China’s copper cathode output stood at 857,000 mt in June, up 4.6% month-on-month and 3.3% year-on-year. 

Overall, most smelters were under maintenance in June, but the added output from two smelters in Shandong, which resumed the production earlier, entered the market. Meanwhile, some maintenance plans were repeatedly delayed due to the issues relating to equipment and maintenance personnel, and were now scheduled in July or even September and October. As such, domestic copper cathode output returned to the moderate high of more than 860,000 mt in June. From the perspective of raw materials, the clean ore market was in short supply due to the intensive restocking of smelters and supply-side disturbances in South America, and TC fell below the $75/mt mark. However, based on the recent disclosed benchmark TC, which stood at $76/mt for 2023 after negotiations between Antofagasta and domestic smelters, and $80/mt set by CSPT, the market expects the supply of copper concentrate to be relatively sufficient in the future. At the same time, the prices of sulphuric acid fell slightly due to the decline in the prices of raw materials, but the overall profit of smelters was still considerable despite high cost. In the future, domestic smelters are expected to maintain high output under the backdrop of sufficient raw material supply. In terms of blister copper, with the rapid decline of copper prices by nearly 10,000 yuan/mt, the supply of copper scrap remained tight, and the blister copper RC continued to fall amid relatively tight supply of imported blister copper, which is relatively unfavourable for smelters with expansion plans in the second half of the year.

Judging from the production schedules in July, most smelters are still under maintenance. Jinchuan and Nanguo have started their maintenance, which has a greater impact on production. Chifeng is also considering advance the maintenance plans, lowering market expect for July output. The other maintenance plans will have little impact on the overall production. Nonetheless, some large factories will resume the production from overhauls, and the overall production will remain high. In August-September, three large expansion plans are expected to be put into production, and domestic copper cathode output is expected to rise steadily. Domestic copper cathode output in July is estimated at 858,400 mt, up 0.2% MoM and 3.4% YoY.

SMM China metallurgical-grade alumina output in June (30 calendar days) was 6.74 million mt. The average daily output of metallurgical-grade alumina was 224,700 mt, down 3% MoM and up 14.4% YoY. The metallurgical-grade alumina output totalled 37.786 million mt from January to May, up 6.7% year on year.

In June, due to the tight supply of raw materials and the high purchase prices, profits of enterprises fell sharply. Therefore, high-cost capacity in Shanxi and Henan regions reduced the production intensively. The output in Henan in June was 699,000 mt, a decrease of 16% from the previous month, and the output in Shanxi was 1.755 million mt, a decrease of 3% month-on-month. Up to now, according to SMM, the output in the north China declined and the annualized capacity is close to 4 million mt. The production reduction is expected to be shown in the output in July.

The output in Guizhou rose by 4% to 436,000 mt as enterprises purchased ores from other regions and purchased imported ores to supplement the supply. In Chongqing, the output stood at 362,000 mt, up 12% on the month. The production capacity of Chongqing Bosai Wanzhou will reach 4.8 million mt in July. Therefore, the output in this region increased significantly. In Hebei province, Wenfeng had a production capacity of 2.4 million mt and the output stood at 175,000 mt. The output in Guangxi stood at 1.027 million mt in June, a month-on-month decrease of 3%. The output in Inner Mongolia stood at 41,000 mt, down 2% MoM. The output in Yunnan stood at 25,700 mt in June, a month-on-month decrease of 3%.

On the whole, it is estimated that the net imports of alumina in June will be -100,000 mt. And there will be a surplus of 170,000 mt in the month, and the surplus of about 426,000 mt during January-June. At present, the alumina market is experiencing the replacement of old capacity, hence the new capacity release and the production suspension will occur at the same time. The concerns about the huge surplus of alumina in the early stage will be eased and the market will gradually restore the balance between supply and demand through games. SMM will continue to pay attention to the production of high-cost capacity and the speed of the new plants putting into operation.

According to SMM data, China produced 3.361 million mt of aluminium in June (30 calendar days), up 4.48% on the year. The daily output stood at 112,000 mt, up 1,231 on the month and 4,790 mt on the year. The output totalled 19.559 million mt from January to June 2022, an increase of 0.47% on the year. The domestic aluminium supply in June continued to increase. The production resumption and the new capacity in Guangxi, Gansu, Yunnan and other regions totalled around 450,000 mt, contributing the major increase. As of early July, Chinese aluminium production capacity reached 41.05 million mt, the effective built-up capacity scale was 44.57 million mt, and the operating rates stood at 92.1%. During the month, the proportion of aluminium liquid in Xinjiang and Inner Mongolia adjusted. According to SMM, the domestic proportion of aluminium liquid increased by 0.9% on the month to 66.5% in June.  

In July, Gansu Liancheng, Guangxi Jili Baikuang, Guangxi Investment Group Yinhai, etc. resume the production steadily. In addition, the new capacity of Gansu Zhongrui and Guangyuan Zhongfu have also been put into production as planned. Therefore, the domestic aluminium operating capacity will continue to rise. SMM expects that the domestic ealuminium production capacity will reach 41.4 million mt by the end of July, and the domestic aluminium output in July is expected to reach around 3.48 million mt, a year-on-year increase of 6.2%. Recently, the aluminium prices fall significantly, and 25% of the domestic capacity is in a state of loss. The market should be alert to the follow up impact of the continuous decline in aluminium prices on the profits of the supply side. On the demand side, the new orders of construction extrusions and aluminium sheet/plate declined amid the off-season in July. Therefore, the operating rates declined and the price spread between domestic and overseas aluminium prices narrowed. The domestic aluminium export profits declined, hence the aluminium export volume will also decline on the month. In addition, as the price spread narrowed, the import loss of aluminium ingots in June has narrowed to less than 100 yuan. In this case, the inflow of some low-priced imported goods will also have a negative impact on the domestic aluminium ingot market. The domestic aluminium social inventory is unlikely to decline in July. SMM expects that the domestic aluminium inventory will be around 780,000 mt by the end of July.

China produced 254,100 mt of refined lead in June, up 2.14% MoM and down 10.15% YoY. The combined output in January-June declined by 3.42% on the year. Production capacities of enterprises involved in the survey totalled 5.711 million mt in 2022.

According to the survey, the refined lead smelters experienced both production increase and decrease in June. Although Chifeng Shanjin, Anhui Tongguan, Yunnan Mengzi and other enterprises were under the maintenance in June, the smelters that resumed from the maintenance increased the production greatly. The major deliverable brand in Henan such as Hunan Jingui, Chihong Zn & Ge Co., etc. resumed after the maintenance. In addition, Zhongjin Lingnan's new plant increased the production in June after it was put into operation, hence the output of refined lead increased as scheduled.

In July, the output of refined lead is expected to increase further, mainly because of the new capacity and the production resumption. The capacity further increases after the completion of the technological transformation in Henan Wanyang. The output continues to increase after Zhongjin Lingnan’s new plant has been put into operation. At the same time, Anhui Tongguan, Chifeng Shanjin, Yongning Gold and Lead and other smelters have resumed from the maintenance. On the whole, the medium and large-sized smelters increase the production more in July, hence SMM expects that the output of refined lead in July will rise greatly to 280,000 mt from the previous month.

China produced 301,000 mt of secondary refined lead and alloy in June, down 3.6% MoM and 4.8% YoY. The combined output in January-June increased by 4.71% on the year. Production capacities of enterprises involved in the survey totalled 9.1 million mt in 2022. According to the survey, the secondary refined lead smelters experienced both production increase and decrease in June, but the overall production was in a state of decrease. Anhui Tianchang, Xinan Huacheng and other smelters suspended the production for maintenance, while some smelters in Guangdong slightly reduced the production due to the floods and the heavy rains at the end of the month.

At the same time, Anhui Camel and Henan gradually resumed the normal production in June, contributing to some output increments. In July, most smelters will resume to normal production. Among them, Anhui Tianchang has finished maintenance and has resumed production. In addition, the impact of flood in Guangdong has eased, hence smelters will gradually resume normal production. It is expected that the domestic output of secondary refined lead in July will reach 337,500 mt.

Refined Zinc Output Declined More than Expected amid the Tight Raw Material Supply and the Rapid Decline in Profits

China's refined zinc output stood at 490,300 mt in June, down 24,900 mt or 4.84% MoM and 17,700 mt or 3.48% YoY. From January to June 2022, the combined refined zinc output was 2.973 million mt, a decrease of 1.49% year on year. SMM survey showed that the output of domestic refined zinc decreased in June and was less than expected. The output increment was mainly brought about by a smelter in Inner Mongolia which resumed the production after maintenance. In addition, a large smelter in Hunan resumed normal production in June after a minor overhaul. Some smelters in Shaanxi and Sichuan increased the production. Therefore, the output increased. The decline in output was mainly caused by a smelter in Henan which was under maintenance. In addition, some smelters in Shaanxi and Yunnan took maintenance. Some smelters in Gansu and Qinghai were overhauled, resulting in major reductions. Some small-sized smelters in Hunan reduced the production and the output of some smelters in Inner Mongolia declined, bringing unexpected reductions. On the whole, due to the shortage of raw materials and the rapid decline of profits, the output in June declined more than expected. Therefore, the output declined more significantly. SMM expects that China's refined zinc output will increase by 6,300 mt to 496,600 mt in July, down 18,600 mt or 3.62% YoY. From January to July 2022, the combined refined zinc output is estimated to be 3.47 million mt, a decrease of 1.8% year on year. A smelter in Henan resumes the production after maintenance, which brings to the increase in output. In addition, some smelters in Shaanxi and Gansu resume the production. At the same time, a smelter in Qinghai resumes from maintenance, which contributes most of the increases. A smelter in Inner Mongolia plans to increase the production in July. Moreover, a smelter in Sichuan will resume the production in July, but the output will increase only slightly and it will not be sustainable. The decline in output was mainly caused by some smelters in Inner Mongolia which plan to take maintenance in July. In addition, one of the smelters also plans to overhaul in August. A smelter in Gansu continues to overhaul, hence the output will decline. Some smelters in Hunan suspend the production due to problems such as high costs.

Domestic refined tin output was 10,355 mt in June, down 36.59% MoM and 26.5% YoY, and the combined output from January to June fell by 3.22% YoY, according to SMM research. In June, domestic refined tin output reduced mainly because of the smelters’ intensive production reduction in response to the sharp fluctuation in tin prices in mid-late June. In terms of regions: 1. The output of smelters in Yunnan declined sharply MoM. Major smelters announced to suspend the production for maintenance between June 15 and 20. Most smelters overhauled for up to 30 days, but the maintenance time of some large-sized smelters was longer. 2. The output of smelters in Guangxi was stable on the month, without intensive maintenance. However, some smelters lowered the output expectations for July. 3. The output of smelters in Jiangxi decreased month-on-month, but the decrease was smaller than that in Yunnan, mainly because most of the major smelters in Jiangxi had a shorter maintenance time. 4. The total output of smelters in other regions decreased slightly month on month in June. On the whole, only a few smelters remained the normal production and most smelters reduced the production to varying degrees. Some smelters suspended the production in June due to the sharp drop in tin prices.

In July, the domestic major smelters are still in a state of maintenance and shutdown. As the maintenance has entered the latter stage, the market is paying more attention to the production resumption of smelters. According to SMM, some smelters are not active about resuming the production due to the recent decline in tin prices. From the perspective of production process, the smelters expect that the opening of the furnace in late-July will limit the output of finished products in the month. In summary, SMM expects the domestic refined tin output will decline further to 5,190 mt in July.

China produced 15,500 mt of refined nickel in June, up 8.74% MoM and 9.07% YoY. The slight increase in output in June was basically in line with expectations. The main reason of the increase was that the salt plants resumed the production or built new refined nickel production line due to the profits. In addition, driven by the demand, the order volume of the alloy military sector improved significantly compared with previous years. The demand for Jinchuan nickel plate by manufacturers increased significantly. At present, the nickel prices is in the recovery stage, and the impact on the raw material side is gradually easing. Therefore, refined nickel manufacturers have basically maintained normal production recently.

The output of refined nickel is expected to stand at 15,600 mt in July 2022, up 0.32% MoM and 26.47% YoY. It is expected that the output of refined nickel will still increase slightly in July, mainly because the refined nickel production lines of some salt plants are still being commissioned. Therefore, it is expected that the output will further increase in the future.

China produced 337,000 mt in Ni content of NPI in June, down 6.05% MoM and 13.49% YoY. The NPI output continued to reduce due to the current weak terminal demand, the sluggish stainless steel market and the increase in the inflow of Indonesian NPI. The output of high-grade NPI stood at 27,000 mt (Ni content), down 4.67% MoM in June. And the output of low-grade NPI was 6,800 mt (Ni content), down 10.8% on the month. The weak market demand in June and the rapid decline in the NPI prices made it difficult to stimulate NPI plants to maintain normal production. Some high-cost capacity production suffered more losses due to the loose NPI supply and the decline in prices. Therefore, some smelters gradually suspended and reduced the production. At the same time, the decline of nickel ore prices was slower than the NPI prices, hence the cost of NPI plants was high. Therefore, they appropriately reduced the production to avoid risks. In addition, the output reduction of integrated steel mills also affected the output of some low-grade NPI, and the overall operating rates of low-grade NPI declined.

It is estimated that the domestic NPI output will be around 33,100 mt (Ni content) in July 2022. The market is unlikely to have an optimistic expectation for the stainless steel market. In addition, the Indonesian NPI is gradually put into production, hence the market supply is loose. In this case, the overall operating rates of the domestic NPI may remain low. If the consumption of stainless steel recovers, which stimulates steel mills to resume the production, NPI output may be stable in the short term. However, domestic NPI output and prices will under great pressure in the long term, with the further production of Indonesian NPI in the second half of the year.

China produced 26,500 mt (metal content) or 120,500 mt (physical content) of nickel sulphate in June 2022, up 13.90% on the month and 12.04% on the year. In June, although the retail market was relatively quiet and the supply of goods was tight, self-production and toll manufacturing of integrated manufacturers increased obviously due to the large cost difference between different salt factories. Therefore, the output of nickel sulphate increased significantly. From the perspective of raw materials, due to the extremely poor cost efficiency of nickel briquette and nickel sulphate, the demand for nickel sulphate was weak in the market. Nickel briquette (powder) accounted for about 13% of the total raw materials used in June, and the proportion of intermediate products and high-grade nickel matte increased to 62%. At present, the cost efficiency of hydrometallurgy intermediate products is good and the supply is relatively loose. Therefore, it is expected that the use of hydrometallurgy intermediate products will further increase in the future. In addition, the high-grade nickel matte output will also increase significantly with the increase in capacity utilization.

The output of nickel sulphate in July is expected to increase by 4.27% month on month and 14.14% year-on-year due to the recovery of downstream demand. Since June, the nickel prices has continued to fall due to the macro factors and fundamentals, which has led to a decline in the nickel sulphate prices. However, the demand has improved in early-July. Therefore, the market supply is expected to further increase.

 China produced 20,600 mt in physical content or 6,600 mt in metal content of battery-grade manganese sulphate in June, up 37% MoM and 20% YoY, according to SMM statistics. The increase was mainly caused by the production resumption of major enterprises in Guangxi and Guizhou. The precursor plants were more willing to picking up goods in June/July than in May, but the prices of battery-grade manganese sulphate still declined due to the high inventories in the early stage. In July, the downstream ternary cathode precursor demand further improves. Therefore, the output of battery-grade manganese sulphate is expected to increase by 5% on the month and 23% on the year to 69,400 mt in metal content in July.

SMM data showed that China's high-carbon ferrochrome output fell slightly by 11,000 mt on the month and 93,500 mt or 21.5% on the year to 580,500 mt in June. The output in Inner Mongolia was 287,200 mt, a MoM decrease of 29,000 mt or 1%. The output in Sichuan was 42,300 mt, down 2.7% MoM. In June, the prices of steel mills were flat. Although the retail prices gradually fell, some long-term orders of ferrochrome maintained a certain profit. Therefore, the operating rates were stable. The large-scale ferrochrome plants in Inner Mongolia had a higher cost to suspend the production and had greater pressure of long-term orders. Therefore, many ferrochrome plants chose to use low-priced raw materials in the early stage to reduce the cost and lengthen the production cycle. At the same time, the electricity prices in Sichuan were lower amid the wet season. Therefore, although the prices of ferrochrome were low, the ferrochrome plants in Sichuan continued to produce normally due to the cost advantage.

The output of high-carbon ferrochrome in July is expected to be 531,000 mt, lower than that in June. In July, the prices of steel mills continue to fall and the low-priced raw materials are consumed, hence the cost of ferrochrome plants increases. As the steel mills are in losses due to the sluggish consumption, the output of stainless steel is expected to decline. Therefore, the demand for ferrochrome will decreases. The prices of coke and chrome ore fell, hence the cost support of ferrochrome also weakened and the ferrochrome prices fell synchronously. The ferrochrome plants are unlikely to gain profits due to the reduced demand, weakened cost support and the bearish market outlook.

According to SMM survey, the domestic stainless steel output in June totalled about 2.6753 million mt, down 177,900 mt or 6.08% MoM and down 3.55% YoY. The output of 200 series products stood at 737,000 mt, up 6.32% YoY, The output of 300 series products was 1.3739 million mt, down 9.79% YoY. The output of 400 series products was 502,400 mt, down 0.79% YoY.

In June, the supply decreased as expected and steel mills chose to digest the inventories. Although the spot prices continued to decline and the downstream inventories were low, the downstream was not active to pick up goods. Therefore, both supply and demand were weak. In July, as the tight supply of nickel raw materials continues to ease, and the raw materials are more competitive, the stainless steel prices dropped significantly. However, some steel mills have purchased high-priced raw materials in the early stage. In addition, as the prices fall too fast and the orders are poor, it is expected that the output will continue to decline. However, the decline in output may be less than expected amid the recovery of profits. The output of stainless steel in July fell by 11.98% year-on-year, breaking the seasonal pattern in previous years. Among them, the output of 200 series products will fall 7.76% as steel mills have reduced the production in June. The output of 300 series products is expected to fall by 4.73%. The output of the 400 series products will increase by 3.98% month-on-month.

SMM national stainless steel output statistical samples includes Dingxin Industry, Tsingtuo Nickel Industry, Qingtuo Industrial, Tsingshan Group, Guangqing, Beibu Gulf New Materials(Beihai Chengde), TISCO Stainless Steel, Zhangjiagang Pohang, Ansteel, Jiugang and Taishan Steel Group, Jiangsu Delong (including Danan project + Xiangshui phase II), Eastern Special Steel, Xinjinhui Stainless Steel Industry, Baosteel Desheng, Fujian Wuhang Stainless Steel Products, Fuxin Special Steel, Jiangsu Delong, Inner Mongolia Shangtai Industry, Yantai Walsin Lihwa, Huale Alloy, Yongxing Materials, Shandong Shengyang, Guangxi Jinhai, Liuzhou Steel Zhongjin, Guangxi Yongda Steel, Guangxi Xinfeng, Wolaidi Metal Material, Shenyuan Special Steel, Friendship Special Steel, Taizhou Huadi, Ningbo Dongmeng, Jiangxi Shengda and Ningbo Yiyue, totaled 35.

China produced 98,000 mt of EMM in June, down 11% MoM and up 3% YoY, according to SMM statistics. The combined output in January-June totalled 359,000 mt, down 37% YoY. According to SMM, although the prices of raw materials was low, many stainless steel reduced the production due to weak downstream demand. Therefore, the EMM output declined on the month in June because In addition, due to the continuous decline in the EMM prices and the problem of ore mining, some EMM plants reduced and suspended the production.

The weak terminal consumption is difficult to improve in July, and the prices of steel mills has dropped by around 200 yuan/mt on the month. However, it is hard for steel mills to force down the prices amid the game of supply and demand. In this case, EMM plants hold a strong wait-and-see sentiment. In addition, the demand for EMM is weak amid the huge reduction in stainless steel production. Therefore, the EMM prices is unlikely to rebound in July. Some EMM plants may reduce the production to control the losses. The EMM output in July is expected to be 96,000 mt.

SMM data shows that China's industrial silicon metal output was 307,900 mt in June, an increase of 3% month on month and 34% year on year. China's industrial silicon metal output totalled 1.6326 million mt in January to June, a year-on-year increase of 31%.

In June, the output of the three major producing areas of Yunnan, Sichuan and Xinjiang increased month-on-month, but the output in most provinces such as Fujian, Hunan, Shaanxi, etc. decreased month-on-month.

As the hydropower supply in Sichuan and Yunnan is relatively abundant, most silicon factories in Sichuan have resumed the production in late-May. Some silicon factories in Dehong, Yunnan have resumed the production in early-June, while some silicon factories have resumed in mid-June due to the poor market. The operating rates in Baoshan and Nujiang has increased. The capacity resumed in late-June has basically released. It is expected that the output in Yunnan and Sichuan will increase by about 17,000 mt month-on-month. The operating rates of various silicon factories in Xinjiang show ups and downs, and the total output in the region increased slightly by about 3,000 mt.

In Fujian, Chongqing, Shaanxi, Inner Mongolia and other regions, most silicon factories suspended the production due to the weak market, losses and poor equipment. The operating rates in some regions declined due to the weak market and the high cost while that in other regions increased amid the wet season. However, with the full release of the capacity in Sichuan and Yunnan, it is expected that the industrial silicon metal output may increase to around 330,000 mt in July.

The output of polysilicon stood at 61,200 mt in June, down 3.92% on the month, according to SMM statistics.

The main reason for the slight MoM decline is that in late June, a large factory in Xinjiang stopped the production due to an accident. This incident itself has limited impact on the overall supply of polysilicon. But the other two polysilicon production lines of the company were shut down for maintenance due to this accident, and some other leading manufacturers in Xinjiang also reduced the production to varying degrees for the same reason. As such, polysilicon production dropped MoM in June. In July, since most domestic polysilicon manufacturers have maintained high operating rates for several months, in order to ensure the production safety, GCL, Daquan, East Hope Group and a few other enterprises will be overhauled in July. It is expected that polysilicon production will fall by another 3,000-4,000 mt in July.

China produced 825,500 mt of silicon-manganese alloy (SiMn alloy) in June, down 12% MoM and 18% YoY, according to SMM statistics. The combined output from January to June totalled 5.53 million mt, down 6% YoY. Several causes led to the MoM drop in June production. First, although the pandemic situation eased substantially in June, the terminal consumption was still weak, and the steel mills extended the maintenance period, resulting in weak demand for SiMn alloy and accumulation of spots. On the other hand, the futures prices continued to fall in the month, which were even close to the break-even point. The spot market sentiment was affected, and the downstream turned away from high prices. However, the prices of raw materials were high, creating high cost pressure of alloy factories, which held firm to the prices. Affected by these two factors, small factories in the north that rely solely on retail sales were forced to stop the production due to cost pressures, and other factories also reduced the production by about 20% to maintain the delivery of long-term orders. Meanwhile, most manufacturers in south China suspended or reduced the production also due to high cost, except for Guangxi where preferential power tariffs allowed lower cost.

In July, the domestic SiMn alloy output is estimated at 789,300 mt. With the announcement of the bid price of Hegang Group, it can be seen that the steel mills are obviously forcing down the prices, while alloy manufacturers are under great cost pressure. But in the case of oversupply, the prices of SiMn could hardly rise. Therefore, the manufacturers are less interest in resuming the production, and there is also possibilities that they will further reduce the production to control the cost.

China's magnesium ingot output stood at 81,300 mt in June, down 5.31% MoM and up 18.04% YoY, according to SMM statistics. The output totalled 503,700 mt in January-June 2022, a year-on-year increase of 24.94%.

According to SMM, the output of some magnesium plants declined due to the high temperature and the decline of domestic magnesium prices. The magnesium plants chose to reduce the production for maintenance to balance the supply and demand. According to the current production plans, some magnesium plants in major producing areas still have maintenance plans in July. Therefore, the magnesium ingot output will continue to fall in July. The overall output is estimated at 75,000 mt in July. SMM will pay further attention to the maintenance of magnesium plants in major producing areas in summer.

China's magnesium alloy output stood at 24,700 mt in June, down 10.20% MoM and down 20.39% YoY, according to SMM statistics. The output totalled 151,500 mt in January-June 2022, a year-on-year decrease of 22.98%.

The average operating rate of the magnesium alloy industry stood at 43.56% in June, down 10.20% month on month and 24.13% year on year.

According to the domestic magnesium alloy sellers, the overseas orders were muted amid the overseas summer holiday period. In addition, the operating rates of the downstream declined amid the high temperature, hence the demand for magnesium alloy decreased. In this case, some magnesium alloy factories chose to lower the processing fees and some controlled the inventory level by reducing the operating rates. As the exports take up a large proportion of the total demand, the weak overseas demand will continue to affect the operating rates of magnesium alloy. It is expected that the magnesium alloy output will be 24,000 mt in July.

China's magnesium powder output stood at 6,900 mt in June, down 4.10% MoM. The output totalled 43,000 mt in January-June 2022.

The domestic magnesium powder output continued to decline in June. According to the magnesium powder sellers, the demand from steel mills was still weak. Although magnesium prices fall stably recently, the overall prices are still higher than expected. In addition, the domestic steel demand is less resilient and the transactions with high prices are poor. Therefore, the market have a strong bearish sentiment. It is expected that the magnesium powder output will be 6,700 mt in July amid the weak market.

China PrNd oxide output stood at 5,928 mt in June 2022, down 7.5% MoM. Among the producing areas, Jiangxi and Fujian saw added output, while output cuts were also found in Jiangxi, Shandong and Inner Mongolia.

Scrap supply was still tight in June as magnetic material companies received fewer orders in the second quarter in light of spreading COVID and sluggish demand, dragging down the supply of NdFeB scrap. And the output in Shandong, Jiangxi and Inner Mongolia fell 22%, 5% and 16% respectively MoM in June for multiple factors including insufficient raw material supply and high scrap prices.

Nonetheless, the output of PrNd oxide in Fujian rose 10% MoM in June as local companies produced normally to deliver the long-term orders.

The overall PrNd oxide output is likely to fall MoM in July amid sustaining supply shortage of scrap as well as poor demand although the supply of iron ore in Jiangxi and Myanmar is likely to pick slightly in July.

Output of PrNd alloy stood at 5,163 mt in June, down 4.5% MoM with output cuts mainly contributed by Jiangxi, Sichuan and Inner Mongolia.

In details, PrNd alloy output fell 8%, 13% and 2% respectively MoM in June when magnetic material factories became more cautious in purchasing PrNd alloy in light of few orders, and the orders received by alloy plants were also modest. In addition, some plants were affected by high equipment maintenance cost as the rising temperature in Inner Mongolia also heightened the furnace temperature.

It is expected PrNd alloy output will drop in July.

Domestic molybdenum concentrate output was about 19,700 mt in June, down 770 mt or 3.8% on the month.

The domestic production of molybdenum concentrate in June fell slightly compared with the previous month. The main reason is that in June, although the domestic molybdenum prices rose slightly, it was mainly due to the pre-market sentiment under the background of easing pandemic situation, while the market demand did not really improve, which was also proved by the fall in the concentrate prices later. Judging from the steel mills’ tenders, the overall demand declined compared with that in May. A quiet market affected the enthusiasm of mine production, resulting in contracted production to a certain extent. On the other hand, in June, two major mines in north-east China were shut down briefly due to reasons of routine maintenance and road damage respectively, which also contributed to the decrease in the domestic supply of molybdenum concentrate.

Domestic ferromolybdenum output stood at about 16,100 mt in June, down 600 mt or 3.6% MoM.

The main reason is that in the second half of June, domestic steel mills were significantly less motivated to purchase ferromolybdenum due to high finished product inventory. The bid prices disclosed by steel mills were significantly lower, and ferromolybdenum led the decline across the domestic molybdenum market. The production enthusiasm of smelters was greatly contained as they suffered losses once, and the output of ferromolybdenum dropped immediately.

According to SMM survey, domestic silver output stood at 1253.24 mt (including production of 1055.24 mt of mineral silver) in June, up 4.39% from the previous month. On the macro front, the pressure of the US Fed to raise interest rates was still looming over the precious metal market, and the prices of silver have always been under pressure. There were also voices that Europe is basically in a state of stagflation, and its current economic growth is low and inflation is rising. The situation in the United States is more complicated. From a technical point of view, if the GDP growth rate of the United States is contracting or drops to the negative zone for two consecutive quarters, the economy is receding. But since the second quarter GDP data of the United States has not been released, it is uncertain whether the US economy has already receded.  The US unemployment rate is now at the lowest level in several decades, which indicates that U.S. economy is relatively healthy, one of the reasons for the current strength in the US dollar index. The market is more worried that there is a greater probability of a recession in the United States in the next two years. In 2022 or 2023, more countries outside the United States may experience economic recession, and the United States has a high probability of stagflation in the next two years on the backdrop of integrated global economic development.  The production of manufacturers in June still changed little. The output of only a few manufactures post great declines in June, including Tongling Nonferrous Metals, Jinli Gold Lead, Hunan Yuteng, and Zhejiang Hongda. The number of companies with added output increased significantly in June, such as Yuguang Gold and Lead, Shandong Zhaojin, Wanyang Smelting, Baiyin Nonferrous Metals, Guiyan Platinum, Zhongyuan Gold and other manufacturers. The increase in output was significantly greater than the decrease. Therefore, the overall production of silver rose in June. It is expected that the domestic silver output in July may remain stable with few increase and decrease.

As the silver nitrate is mainly produced on-demand, the reduction in orders amid the off-season in June has led to the reduction in output. According to SMM, the output of silver nitrate in June was 515 mt, a decrease of 7.2% on the month.

As some downstream enterprises stockpiled a lot of silver nitrate in May, the procurement in June was less active. Only some silver powder manufacturers purchased as needed.

Throughout June, the overall silver prices declined on the month due to the Fed raising interest rates. Except for silver powder, other downstream customers held a more bearish attitude towards silver prices. At the same time, as some downstream enterprises stockpiled a lot of silver nitrate in May, the enthusiasm for purchasing declined amid the wait-and-see sentiment. Silver paste production was under the technical adjustment in the second half of the year. In order to prevent the mismatch of products before and after, silver powder purchased in small quantities. Therefore, the orders and the output of silver paste declined.

It is expected that the output in July will be flat on the month amid the off-season in July and August.

According to SMM, China's titanium dioxide output stood at 339,800 mt in June, up 0.39% month on month and 7.96% on the year. The output totalled 2.0015 million mt from January to June, a year-on-year increase of 5.01%.

According to SMM, as the downstream demand was weak amid the sluggish market, the inventories of some titanium dioxide enterprises increased. A sales staff of a large enterprises said that the titanium dioxide prices may still fall under the pressure in the short term as the cost support of sulphuric acid and titanium ore prices is insufficient in the off-season. According to the current production plans, some plants have reduced the production for maintenance in July due to the weak downstream demand. The domestic titanium dioxide output is expected to fall slightly to 336,500 mt in July.

SMM data shows that in June 2022, the domestic APT output was 12,520 mt, a drop of 10% on the month.

According to SMM, due to the weak domestic dwnstream and terminal demand and the firm raw material prices of raw materials, APT smelters in Jiangxi and Hunan suffered losses. Therefore, the smelters mainly suspended the production for maintenance and adjusted the production lines. Some smelters in south China also suspended the production for nearly a week due to the heavy rain.  To sum up, the domestic APT output in June decreased by more than 1,000 mt compared with the normal level.

According to SMM, a smelter in Jiangxi has suspended the production for a one-month maintenance due to industrial line upgrades. Most private smelters also plans to reduce the production due to the tight raw material supply. A small amount of smelters have not resumed to normal production yet and are temporarily unable to supply products. To sum up, it is expected that domestic APT output will continue to decline in July, and there may be a supply gap of more than 1,000 mt in the market.

According to SMM survey statistics, China antimony ingot (including antimony ingot, converted crude antimony, cathode antimony, etc.) output in June 2022 was 7,594 mt, up 4.86% month-on-month. The reason is that the Hsikwangshan Twinkling Star Co., one of the largest antimony manufacturers in China, resumed the production in June, pulling up the overall production. The output of other manufacturers was basically flat or dropped MoM, and as many as 8 manufacturers reduced their production in June.  That is to say, the recovery of Hsikwangshan Twinkling Star Co. alone has maintained the stability of the overall output, otherwise the domestic production of antimony ingots would have dropped sharply in the month.  Nonetheless, according to relevant sources, although Hsikwangshan Twinkling Star Co. has resumed the production, the supply of antimony ore was still quite tight. There is news from the company that it is also actively sourcing raw materials. Many other manufacturers indicated that they are also looking for ore sources across the country, but the process has been slow amid high prices and low supplies.  Some manufacturers even said that they have to hoard antimony oxide powder or other kinds of raw materials in order to maintain the supply.  Judging from the production situation of manufacturers in June, those that reduced or significantly reduced the output have been covered by SMM research.  And the number of companies that have stopped the production is also great. Among the 32 survey respondents, 13 manufacturers stopped the production in June, 13 reduced their production, and 6 maintained normal production. It is expected that if some manufacturers partly resume the production in July, the domestic antimony ingot production may continue to rise.

Notes: SMM starts to disclose the output of antimony ingots (including antimony ingots, converted crude antimony, cathode antimony, etc.) since May 2022.  Thanks to high coverage of the antimony industry, SMM has successfully investigated a total of 32 antimony ingot manufacturers, which are located in 8 provinces across the country, with a total capacity of nearly 20,000 mt and a total capacity coverage rate of over 90%.

China lithium carbonate output stood at 31,734 mt in June, up 9% MoM and 39% YoY.  Newly commissioned capacites ramped up the production in June, and the recycling volume also rose palpably driven by rebounding lithium prices. However, some companies were affected by the shortage of ore and the overhaul of production lines, and the overall supply level rose only slightly. In July, production ramp-up will continue, and the raw material supply shortage of some manufacturers will eased slightly. But because some leading manufacturers have started mid-year maintenance, the overall supply will remain stable. China lithium carbonate output is expected to stand at 31,642 mt in July, up 59% YoY. Due to the rapid changes in the industry dynamics, and in order to ensure the accuracy and reliance of SMM data, SMM will has added 3 lithium carbonate sample companies from June 2022.

China lithium carbonate output stood at 21,310 mt in June, up 3% MoM and 36% YoY. In terms of production through smelting, some of the newly commissioned capacity were still under trial production, but some manufacturers experienced short-term maintenance and raw material shortage, hence the supply only rose slightly. The production through causticization also grew slightly.  Entering July, although some new production lines will continue to ramp up the production, some large factories either have started or completed mid-year maintenance; the supply through causticization will remain high. The overall supply of lithium hydroxide is expected to decline slightly. China lithium hydroxide output is estimated at 20,412 mt in July, down 4% MoM and up 47% YoY.  Due to the rapid changes in the industry dynamics, and in order to ensure the accuracy and reliance of SMM data, SMM will has added 1 lithium hydroxide sample company from June 2022.

China cobalt sulphate output was 6,391 mt in metal content in June, a month-on-month increase of 38% and a year-on-year growth of 19%. In terms of raw material supply, the arrival of intermediate products at ports improved in June. In addition, the terminal demand was recovering after COVID lockdown was removed in Shanghai. The output of most intermediates-based cobalt salt factories remained stable or rose slightly. On the recycling side, in view of the firm prices of lithium carbonate and the more attention paid to scrap, relative output increased accordingly. The main increase in cobalt salt output in June was contributed by precursor manufacturers with smelting capabilities. In view of the current price fluctuations of cobalt varieties, some precursor manufacturers with ore resources (cobalt intermediate products and MHP) have raised the smelting volume in order to reduce the cost.  Therefore, the overall output of cobalt salts increased in June. On the demand side, the pandemic situation eased in June, and the purchase demand from ternary cathode materials increased. Thus the output of precursor manufacturers recovered compared with the previous month. However, precursor manufactures mainly consumed in-house cobalt salts, and the purchase demand was relatively low. And other small and medium-sized precursor manufacturers purchased on rigid demand.  It is expected that the arrival of raw materials at ports will continue to rise in July, and the downstream demand will improve further, pushing up the cobalt salts production.  China cobalt sulphate output is expected to stand at 7,186 mt in metal content in July, up 12% MoM.

The output of Co3O4 in June rose 7% on the month and fell 20% on the year to 5,903 mt. The weak demand for Co3O4 extended in June, and the electronics sector was still in the off-season in the second quarter.  On the supply side, some Co3O4 companies reduced or even stopped the production in June in light of a large backlog of finished product inventories, and the imbalance between supply and demand drove down the prices. On the demand side, the recovery of the Co3O4 market is still not promising based on the orders in July, and the electronics market stays muted. Co3O4 manufacturers are likely to reduce the production in July amid weak market demand. Output of Co3O4 is estimated at 5,036 mt in July, down 15% MoM and 28% YoY.

Domestic PCAM (precursor of cathode active materials) output was 66,913 mt in June, a month-on-month increase of 22% and a year-on-year increase of 36%. On the supply side, the output of top-tier precursor companies increased significantly in June, mainly due to the release of new capacity, the recovery of downstream power battery sector and rush to complete half-year earnings target.  The production of small and medium-sized enterprises increased slowly, and the recovery of downstream orders was also slow. Overall market output has returned to the level in March. On the demand side, the domestic power battery market has basically recovered since mid-June, while the overseas power battery market was relatively stable. However, the domestic electronics market was still sluggish.  It is expected that the demand from domestic and foreign power battery markets will continue to grow in July, and the electronics market will increase slightly. The output of precursors is estimated at 70,791 mt in July, an increase of 6% month-on-month.

China NMC cathode material output was 52,727 mt in June, up 14% MoM and 33% YoY.  With the removal of COVID lockdown in Jiangsu and Zhejiang, the terminal demand has gradually recovered, and orders placed by battery companies rose as they basically had no inventory. The demand from overseas remained stable, and the newly commissioned capacities ramped up the production steadily. The operating rates of NMC cathode materials rose in June.  By product, the proporation of 5-series NMC materials rose slightly amid rising orders, while that of 6-series and 8-series fell slightly.  Entering July, the newly commissioned capacities of some manufacturers start to ramp up the production, and the domestic terminal demand is also recovering. Some car companies have increased their orders, and new battery capacities are also commissioning as expected, creating more demand for NMC materials. Overseas orders are still increasing steadily. China NMC cathode material output is expected to stand at 57,680 mt in July, up 9% MoM.

China produced 52,194 mt of iron phosphate in June, an increase of 17% month-on-month. In June, although the output of non-iron phosphate manufacturers rose more slowly than expected, there was still some output yielded in June. In addition, the current production lines of some established enterprises were running relatively smooth, and the overall supply of iron phosphate was still on an upward trend. On the demand side, the impact of the recent pandemic has gradually subsided, and the increase in terminal demand has driven the demand for upstream materials. The iron phosphate production rose amid more demand generated in the LFP sector.  Iron phosphate output is expected to increase by 6% on the month to 55,153 mt in July.

China produced 72,806 mt of LFP in June, an increase of 26% month-on-month and 148% year-on-year. On the supply side, driven by the strong recovery of terminal demand, new LFP lines were released in a centralised manner in June. The new production lines of some established brands were also ramping up the production, and the in-house LFP production line of a battery cell factory started to yield output after testing.  LFP supply rose palpably. Considering that several 50,000-100,000-mt projects will be released in the future, it is expected that the production capacity of LFP will expand rapidly in the next two to three months. On the demand side, the Yangtze River Delta region was completely released from COVID lockdown in June. Car companies and battery companies that had been affected by the pandemic resumed work and production. Both production and sales were booming. The demand in the power battery and energy storage sectors showed a clear upward trend. Terminal players de-stocked LFP and battery cells during the pandemic outbreak, and have been active in purchasing after the pandemic situation eases. The LFP production is expected to remain high with rapid growth in the future.  China is expected to produce 88,469 mt of LFP in July, an increase of 22% month-on-month and 191% year-on-year.

Domestic LCO material output was 5,490 mt in June, a month-on-month decrease of 7% and a year-on-year decrease of 24%. June is still the seasonal low for the consumption of LCO materials and downstream electronics. On the supply side, the supply of LCO was reduced in June in response to the weaker market environment. On the demand side, the operating rates of LCO battery factories dropped, the procurement of LCO cathode materials also decreased while demand from the electronics sector stood gloomy. Compared with the same period last year, the shipments of electronics dropped significantly. The lack of driving force created by electronics consumption has led to great pessimism in the upstream and downstream across the LCO industry chain. It is expected that the output of LCO materials in July will be flat MoM.  Output of LCO in July is expected to rise 2% on the month and drop 19% on the year to 5,592 mt.

China’s LMO output stood at 3,990 mt in June, a month-on-month increase of 14%, but a year-on-year decrease of 53%. On the supply side, LMO manufacturers still held many in-plant stocks in June as high LMO prices earlier have greatly depressed downstream demand, and the operating rates were low as whole. Some LMO manufacturers even suspended or halved the production.  On the demand side, the two-wheeled electric vehicle market was still sluggish. However, the gradual subsiding impact of the pandemic and the increase in travel demand has brought about a small increase in the demand for mobile power supplies, smart wear and other fields. The constantly rising lithium salt prices has driven battery companies to restock on dips, and the output of LMO has increased slightly. LMO production and sales are expected to continue to rise in the future.  LMO output is estimated at 5,304 mt in July, a month-on-month increase of 33% and year-on-year decrease of 53%.

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