producer Yunnan Copper and in the past month by top producer Jiangxi Copper Company Ltd and other manufacturers, helping to push spot copper premiums to a 7-month high in China, the top consumer of the metal.
‘The closure would cut our (2013) production by at least 100,000 tonnes from our production plan set in the beginning of the year,’ Wu Jun, vice president of Jinchuan told Reuters. Jinchuan had earlier planned to produce 600,000 tonnes of refined copper this year.
The facility was closed a few days ago. ‘We, for now, don’t have a plan to reopen it,’ Wu said.
Jinchuan has more than 600,000 tonnes a year of copper production capacity in the northwestern province of Gansu. About two thirds of the capacity uses copper concentrate as feed and is running at full output, Wu said.
Benchmark premiums, or the differential between spot prices <CU-1-CCNMM> of refined copper and the front-month contract on the Shanghai Futures Exchange, have hovered this week at about 500 yuan ($81.51) a tonne, traders said. That’s the highest level since September 2012.
Some buyers in the northeastern province of Shandong have paid premiums near 1,000 yuan to buy spot metal as supply from domestic producers has fallen.
Jinchuan is building a plant with 400,000 tonnes a year of copper output capacity in Fangcheng city in the southwestern region of Guangxi and had earlier expected start it up in the second half of this year.
But work on the project has been slower than expected, Wu said. Jinchuan now sees the Fangcheng plant starting up half the planned capacity around the first quarter of 2014.
The startup delay, coupled with the cuts by refined copper producers due to the scrap shortage, should trim China’s output growth this year, sources at producers said.
Twelve top refined copper producers had been expected to increase production by a total of 650,000 tonnes this year from 2012 as producers expand their capacities, the sources said.
China produced 6.06 million tonnes of refined copper in 2012, official data showed, making the country the world’s top producer.
($1 = 6.1340 Chinese yuan)
(AGENCIES)
Trending Now
E-Paper
Follow our WhatsApp channel