World Economy

China’s Large Copper Smelters to Cut Production

China’s Large Copper Smelters to Cut ProductionChina’s Large Copper Smelters to Cut Production

Nine large copper producers in China have agreed an initial plan to cut refined metal production by more than 200,000 tons in 2016 or around 5% from this year’s level, an executive at one of the producers said on Saturday.

The agreement followed a meeting by the producers on Saturday in Shanghai to discuss coordinated output cuts to support the market after prices in Shanghai and the London Metal Exchange plunged to their lowest in more than 6 years, Reuters reported.

China, the world’s second biggest economy, is the top refined copper producer and consumer but is suffering an economic slowdown adding pressure on the global market.

The nine producers also will ask the state-controlled industry body, the China Nonferrous Metals Industry Association, to request Beijing to investigate high-speed trading and malicious short selling of copper contracts traded on the Shanghai Futures Exchange, the executive said.

The producers made the initial plan in the morning. In an afternoon meeting, they further agreed that the companies would consider bigger output cuts and would finalize the amounts next week, said the executive.

He was speaking on condition of anonymity but on behalf of the China Smelters Purchase Team group.

Chinese growth dipped to 6.9% in the third quarter, the weakest since the global financial crisis.

Zinc smelters and nickel smelters also called for production cuts earlier this week. Sources said on Friday China’s state stockpiler was considering buying more than one million tons of aluminum from local smelters, an initial sign that Beijing could agree to the first major bailout in its embattled metals industry since 2009.

The nine copper producers involved in the planned cut are members of the CSPT and include Jiangxi Copper Company Ltd and Tongling Nonferrous Metals Group.

Their production accounted with about 60% of China’s refined copper production in the first 10 months of this year.

“We prepare to cut production by at least 200,000 tons,” the executive told Reuters, adding that the cut could be expanded if copper prices fell further.

The companies will produce about 4.4-4.5 million tons of refined copper this year, he added. The proposed cut is equal to about a third of China’s production in October.

The producers would mainly cut output that uses scrap as feedstock, the executive said. The firms also use copper concentrates as feedstock.

CNIA, supported by some large metals producers, has already called for a short-selling probe on metals futures, sources said earlier this week.