Chinese copper smelters consider deeper production cuts

HONG KONG, Aug 24 (Reuters) - China’s copper smelters are considering deeper output cuts due to low metal prices and as supply of raw material scrap and concentrates from domestic mines falls, industry sources said on Monday.

Lower production in the world’s top producer and consumer of refined copper could drive up the country’s demand for imports of spot metal.

Jiangxi Copper Company Limited -- the top integrated copper producer in China -- would cut production by about 10 percent in the next 4 months at its main Guixi smelter, said an industry official who is familiar with the company’s operations. He declined to be named because he was not authorised to speak to media.

“If the prices fall further, (they) would continue the cut,” the official said.

He added that the move would reduce refined metal production at the Guixi smelter by about 10,000 tonnes a month.

A spokesman at Jiangxi Copper did not comment.

The Guixi smelter produced about 85 percent of Jiangxi Copper’s 1.2 million tonnes of refined metal production in 2014.

Copper prices have hovered around six-year lows this month in China CU-1-CCNMM and the international market.

Weak prices have prompted suppliers to cut sales of copper concentrates and scrap in the domestic market over the past two months.

An executive at a state-owned copper smelter said producers that used scrap and concentrates from local mines faced mounting pressure to slow metal production.

“People at smelters are talking about production cuts. They may extend the time of maintenance or slow the production. But I don’t think they are going to close completely,” the executive said.

He added that smelters were still making small profits from refined metal production made from imported concentrates.

Some smelters have already slowed production.

China’s refined copper production dropped 4.5 percent in July from June.

Editing by William Hardy