Chinese copper supplies swell as output climbs to record levels

Chinese smelters continue to churn out record quantities of copper, swelling stockpiles and threatening to slow the metal’s powerful gains.

Refined copper output is expected to rise to almost 1.2 million tons this month, according to a poll of producers by Shanghai Metals Market covering most of the sector. That’s a 4.6% increase from February and a record high for the survey, putting year-to-date output growth at 10%.

Smelters have been able to keep their rapid expansion on the rails despite a shortage of ore globally and a consequent collapse in processing fees. The speculative rally in copper prices to an all-time high at the end of January has incentivized the release of more scrap, which is becoming available for plants to use as a replacement for concentrate, SMM said.

A surge in the price of the copper byproduct sulfuric acid, which rose last month to the highest since at least 2014, is also supporting the economics of higher production, it said. Prices have risen because of constraints on Russian sulfur exports and strong fertilizer demand.

Global copper inventories have soared as real-world buyers of the metal are deterred by lofty prices. That’s been compounded in China, the world’s biggest consumer, by a slowdown in demand over the Lunar New Year break.

China’s statistics bureau releases its output data for January and February later this month. SMM’s survey undershoots the more comprehensive official figures, which saw refined output climb to a record of over 1.3 million tons in December.

SMM said production could drop in April and May, when many smelters conduct annual maintenance.

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