An open pit copper mine in Jiangxi province. On Tuesday, nine large copper companies said they would cut refined copper output by 350,000 metric tons next year. (Provided to China Daily)
Prices have dropped to unsustainable levels, say companies
Copper producers from China have decided to cut output in 2016, in an effort to rein in commodity prices, which fell to a six-year low recently.
On Tuesday, nine large copper companies said they would cut refined copper output by 350,000 metric tons next year. The big smelters said in a joint statement that prices have fallen to a level that is no longer viable for companies.
The amount is equivalent to about 4.4 percent of the country's annual output, based on figures from the National Bureau of Statistics.
The nation accounts for 24 percent of the world refined copper supply, according to Bloomberg data.
The nine companies urged the government to support the market by buying and storing copper, as well as by regulating high-frequency trading.
"The smelters will make cuts and take other necessary measures to maintain the healthy development of the industry," the statement said, adding that firms would weed out excess capacity.
In a significant move, the companies urged the government to stop approvals for new copper capacity expansion projects and vowed not to expand their projects.
Statistics from the Shanghai Futures Exchange showed that transaction prices of copper fell from 38,620 yuan ($6,030) per ton at the beginning of November to 34,830 yuan per ton on Nov 30.
The metals market in China is witnessing its coldest winter since the 2008 financial crisis. Prices of many major commodities like nickel, zinc, copper, iron ore and aluminum have all plunged to record lows.
The China Nonferrous Metals Industry Association had urged the central government to purchase 900,000 tons of aluminum, 30,000 tons of nickel and 400,000 tons of zinc.
"The decrease in output is limited," said Li Xiaobei, a nonferrous metals analyst with SCI International, a commodity market information service provider.
"Last year's total output was 7.96 million tons. The 350,000-ton cut accounts for just 4.4 percent of last year's output. Since the current monthly output is nearly 700,000 tons, the impact on the market is very limited."
