Singapore 29/12/2015 - Major copper smelters in China are mulling a 200,000 tonne cut in their sales volume in the spot market in the first quarter of this year, sources told Fastmarkets.
A senior official with a major copper smelter confirmed this is being discussed among the smelters but said a conclusion on how much sales volume to be cut by each smelter – who are members of the China Smelters Purchase Team (CSPT) – has not been finalised.
Citing a smelter source, Reuters reported on Tuesday that nine large Chinese smelters have agreed to cut sales of spot copper by as much as 200,000 tonnes in January-March to counter low prices.
Some market participants however said it is uncertain whether the smelters will put this into action as producers did not detail individual plans.
“In terms of production cuts, so far we have only heard one smelter which has concrete plans to cut production in December. But there is nothing else from other smelters,” said a Shanghai-based copper analyst.
“As far as we know, domestic copper production remains high in October. Whether they really cut sales volume starting January is still uncertain. I think it will depend on how copper prices are then,” said a Beijing-based metals analyst.
Still should some 200,000 tonnes of supply be unavailable during the first quarter, industry participants said the effect should be limited in January-February as demand typically slows down before and during Chinese New Year which will start in February 8 next year.
But come March, the market could experience some tightness as demand usually picks up after the Spring Festival holidays.
“March will likely be a peak period for demand as Chinese businesses restart after the holidays. And if the smelters do cut their sales volume and there is no increase in production in March, that will affect the market,” said the first analyst.
Sources also said the major Chinese copper smelters who met a week ago to discuss commercial stockpiling has not finalised details on the move.
Chinese smelters had met on December 19 and agreed to cut at least 350,000 tonnes of refined metal output in 2016 and move ahead with plans to stockpile metal.
The Shanghai Futures Exchange February copper contract rose 550 yuan per tonne to close at 36,290 yuan per tonne on Tuesday.