NINE large copper smelters in China have agreed to cut the sales of spot metal by as much as 200,000 tonnes in the first quarter of 2016.
Reuters reports that this is to counter low prices, an executive at one of the smelters said late Monday.
The amount is equal to about 10 per cent of China’s first-quarter refined copper production in 2015.
As the immediate market reaction, the copper prices slipped yesterday as consumers expected surplus metal and weak demand growth as a result of the happenings in China, the world’s largest consumer of industrial metals.
Benchmark copper on the London Metal Exchange was trading down by 0.2 per cent at US$4,720 a tonne. The metal used in power and construction was boosted on Tuesday by news of output cuts by Chinese smelters.
The plan to limit spot sales adds to an earlier decision by smelters to cut production next year by at least 350,000 tonnes in an effort to support prices that are troughing around six-year lows.
The agreement came after the smelters held a bi-monthly meeting in Shanghai on the weekend. The nine firms are members of the China Smelters Purchase Team (CSPT) and include Jiangxi Copper, Tongling Nonferrous Metals and Jinchuan Group.
Under the latest proposal, the smelters would place some refined metal in warehouses rather than sell it on the spot market.
They would still raise cash through stock financing deals with banks, said the executive, who had direct knowledge of the meeting.
China accounts for nearly half of global copper consumption estimated at around 23 million tonnes this year.
Copper found support on Tuesday from news that nine large copper smelters in China had agreed to cut sales of spot metal by as much as 200,000 tonnes in the first quarter of 2016.
This adds to an earlier decision by smelters to cut production next year by at least 350,000 tonnes.
Traders say copper could trade between $4,500-$4,750 until some fundamental trigger pushes it out of that range.—REUTERS