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UPDATE 1-China's base metals output climbs in May, showing demand ticking
June 17, 2014 / 10:21 AM / 3 years ago

UPDATE 1-China's base metals output climbs in May, showing demand ticking

(Adds analyst comment, base metal numbers)

* Copper rises to 615,307 tonnes

* Aluminium, zinc, lead, tin output up, nickel down

* Higher prices, seasonal demand are driving factors

By Polly Yam

HONG KONG, June 17 (Reuters) - China’s production of base metals including copper, aluminium and zinc was higher in May, government data showed, driven by higher prices and seasonal demand.

Rises in both month-on-month and year-on-year output showed that demand in the world’s biggest consumer of commodities is ticking along even as the overall economy cools. Growth in the world’s second-largest economy is forecast to slide to a 24-year low this year.

Refined copper production rose 5.3 percent to 615,307 tonnes in May from 584,277 tonnes in April, data from the National Bureau of Statistics showed on Tuesday. The rise reversed a month-on-month fall in April.

“Copper prices rose in May. That was the main reason for the higher output,” said Shenzhen-based Yang Xiaoguang at the institutional business department of Jinrui Futures.

Spot copper CU-1-CCNMM traded at around 50,000 yuan ($8,100) per tonne mostly in May, compared to the mostly below 48,000 yuan levels in April.

Yang added that strong seasonal demand in April-June in China also had prompted smelters to produce more metal.

He expects refined copper production to stay strong in June.

The May production of refined copper was up 6.5 percent from a year earlier.

Refined copper output reached 2.87 million tonnes in the first five months of 2014, up 6.5 percent from the same period in 2013.

Production of primary aluminium inched up 0.2 percent to 1.898 million tonnes in May after falling 4.5 percent on-month in April, the data showed.

Firm prices prompted aluminium smelters to stop closing high-cost capacity, while some smelters had restarted some idle capacity, industry sources said.

More restarts are expected in the southwestern province of Guizhou after the government there agreed to give a subsidy on electricity to aluminium smelters as part of efforts to boost the local economy.

At least two large smelters in Guizhou started reopening some closed capacity between the end of May and early June, the sources said.

The May production of primary aluminium rose 5.7 percent from a year earlier.

In the first five months of 2014, aluminium production increased 7.9 percent year-on-year to 9.588 million tonnes.

Spot aluminium prices AL-A00-CCNMM rose 3 percent between early May and the end of that month.

ZINC, LEAD

Firm prices and strong seasonal demand also boosted China’s production of refined zinc and refined lead in May, Yang at Jinrui said.

Refined zinc production was up 1.2 percent from the previous month to 461,021 tonnes in May.

The May zinc production rose 1.4 percent from a year earlier.

Refined lead production surged 16.1 percent month-on-month to 376,318 tonnes in May 2014. But the output fell 8 percent from May 2013.

Refined tin production rose 5 percent month-on-month to 16,096 tonnes in May, extending a 2.4 percent rise in April.

China is the world’s top producer and consumer of refined copper, primary aluminium, refined zinc, refined lead and tin.

Refined nickel fell 3.7 percent on-month to 27,751 tonnes in May, reversing a mild rise in April, the data showed.

The May nickel production still surged 39.1 percent from a year earlier as smelters expanded capacity. ($1 = 6.2090 Chinese Yuan Renminbi) (Editing by Muralikumar Anantharaman)

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