'Factors behind a jump in Chinese base metals output in June'
BEIJING (Scrap Monster): Barclays Capital cites several factors behind a jump in Chinese base-metals production in June this year.
In some cases, such as copper and zinc, early-summer maintenance that was brought forward into May came to an end at the same time that margins improved because of improvement in spot treatment charges, Barclays added.
“In the case of copper, this increase in domestic production combined with a steady flow of imported material has improved domestic availability as illustrated by the builds in SHFE stocks. In the case of zinc, however, domestic availability of refined metal remains a little tight with SHFE stocks falling and the SHFE/LME arbitrage ratio still comfortably in positive import territory,” they noted.
Primary aluminum production continued to grow in June despite prices trading well into the industry cost curve, with around 29% of the country’s production now receiving some form of government aid in the form of power subsidies.
The British bank continued that, “we know that some smelters are using these subsidies to restart production so, with that in mind, together with further (albeit slower-than-announced) ramp-ups of production in Xinjiang province, Chinese aluminum production looks likely to continue growing strongly in the months ahead.”
“The record level of refined lead production in June shows that output is now fully recovered from environmental-related shutdowns, and with battery production up strongly, we believe this additional production is being absorbed,” Barclays concluded.
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