China August metals output up aluminium at record

China's production of most base metals rose in August reversing declines in the previous month with primary aluminium hitting an all time monthly high as smelters expect demand to improve in the next 3 or 4 months.

Metal demand in China, the world's top consumer and producer of copper, aluminium, lead, zinc, nickel and tin has fallen this year after economic activity slowed in global markets.

Chinese smelters are hoping demand will rise in the Q4 usually the peak consuming season and will benefit from Beijing's increasing investment in infrastructure to boost an economy growing at its slowest pace in three years.

Production of refined copper rose 5.8% from the previous month to 511,000 tonnes in August, the second highest level this year but was still down 3.4% from a year ago.

Mr Yang Xiaoguang an analyst at Jinrui Futures said that "The rise in August reflected the fact that base metals smelters have prepared for better demand in September or October."

Mr Yang said that he expected production of most base metals to extend this month's gains. Investment in the power sector should be higher in the H2 than the H1. The National Development and Reform Commission already approved a lot of infrastructure projects in recent weeks boosting the demand expectations.

China has given the green light to 60 infrastructure projects worth more than USD 150 billion fuelling investor hopes the world's growth engine may get a lift in the Q4 of the year and beyond. A new 200,000 tonne per year copper smelter controlled by Zijin Mining also reached full production in August.

Aluminium - Production of primary aluminium rose 4.7% from the previous month to a record 1.75 million tonnes in August. The output increased 12.7% from a year earlier. Some factories that used primary aluminium to make semi-finished products such as profiles have been receiving more orders this month after a fall in orders in July and August.

Primary aluminium smelters have continued to open new facilities in the second half after slowing construction in the first half due to weak demand and low prices.

Nickel, Lead, Zinc and Tin - Nickel production jumped 20.7% to 24,543 tonnes in August recovering strongly from a fall of 14% in July.

A sales manager at a nickel producer said that demand in September should be better than August. Some stainless steel mills started making enquiries to buy nickel after the NDRC approved many projects. Nickel production may rise further this month as producers restart idle capacity, the manager estimated.

Refined lead production rose 8.8% from the previous month to 457,000 tonnes in August, the second highest after an all time record of 459,000 tonnes in June. Production of refined tin increased 4.8% from July to 12,989 tonnes in August.

Chinese solder makers are likely to increase refined tin purchases by the end of the year as they build inventories in anticipation of economic stimulus measures and a spike in demand for their product in 2013. Refined zinc increased 8.5% to 397,000 tonnes in August after output dived to a 29 month low in July.

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