– Copper & Nickel smelting activities continue to fall –
– Global inactive copper smelting capacity increases to 19.5% –
– Asia nickel smelting weakens vs improvements in US and Europe –
– China NPI Dispersion Index fell back to 44.0 from 47.1 in May –
June 2023 Copper observations include:
The Global Dispersion Index fell to 45.9 from 46.2 in May, resuming the downtrend seen this year, with May being the exception. This was despite activity in China increasing to its highest level since January 2021 as the country finished the second quarter maintenance season. Both Zhongtiaoshan’s 50kt/a Shanxi smelter and Zijin Mining’s 150kt/a Qiqihar plant in Heilongjiang province – that we noted as being offline at the end of May – resumed activity. Nevertheless, it was noteworthy that Jinchuan’s eponymous 400kt/a plant was seen as inactive from the middle of the month, while Daye’s 300kt/a smelter in Hubei province remains on an extended outage.
Outside China, smelting activity weakened from May in all regions except for Asia & Oceania, which rose slightly from 42.4 to 44.2. SAVANT monitoring indicated the resumption of activity at Boliden’s Ronnskar smelter in Sweden in the last week of the month following a fire that destroyed the electrolytic refinery during the night of June 13. The company has indicated that they expect anode production at the smelter to continue, although possibly at reduced capacity, for the foreseeable future.
- Global Dispersion Index fell to 45.9 in June from 46.2 in May, while China smelting activities rose by 3 points to 55.7
- Global Inactive Capacity rose again to a monthly average of 19.5%, with that for the World ex. China recorded its highest reading since July 2022 at 24.7%
- All regions outside China recorded Dispersion Indices below the 2 year average of 50 for the first time in a year, so that the collective Global ex. China Dispersion Index fell to 39.3, its lowest reading since April 2021
June 2023 Nickel observations include:
The Global Dispersion Index fell back to 40.4 in June from 41.8 in May, with activity in the Eastern hemisphere weakening as readings for NPI in China and Indonesia both fell, together with the regional index for Asia & Oceania. This was in contrast to activity in the Americas and Europe & Africa, which rose by 6.2 and 8.5 points, respectively, to 57.0 and 42.6. Of the metal grades, despite registering the lowest monthly average reading, activity at class 1 operations has been resurgent in the second half of June, despite the downtime at Jinchuan’s 150 kt/a plant noted above from the middle of the month. With activity at ferronickel operations falling by 3.9 points to 43.8 in June, the spread between the grades has narrowed, a trend which seems set to continue with the rebuild of the furnace at Vale’s 27kt/a Onca Puma plant in Brazil scheduled for the second half of 2023.
- Global Dispersion Index fell to 40.4 in June from 41.8 in May, the 7th consecutive monthly fall and its lowest level in a year
- The China NPI Dispersion Index fell back to 44.0 from 47.1 in May, recording its fourth consecutive month below the average of 50
- The Americas continued to be the strongest region, rising by 6.2 points to a reading of 57.0 in June
- Class 1 production recorded its fifth consecutive month as the weakest of the metal grades, despite rising to 36.5 in June from 34.8 in May, trailing both ferronickel and nickel pig iron at 43.8 and 40.9, respectively
Dr Guy Wolf, Marex Global Head of Analytics, commented: “The rebound in copper and nickel smelting activity in China is noteworthy against the bearish macro environment that has seen rumours emerge of an impending stimulus package from the government. Indeed, copper demand will need to step up to meet supply as SAVANT data shows rising concentrate exports from South America are now being processed to metal. Together with increasing refined shipments from Africa, the supply side is starting to fire.”
Copper: Global ex. China Activity Dispersion Index (21 day moving average), Jul 2021 – Present
Nickel: Metal Grades Activity Dispersion Index (21 day moving average), Jan 2023 – Present
Source: SAVANT by Earth-i
The Activity Dispersion Index is a measure of capacity-weighted activity levels observed at smelter sites where a reading of 50 indicates that current activity levels are at average levels. Readings above or below 50 indicate greater or lesser activity levels than average, respectively. The above chart displays these readings as a weekly rolling average.
The Inactive Capacity Index is derived from binary observations of a smelter’s operational status as being either active or inactive. The capacity weighted global and regional indices show the percentage of smelter capacity that is inactive, with readings displayed in the chart below as a weekly rolling average. A reading of zero would indicate 100% smelting capacity.
The SAVANT platform monitors up to 90% of the smelting capacity for copper and nickel round the globe. Using daily updated sources, including extensive use of geospatial data collected from satellites, the index reports on the activities at the world’s smelting plants offering subscribers unprecedented levels of coverage, accuracy and reliability. This dataset allows users to make better informed and more timely trading decisions.
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