Three month’s metal production totaling 190kt will be lost. 

China Daye Non-Ferrous Metals Mining Ltd.'s copper smelter subsidiary, Yangxin Hongsheng Copper Industrial Company, experienced an incident on September 14th. A fire broke out at the plant, located in Huangshi Xingang Industrial (Logistics) Park, Hubei province, at 5.00pm, which was not fully extinguished until 8.30pm. Fortunately, there were no casualties. The cause of the fire remains unknown and is currently under investigation. According to Reuters, the fire only affected the smelter’s sulphuric acid plant. The smelter’s thermal smelting and blowing furnaces were automatically shut down, without damage. 

In 2023, the company produced 625kt of copper cathodes and had earlier reported an excellent operating performance for H1 2024, with output surging 34.6% yoy to 422kt, up from 313kt in H1 2023. China Daye had forecast a full-year output of 870kt for 2024 but now expects to produce only 680kt, reflecting a shortfall of 190kt, or 22%, of the annual target. The plant’s refinery will continue to operate during Q4 by processing stockpiled and imported anodes. The company’s management reported that the smelter is expected to be closed for three months while repairs are carried out. Given the high levels of imported concentrate stocks within China, it is likely that Daye will resell most of their inventories and contracted material to other domestic smelters. Moreover, with Chinese cathode demand still tepid, the disruption in output will likely reduce the oversupply of refined metal during Q4. 

China Daye also acknowledged the current dire state of profitability in the Chinese copper smelting industry, citing the collapse in spot and contract TC/RCs. “The gap between supply and demand for concentrate will widen dramatically, and processing fees are expected to remain below the industry’s average breakeven point for an extended period of time, placing the company under unprecedented operating pressure.” Partly as a result of the Daye closure, the Chinese Smelters Purchasing Team (CSPT) yesterday issued guidance for Q4 TC/RC spot terms of US$35/t and 3.5c/lb. This is up slightly from terms of US$30/t and 3c/lb in Q3.