China’s refined copper production
Previously, we discussed how China’s copper demand is shaping up. In this part, we’ll look at refined copper production in China (FXI). Globally, China is the largest producer of refined copper. China accounts for over a third of the global refined copper production. Chile (ECH) is the second largest producer at the refinery level, while Japan is ranked third. The US is ranked fourth in terms of refined copper production.
The above chart shows the recent trend in China’s refined copper production. China produced 607 thousand tonnes of refined copper in April. This represents an increase of ~4% on a YoY (year-over-year) basis. Although the copper production in April increased on a YoY basis, it declined compared to March.
China’s refined copper production averaged more than 700 thousand tonnes in the last four months of 2014. This was possibly a reason behind the surge in copper inventory on the Shanghai Futures Exchange.
Now, with production declining from last year’s peak, copper inventories have also started to come down in China. In our recent series, we discussed how Chinese copper inventories literally flew off the shelves in April.
What to read?
While the decline in Chinese inventory is positive for the copper industry, the production slowdown reflects poor demand. The slowdown in Chinese copper demand negatively impacts producers like Thompson Creek (TC), Buenaventura (BVN), and McEwen Mining (MUX).
China is the largest refined copper producer, but it lacks copper mineral deposits. It has to import unprocessed copper ores and copper scrap. Analysts track the imports of these materials as an indicator of future refined copper production in China. In the next part of this series, we’ll discuss the latest trend in Chinese copper imports.