London 02/09/2015 - Jiangxi Copper will cut refined copper output at its Guixi smelter by around 10,000 tonnes per month due to low copper prices and higher raw material costs, industry sources said.
”One furnace at the Guixi smelter has already closed,” a source close to the company said.
The smelter, located in Jiangxi Province, produced 581,700 tonnes of copper cathodes in the first half, up 2.2 percent year-on-year. The company previously announced a 2015 full year target of 1.22 million tonnes.
Jiangxi might consider restoring production if copper rebounds, said another source, who declined to disclose a possible trigger price.
Three month copper on the London Metal Exchange last traded at $5,114 per tonne, which is only modestly above the six-year low of $4,855 per tonne set on August 24.
“I've heard that they reduced their copper blister purchases. They usually get it from other smelters at a discounted prices based on the Shanghai Futures Exchange, but with low copper prices, it’s harder for them to get the discount,” a trading source said.
Other big Chinese smelters, known as the Chinese Copper Smelting Purchasing Team (CSPT), have not yet announced major production cuts.
“We have no plans this year to reduce our production targets,” said one of the CSPT members.
Spot copper treatment and refining charges (TC/RCs) have showed signs of recovery in late August, with sales to smelters increased to $84-94 per tonne/8.4-9.4 cents per pound from $84-92/8.4-9.2. Purchases made by CSPT members remain above $90/9.0 as they set their minimal buying level at $90/9.0 at the beginning of July but small smelters are buying at mid-high 80s.
“Big smelters in China have high stock levels, and are well-covered by long-term contracts. With some of the factories going on maintence work in the coming month, there is still space for TC/RCs to go higher,” another trading source in Shanghai said.
(Edited by Tom Jennemann)