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China’s copper industry could face pressure due to the declining price of a key moneymaking byproduct, potentially leading to a drop in operating rates, according to a Chinese consultancy.
Prices of sulphuric acid in China have fallen from high levels since September due to weakening demand for fertilizers, analysts at SMM Information & Technology Co. said in a note on Monday. The byproduct in the copper smelting process soared earlier in the year after an unusually tight market, propping up the industry.
Copper smelters now face pressure from weakening byproduct revenues, as well as persistently negative spot treatment charges, high raw material costs, and an expected decline in refined copper output, SMM said. “These factors together are expected to lead to a deterioration in smelter operating rates,” they said.
Chinese copper production was at record levels during the first half of the year, putting pressure on operations elsewhere in the world. Smelters from the nation account for more than half of global production.
Copper prices on the London Metal Exchange were steady at $9,978 a ton at 9:45 a.m. London time. Nickel and aluminum were also flat.
(By Katharine Gemmell)