HONG KONG: China's production of refined copper rose in November to a record high for the second straight month, as more domestic manufacturers turned to local smelters for supplies that traders said were cheaper than imports.
Smelters also continued to take advantage of higher treatment and refining charges (TC/RCs) for raw material copper concentrate, which was also in plentiful supply due to a rise in imports, analysts said.
Refined copper output rose 2.1 percent in November to 531,000 tonnes, up from the previous record of 520,000 tonnes in October, data from the National Bureau of Statistics showed on Tuesday.
Some large smelters have also increased exports of refined copper cathode in the past few months and plan to ship out even more next year, encouraging higher production, traders said.
China is the world's top consumer of industrial metals and also the biggest producer of most refined metals.
Demand for metals has weakened this year as China's economic growth slowed, creating record high stockpiles of copper and slowing the growth of imports of refined metals, alloys and semi-finished copper products in October to their lowest in 15 months.
"Most smelters have been doing alright this year even though consumption has slowed and their raw materials supplies have increased recently, encouraging them to produce more metal," said Yang Xiaoguang, analyst at Jinrui Futures, a subsidiary of top producer Jiangxi Copper.
"Capacity of semi-finished copper products has expanded this year, therefore the demand for refined copper has still increased," he said, adding that refined metal output is likely to stay strong in December.
Some analysts and traders had hoped Beijing's recent increase in infrastructure spending would boost copper demand in the fourth quarter of the year.
LEAD
Refined lead production fell 2.8 percent from a record 471,000 tonnes in October to 458,000 tonnes in November as demand weakened from the battery sector, the biggest user of the metal.
Some lead-acid batteries manufacturing plants built new capacity after the government closed outdated plants last year. The bulk of the capacity came on line in the first half of the year but demand has slowed, creating high inventories and forcing some factories to cut production.
"The sales of lead are still very bad. Battery plants have a lot of battery inventories, both for electric bicycles and automobiles," a sales manager at a large lead smelter said.
"We are pessimistic on demand for the next few months. Some lead smelters are certainly going to cut production."
ALUMINIUM, ZINC
Output of primary aluminium dropped 3.3 percent to 1.67 million tonnes in November, reversing a 2.8 percent rise in the previous month, even though a purchase by the State Reserves Bureau briefly supported domestic prices.
"There is so much aluminium in China, it is hard for prices to rise," said a manager at a large aluminium smelter.
Jinrui's Yang estimated more than 1.2 million tonnes of aluminium ingots were currently stored in private and public warehouses. These figures excluded state stocks.
"Some smelters have cut or shut production because of low prices. But the overall production is still higher than last year as new capacity came onstream," Yang said.
China's State Reserves Bureau kicked off a metals buying spree last month, taking 100,000 tonnes each of aluminium and zinc from domestic smelters in a move that is aimed to assist smelters that have been hurt by weak demand.
NICKEL
Refined nickel production rose 2.8 percent to 23,017 tonnes in November after falling 3.2 percent in October.
A source at a nickel pig iron production plant said many plants were still not running at full production as demand from stainless steel manufacturers remained modest.
"Many producers are not expecting demand to improve in the next few months," the source said.
Center>Copyright Reuters, 2012
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