The total planning output in 2023 will increase by 0.74 million tonnes or 7% year on year to 10.95 million tonnes, according to Mysteel's survey on the annual production plan of 50 copper smelters in China (with a total capacity of 13.22 million tonnes and a sample coverage rate of 96.7%). However, Mysteel estimates that it is difficult to achieve this production plan and will maintain the previous increase forecast of 0.5-0.55 million tonnes in 2023.
According to the survey, the main increase comes from the newly launched capacity of Yangxin Hongsheng, Qingyuan Jiangxi Copper, and Zhejiang Fuye in 2022, as well as the expansion of Baiyin Nonferrous and Northern Copper in 2023. In addition, China's secondary copper smelting output is expected to increase by 190,000 tonnes in 2023.
However, according to Mysteel's survey, China's copper scrap supply will remain tight in 2023 and is expected to increase by 160,000 tonnes year on year, while the import volume of copper scrap will remain unchanged. In addition, China's secondary copper rod production is expected to increase by 220,000 tonnes in 2023. As a result, 160,000 tonnes of raw material supply will be difficult to cover the total raw material demand of 410,000 tonnes of secondary copper cathode and secondary copper rod.
Therefore, it is expected that the raw material procurement competition among Chinese secondary copper producers will be very fierce in 2023, and the refined/secondary copper price spread will fluctuate sharply.
In addition, the global copper concentrate supply is further disturbed in Q1 2023, so processing fees continue to decline, and some mining enterprises may extend the maintenance. Therefore, it is expected that some smelters will face a shortage of raw materials again.
Data Source: Mysteel
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com