China's Jinchuan Group declares force majeure at Gansu copper smelter

BEIJING (Scrap Monster) : Jinchuan Group- one of the leading Chinese copper producers has announced force majeure at one of its facilities in Gansu province.

The company officials cite equipment failure as the reason for closure of the plant. The closure is anticipated to cut the production by half in the coming months. It is also feared that the domestic market will face a shortage of 20,000 tons a month. Jinchuan Group is the third top copper producer in China.

The supply shortage may spike up the prices and bring down the surplus levels of the metal in global market. It should be noted that the force majeure comes during the peak demand season. This in turn may trigger more copper imports by the country at higher prices.

Recently, Jinchuan Group Co had announced closure of its plant having a yearly capacity of 200,000 tonne following acute shortage of raw scrap. According to the company officials, there are no plans for reopening of the plant. The shutdown would lower the company’s yearly production by at least 100,000 tonnes. Jinchuan Group which had earlier forecast a yearly output of 600,000 tonnes has now cut the production estimates by 17% to 500,000 tonnes. The scarcity of scrap is feared to get even tighter during the month of June.

Supply from two major copper smelters – Freeport-McMoRan Copper & Gold’s Grasberg mine in Indonesia and Rio Tinto’s Bingham Canyon Utah mines in the US are already disrupted.