China's Base Metal Production Up in 2006
By David Harman
23 Jan 2007 at 11:12 AM EST
resourceinvestor.com
SHANGHAI (Interfax-China) -- China produced 2.925 million tonnes copper in 2006, an increase of 17.8% from a year earlier. Aluminum production hit 9.19 million tonnes, up 19.7%, according statistics released by the National Bureau of Statistics yesterday.
China Nonferrous Metals Industry Association predicted previously China would produce 3.20 million tonnes copper in 2007, up 9.4% from 2006.
Shanghai Futures Exchange (SFE) copper futures dipped on Tuesday in modest trade closing at RMB 52,260/tonne (US$6,720/t), despite a slight rise at the London Metals Exchange overnight on an inventory reduction of more than 5,000 tonnes.
Analysts said the domestic market still shows strong consumption prospects, but spot trading will be bleak ahead of the Chinese New Year as factories keep inventories low and rebuild stockpiles after the holiday season.
Aluminum futures edged up in quite active trade following bullish performance on LME overnight, closing at RMB 19,450/tonne (US$2,501/t) on the SFE. Analysts said the rebound was supported by rising alumna prices.
Domestic alumna production jumped 54% to 112 million tonnes in the first 11 months of last year, putting pressure on futures prices. Speculation that four major alumna producers would unite in a output reduction to keep the prices between RMB 2500 (US$321.3) – RMB3000 (US$385.6), as well as smelters’ stockpile moves before the Chinese New Year have given the aluminum future prices a significant boost.
Following table specifies production of China’s major base metals in 2006.
Commentary
These figures are far and above growth expectation. The trend has been toward higher domestic capacity although not necessarily at this rate. Markets are already looking for a slowdown in demand and expect imports to fall. These numbers are likely to surprise to the negative, especially on copper where global oversupply exists.
Aluminum prices have been very steady after recovering from early January losses. Copper too is beginning to find a base at the lower levels and has seen encouragement from a slight decrease in stocks. Watch for reaction to the latest statistics on production which may surprise to the negative. |
