For the fourth consecutive month global smelting activity increased in September according to Earth-i’s SAVANT Global Copper Monitoring Index, with average smelter inactivity falling by a full percentage point m/m to 14.2%. This monthly decline contributed to smelters being 1.6% more active on average in Q3 2024 than the same period a year ago. It would therefore seem that despite very low terms in the spot market, record high gold as well as resurgent copper prices are proving sufficient to incentivise operators to keep processing scarce concentrates.
The fall in the global index was in large part due to a 2.1% decline in China, where average inactivity fell from 12.8% to 10.7%, the lowest reading since March. This is highly unusual for this time of year when smelters enter negotiations for next year’s annual benchmark terms, and speaks to the duress they face as a cohort that we highlighted in our recent feature article – ‘Damned if they do, damned if they don’t?’. Not surprisingly, the country level fall was mirrored by that of the custom smelter monitoring index, which shed 2.2% to 11.4%, as 54% of all operating custom smelters are located in China.
A rise in inactivity towards the end of the month may indicate that some operators have heeded calls from members of the China Smelter Purchasing Team (CSPT) for production cuts and maintenance extensions. The largest contributors to the recent uplift have been the northeast and south central regions, the latter where the large Daye Hongsheng (400 kt/a) plant is located that will be closed for 3 months, following a fire that broke out in the sulphuric acid plant on September 14th. In the northeast of the country, the Fubang (40 kt/a) and Jilin Zijin (150 kt/a) smelters were the main contributors, although the later was recorded as active again on October 8th.
Across other regions, the largest fall in smelting activity (as deduced by a rise in inactivity) was seen in Europe, where the regional monitoring index rose by 9.2% to 28.3%. In addition to the major maintenance and upgrading work being undertaken at Glogow (540 kt/a) that has seen the continent’s largest smelter offline since the middle of August, towards the end of the month weaker signals from the region’s second largest Hamburg smelter (450 kt/a) also assisted the rise.
Elsewhere, inactivity remains highest in Africa at an average of 44.6% for September, despite finishing the month at 28.9%, while Asia & Oceania cemented its status as the region with the highest level of operating activity, where the inactivity index fell by 4.7% m/m to just 2.1%. Here only the Ust-Kamenogorsk smelter (70 kt/a) in Kazakhstan joined Samsun (80 kt/a) in Turkey as showing any significant period of inactivity.