Shanghai 18/11/2015 - China's Jiangxi Copper expects to produce around 1.2 million tonnes of copper this year, little changed from last year's output despite small production cuts at its main Guixi smelter, Wu Yuneng, vice president of the company, said on Wednesday.
"Output cuts are slight," Wu told Fastmarkets on the sidelines of Cesco Asia Copper Week (ACW) and Metal Bulletin's copper conference in Shanghai.
In September, Jiangxi Copper closed one furnace at the Guixi smelter and had planned to cut copper output at the plant by around 10,000 per month from the fourth quarter due to low copper prices and higher raw material costs.
The smelter, located in southeast 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.
Chinese copper smelters are still producing at high operating rates despite low copper prices, said market participants.
"Chinese copper smelters at this stage are neither making losses nor making much profit," said a Shanghai-based copper trader. "There are not a lot of copper production cuts in China, but at the same time production is unlikely to rise by much."
State-owned Chinese producers have to consider many factors such as local employment, high debts and the opinion of the provincial government before they can cut production, noted a Shanghai-based copper analyst.
"There are huge losses associated with output cuts. It is hard for smelters to cut production," he said.
Some copper smelter officials also told Fastmarkets at the event that they are maintaining production as demand has so far remained stable for them.
“Many people perceive that copper demand has slowed due to the country's decline in copper imports. But this is due to a decrease in financing deals, not real demand," said another Shanghai-based trader. Real Chinese copper demand growth is expected at 1-2 percent next year, unchanged from this year, he added.
The London Metal Exchange three-month copper price on Tuesday fell below $4,600 per tonne for the first time since May 2009. It was last at $4,617 per tonne on Wednesday, down $67 from the previous day’s close and down nearly 30 percent since May this year.
(Editing by Perrine Faye)