– Copper global smelter production up 5% at record level 1 –
– Nickel readings start to rebound in late January –
January 2023 Copper observations include:
In January, the Global Dispersion Index rose to 50.1, its first reading above the average of 50.0 since January 2022, and simultaneously the Global Inactive Capacity recorded its lowest reading since February 2022. This translated into a record month for Global Smelter Production1 – SAVANTs newly launched data series – which rose by 5% from December 2022 to a new monthly high of 1.77Mt.
January is traditionally a strong month for production, particularly in China, as smelters look to build up stocks of metal in expectation of burgeoning demand after the New Year holiday and ahead of the spring thaw in the northern hemisphere. At the end of the month, only the 100kt/a Baotou smelter in Inner Mongolia and the old 120kt/a Yantai Guorun site in Shandong province were observed as inactive. Additionally, in 2023, high treatment and refining charges (TC/RCs) look to have incentivised smelters across the globe to process concentrates to metal, shrugging off shipment delays from operations in South America due to logistics issues and community unrest.
- Global Dispersion Index rose to 50.1 in January, the highest reading in a year
- Global Inactive Capacity registered only 9.4% for the month, the lowest reading in 11 months
- The China Dispersion Index rose by 2.4 points – the strongest MoM gain since May, to record its highest reading in seven months at 48.7
- Global smelter production was the strongest since January 2022 at 1.77Mt, a rise of 5% from December
- MoM production was strongest in Asia & Oceania, while in China output rose by 2% MoM to 744kt
1 – This is a new data series derived from capacity-weighted activity levels observed at smelter sites and collated to country and regional levels. Recorded data goes back to 1 January 2017.
January 2023 Nickel observations include:
The Global Dispersion Index fell in January to 49.4, recording a reading below the average of 50 for the first time in 4 months. This was in large part due to the fall in the NPI Dispersion Index in China. The strong performance we noted in December, following the loosening of COVID-19 restrictions, fell away into Chinese New Year, which saw the index fall below 40.0 for 10 consecutive days. However, it is interesting to note that the most recent data points show a rebound in activity to 48.3 last Friday. If this continues into the first week of February, it could be evidence of strength in the broader economy that many are expecting following an underwhelming performance in 2022.
- Global Dispersion Index fell back to 49.4 in January from 52.3 in December
- Global Inactive Capacity reading fell to 13.8%, its lowest level since May 2022
- The NPI Dispersion Index fell 8.3 points to 46.3, the largest fall in 9 months
- The ferronickel Dispersion Index continues to be the weakest of the metal grades at only 41.7, dragged down by the continued closure of plants in Europe where the regional Inactive Capacity Index remains elevated at 61.3
Dr Guy Wolf, Marex Global Head of Analytics, commented: “It is probably no surprise to many in the market that the new Global Smelter Production series has recorded its highest reading on record, given the time of year and the profitability of processing concentrates at present. In terms of what this means for copper market S&D dynamics, it will be interesting to watch how production trends from here, particularly in light of the recent warning from the SAVANT Copper Activity Signal.”
Asia & Oceania Regional Smelter Production, January 2022 – Present
Nickel Activity Dispersion Indices by metal grade, August 2022 – Present
The Smelter Production series is a set of indices derived from capacity-weighted activity levels observed at smelter sites and collated to country and regional levels. Readings are displayed on a kilotonnes of production basis for the monthly, quarterly and annual periods.
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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