Copper smelters in China, the world’s biggest producer of the refined metal, are weighing cuts in production next year as they respond to prices that have tumbled to six-year lows, according to people with knowledge of the matter.
The smelters, including China’s biggest, Jiangxi Copper Co. and Tongling Nonferrous Metals Group Co., decided to reduce output after meeting in Shanghai on Saturday, the people said, declining to be identified because they weren’t authorized to speak publicly. The size of any cut hasn’t been determined, the people said.
Representatives of the companies may continue meeting before announcing the action, which could happen early next week, according to the people.
China’s nickel smelters met Friday and pledged to reduce output starting next month to boost prices, following cuts of 500,000 tons announced by zinc producers on Nov. 20.
The cutbacks are part of wider efforts to support prices in the world’s biggest producer and consumer of raw materials. China’s Nonferrous Metals Industry Association has petitioned the authorities to intervene in the market with state purchases of nickel, aluminum and other metals, and probe the activity of short-sellers, according to people familiar with the matter. Such moves would be similar to the government’s actions earlier this year to calm a stock-market rout.
China’s smelters expanded capacity over the past decade to meet demand amid a boom in the nation’s infrastructure and property markets. Now, faced with the slowest economic growth in a quarter century, they are contending with supply gluts that have driven prices to multiyear lows. The London Metal Exchange’s index of six industrial metals is heading for its biggest annual decline since the global financial crisis.
Codelco, the world’s largest copper producer, said in Shanghai last week that it would rather rein in costs than cut output, while fellow Chilean producer Antofagasta Minerals SA said global mining companies had already cut enough production to balance the market and support prices at current levels.
Patrick Abboud
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