Chinese copper output hits record on tailwind from sulfuric acid

Copper smelters in China churned out a record volume of refined metal last month, as surging prices of byproduct sulfuric acid encouraged higher output and aided the industry’s profitability.

Production of the metal that’s key to the energy transition rose to 1.33 million tons in March, the highest in data going back to 1990, according to figures from the National Bureau of Statistics on Tuesday. That brought output in the first quarter to 3.785 million tons, up 9.3% on-year.

Chinese smelters, the world’s largest suppliers, have proved resilient in recent quarters, even as a slump in processing fees to a record low driven by a shortage of concentrate prompted rivals to cut output, including in Japan.

The companies — led by large and efficient state-owned firms — have been aided by their commitment to local-government growth targets, as well as access to scrap as an alternative feedstock. Another key boost has come from surging income from sulfuric acid, with Chinese prices at a record after the war in Iran choked off sulfur supplies derived from oil and gas production.

For each ton of copper, Chinese smelters can earn more than 5,000 yuan ( $733) from sulfuric acid, boosting their willingness to operate, Yang Changhua, chief expert at Beijing Antaike Information Co., told a conference last week.

Still, production may ease. Copper output looks set to decline in April and the following month due to smelters’ seasonal maintenance, with the impact expected to be seen mainly in May, according to Shanghai Metals Market.

In other base metals, zinc output rose 3.6% to 637,000 tons last month compared with a year ago, with first-quarter output up 4.1% to 1.839 million tons, according to the NBS data. Lead production fell 11% to 652,000 tons in March, and was down 4.1% to 1.81 million tons so far this year.

Read More: Acid, not copper, is paying China’s smelters but will it last?