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China’s annual refined copper output will grow more than 3% this year despite a recent agreement among smelters to take measures to slow production, state-backed research house Antaike said on Friday.
Several major Chinese smelters agreed last week to lower operation rates, adjust maintenance plans and postpone new projects, Antaike said on March 14. That came a day after Reuters reported that top smelters had agreed to production cuts at some loss-making plants to curb losses amid a raw material shortage.
Bringing forward maintenance in the March-May period and the effective annual reduction in smelting capacity each involve capacity exceeding 200,000 metric tons, Antaike said on its WeChat account, but will mainly impact the need for procurement of copper concentrate, which is in short supply.
Full-year refined copper output in China in 2023 totalled around 12.99 million tons, up 13.5% from 2022.
Margins among Chinese copper smelters have been squeezed after spot treatment charges – a fee for converting concentrate into refined copper – hit their lowest in more than a decade.
Several supply disruptions globally, including the shutdown of the big Cobre mine in Panama owned by First Quantum FM.TO and Anglo American AAL.L cutting production guidance tightened prospects of supply of copper concentrate.
Chinese smelters have been rapidly expanding their capacity over the past year to get ahead of an expected surge in copper demand from sectors related to the green energy transition such as electric vehicles or wind and solar energy.
Copper is widely used in power, transportation and construction sectors and sees its demand booming from the renewable energy industry.