Cop­per smelters to trim out­put

Prices have dropped to un­sus­tain­able lev­els, say com­pa­nies

China Daily (Canada) - - LIFE - By YANG ZI­MAN yangz­i­man@ chi­

Cop­per pro­duc­ers from China have de­cided to cut out­put in 2016, in an ef­fort to rein in com­mod­ity prices, which fell to a six-year low re­cently.

On Tues­day, nine large cop­per com­pa­nies said they would cut re­fined cop­per out­put by 350,000 met­ric tons next year. The big smelters said in a joint state­ment that prices have fallen to a level that is no longer vi­able for com­pa­nies.

The amount is equiv­a­lent to about 4.4 per­cent of the coun­try’s an­nual out­put, based on fig­ures from the Na­tional Bureau of Sta­tis­tics.

The na­tion ac­counts for 24 per­cent of the world re­fined cop­per sup­ply, ac­cord­ing to Bloomberg data.

The nine com­pa­nies urged the gov­ern­ment to sup­port the mar­ket by buy­ing and stor­ing cop­per, as well as by reg­u­lat­ing high­fre­quency trad­ing.

“The smelters will make cuts and take other nec­es­sary mea­sures to main­tain the healthy de­vel­op­ment of the in­dus­try,” the state­ment said, adding that firms would weed out ex­cess ca­pac­ity.

In a sig­nif­i­cant move, the com­pa­nies urged the gov­ern­ment to stop ap­provals for new cop­per ca­pac­ity ex­pan­sion projects and vowed not to ex­pand their projects.

Sta­tis­tics from the Shang­hai Fu­tures Ex­change showed that trans­ac­tion prices of cop­per fell from 38,620 yuan ($6,030) per ton at the be­gin­ning of Novem­ber to 34,830 yuan per ton on Nov 30.

Themet­als mar­ket in China is wit­ness­ing its cold­est win­ter since the 2008 fi­nan­cial cri­sis. Prices of many ma­jor com­modi­ties like nickel, zinc, cop­per, iron ore and alu­minum have all plunged to record lows.

The China Non­fer­rous Met­als In­dus­try As­so­ci­a­tion had urged the cen­tral gov­ern­ment to pu r cha s e 900,000 tons of alu­minum, 30,000 tons of nickel and 400,000 tons of zinc.

“The de­crease in out­put is lim­ited,” said Li Xiaobei, a non­fer­rous met­als an­a­lyst with SCI In­ter­na­tional, a com­mod­ity mar­ket in­for­ma­tion ser­vice provider.

“Last year’s to­tal out­put was 7.96 mil­lion tons. The 350,000-ton cut ac­counts for just 4.4 per­cent of last year’s out­put. Since the cur­rent monthly out­put is nearly 700,000 tons, the im­pact on the mar­ket is very lim­ited.”

Shi Xiaofeng in Nan­chang and Zhu Lixin in He­fei con­trib­uted to this story.

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