– Copper and Nickel smelting activities all down in April –
– N. American copper smelting was particularly weak –
– China copper smelting impacted by maintenance –
– Inactive copper smelters back in double figures –
– China NPI Dispersion back to April 2022 numbers –
April 2023 Copper observations include:
The Global Dispersion Index fell back to 44.0 from 46.8 in March, its lowest level since March 2021. A fall in activity in China was already expected, with a number of smelters using the seasonally low demand season to undertake maintenance. Tongling’s 200kt/a Jinchang, Chinalco’s 200kt/a Kunming and Daye’s eponymous 300kt/a smelter, were all observed as inactive at the end of the month. Indeed, in the case of Daye, this appears to be an extended outage that has been ongoing since the second half of March.
Weakness was also apparent in the Rest of The World, which has been dragged down by continued weakness in North America where the Regional Dispersion Index fell to only 24.2, the lowest reading in nearly three years. Meanwhile, in Central Asia, it was interesting to observe that Eti Bakir’s 80kt/a Samsun and Kazzinc’s 70kt/a Ust-Kamenogorsk – two of the least visible smelters in the market – were also inactive at month’s end. Looking ahead, with PT Smelting Gresik’s 300kt/a smelter due to start a 75 day shutdown this month and Aurubis’ 360kt/a Pirdop smelter also expected to undertake maintenance soon, the RoW Dispersion Index appears set to remain under pressure. On the flip side, SAVANT has observed the restarting of Zijin’s 80kt/a Bor smelter since the second week of April.
- Global Dispersion Index fell to 44.0 in March from 46.8 in March, the lowest level in over 2 years
- Inactive Capacity in China rose by 7.3 percent to 10.1 as the country entered Q2 ‘maintenance season’
- In addition, smelting activity in North America was weak with the Dispersion Index falling to 24.2, its lowest reading since July 2020
- Global Inactive Capacity rose to 10.6%, its first reading in double figures this year
April 2023 Nickel observations include:
- Global Dispersion Index fell to 43.3 in April, down 3.5 points from 46.8 in March, the 5th consecutive monthly fall
- The China NPI Dispersion Index fell back again to 37.9 in April from 45.4 in March, its lowest reading since February 2022
- The European Dispersion Index rose again in April to 39.1 and has now risen by 15.6 points from only 23.5 two months ago
Dr Guy Wolf, Marex Global Head of Analytics, commented: “While the most immediate impact of the decline in global smelting activity in April has been the rise in treatment and refining charges in the copper concentrates market, we know that the Savant Global Dispersion Index has a predictive, inverse relationship with LME copper prices at longer horizons. As such, we would expect prices to find a floor before rising into H2 2023.”
N. America Activity Dispersion Index (21 day moving average), July 2020 – Present
The Activity Dispersion Index is a measure of capacity-weighted activity levels observed at smelter sites where a reading of 50 indicates that current activity levels are at average levels. Readings above or below 50 indicate greater or lesser activity levels than average, respectively. The above chart displays these readings as a weekly rolling average.
The Inactive Capacity Index is derived from binary observations of a smelter’s operational status as being either active or inactive. The capacity weighted global and regional indices show the percentage of smelter capacity that is inactive, with readings displayed in the chart below as a weekly rolling average. A reading of zero would indicate 100% smelting capacity.
The SAVANT platform monitors up to 90% of the smelting capacity for copper and nickel round the globe. Using daily updated sources, including extensive use of geospatial data collected from satellites, the index reports on the activities at the world’s smelting plants offering subscribers unprecedented levels of coverage, accuracy and reliability. This dataset allows users to make better informed and more timely trading decisions.
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