Domestic copper cathode output in September stood at 909,000 mt, up 6.12% month-on-month (MoM) and 13.21% year-on-year (YoY).

The domestic copper cathode output increased month-on-month in September as some smelters returned to normal production after the impact of power cuts and overhauls faded and ramped up the production in order to make up for the unexpected production losses in the early stage. The number of smelters undertaking maintenance was also very limited, hence the impact on the output was insignificant. A newly expanded smelter in Zhejiang also reached full production in September. However, according to SMM survey, a number of smelters reported that the shortage of spot blister copper was still serious, which led to the hindered pace of production increase and even output decline. In addition, the pandemic in Jiangxi and the power outage caused by heavy rains in some parts of Shandong also resulted in a reduction in output.

In the fourth quarter, thanks to the abundant copper concentrate supply, most smelters are still highly motivated to produce. As such, some smelters increase the production, and some have postponed or cancelled the original maintenance plan. Judging from the production schedule of domestic smelters in October, although some smelters in Shandong and Fujian has commenced maintenance, the total output of domestic copper cathode will continue to rise. In addition, a smelter in Guangdong has resumed the production since mid-September, and will further increase the operating rates in October. SMM expects that domestic copper cathode output in October will be 936,600 mt, up 3.04% on the month and 18.65% on the year.

According to SMM, China metallurgical-grade alumina output in September (30 calendar days) was 6.717 million mt. The average daily output of was 223,900 mt, down 1.9% MoM as the number of natural days in September is one day less than in August, and up 12.21% YoY. The operating capacity of alumina was 81.72 million mt in September and the domestic operating rates stood at 85% on average. The total output was 2.21 million mt in Shandong, up 1.8% on the month; 1.59 million mt in Shanxi region, down 6.4% on the month; 779,000 mt in Henan, down 1.3% on the month; 1.04 million mt in Guangxi, down 1.7% on the month; 432,000 mt in Guizhou, down 6.3%; 330,000 mt in Chongqing, up 8.2% on the month; and 180,000 mt in Hebei, down 2.7% on the month. The output of other provinces was basically stable, with total output of 115,000 mt in Yunnan and 41,000 mt in Inner Mongolia.

On the whole, it is estimated that the net imports of alumina in September will be -100,000 mt. And there will be a supply surplus of 188,000 mt in the month, and a combined surplus of about 1.066 million mt during January-September. At present, the alumina market has always been in a supply surplus pattern. New production capacity has been and will be launched in the third and fourth quarters in 2022. Luyu Bochuang and Lubei Chemical each expanded their production by 1 million mt at the end of September, and are expected to contribute to the output increase in November. At the same time, due to the production reduction and slow resumption of production of aluminium in Yunnan, the demand for alumina is declining. In the case of the falling prices of finished products, rising raw material costs, and increasing difficulty in capital turnover, the living space of high-cost alumina producers have been squeezed. According to SMM, an alumina plant in Chongqing (with an installed capacity of 800,000 mt) has been reducing the production since early October. It is expected that all production lines will be stopped in late October. An alumina plant in Shanxi (with an installed capacity of 450,000 mt) will gradually stop the production in October, and it is expected to be completely shut down by the end of the month. On the whole, the alumina industry will usher in a change, and the expectation of replacement of old capacity with new capacity will gradually be realised.

According to SMM data, China produced 3.3395 million mt of aluminium in September (30 calendar days), up 7.34% on the year. The daily output stood at 111,500 mt, down 1,041 mt on the month. The output totalled 29.892 million mt from January to September 2022, an increase of 2.78% on the year. Affected by the successive production reductions of aluminium enterprises in Sichuan and Yunnan, the operating capacity declined significantly in September. Among them, aluminium enterprises in Yunnan reduced the production by about 20%, and the operating capacity in the province decreased by about 1.07 million mt compared with the end of August. There was no large-scale production reduction in other regions. In September, aluminium enterprises in Sichuan and Guangxi resumed the production slowly, with a total resumed capacity of about 240,000 mt. On the other hand, the Inner Mongolia Baiyinhua project was put into operation in September and a small amount of new production capacity in Guizhou was released. According to SMM, as of the beginning of October, China’s installed capacity of aluminium reached 45.16 million mt, and the operating capacity was 40.281 million mt, and the national average operating rate dropped to 89.2%. In September, the proportion of aluminium liquid was about 68.28%.

In October, the domestic operating aluminium capacity is restoring. And the increase is mainly contributed by the resumption of production of aluminium plants in Sichuan, Guangxi and other regions, as well as the release of new production capacity of Baiyinhua and Guizhou Yuanhao. In October, aluminium enterprises in Yunnan have not received relevant requirements for further production reduction, hence the enterprises may maintain the current operating capacity. As such, aluminium enterprises may not experience significant production reductions in October. Combined with future production capacity changes, SMM predicts that the domestic aluminium operating capacity may be lifted to around 40.78 million mt at the end of October, and the output in October (31 days) is expected to be around 3.46 million mt, a year-on-year increase of 9.3%.

On the demand side, domestic downstream consumption of aluminium improved in September. The operating rates and orders of mainstream sectors such as aluminium plate/sheet, strip and foil and aluminium extrusion rebounded, hence the aluminium social inventory fell. In October, many places have experienced the pandemic outbreak. Although the production of most enterprises has not been affected, it will inevitably interfere with aluminium consumption and transportation as the pandemic may last for a long time. Combining the future downstream orders and the arrival of domestic and overseas goods, SMM predicts that there may be a slight increase in the social inventory by the end of October. And the inventory of aluminium ingots may be around 720,000 mt, an increase of 100,000 mt from the end of September.

China’s primary lead output in September stood at 295,100 mt, up 9.97% MoM, and 12.83% YoY. The output in September was the highest in 2022 and the highest since September 2017. The YoY decline in combined output in January-September narrowed to 1.99%. Production capacities of enterprises involved in the survey totalled 5.711 million mt in 2022.

According to research, the output of primary lead increased by more than 20,000 mt in September, exceeding the forecast in the previous report. On the one hand, the power cuts in various places were lifted in September, and the production of lead smelters in Hunan, Henan and other places resumed. At the same time, smelters such as Xing'an Silver Lead, Hongqian Nonferrous resumed the production after maintenance. On the other hand, the SHFE/LME price ratio of lead rose since mid-to-late August. Therefore, the import volume of lead concentrate increased and the supply of ore is sufficient, allowing the enterprises to increase the production. At the end of the third quarter, some large enterprises began to increase the production in September, considering their annual production and sales plans. In addition, Wanyang reached full production after technical transformation, Hunan Huaxin in Shaanxi increased the production, which also brought some increase to the monthly output.

In October and throughout the fourth quarter, major companies may continue to ramp up the production in order to fulfil the annual targets near the end of the year. Yunnan Mengzi, Western Mining and other enterprises have started the maintenance. At the same time, the pandemic situation has repeated in various places, such as Hunan and Inner Mongolia. Therefore, the local transportation has been restricted, which has led to the inability of raw material procurement for some enterprises. Power Supply Bureau of Yunnan Honghe Prefecture has issued a notice on energy efficiency management for this winter and next spring, proposing power cuts for dry season. Some lead smelters are included in the list of production control, which suppress the production to a certain extent. SMM predicts that the domestic primary lead output in October may drop slightly on the month to 288,400 mt.

SMM data showed that China's secondary lead output stood at 327,200 mt in September, down 6.41% on the month and 11.28% on the year. Output from January to September totalled 3.1262 million mt, a year-on-year increase of 5.22%. SMM data showed that China's secondary refined lead output stood at 301,900 mt in September, down 0.92% on the month and 17.38% on the year. Output from January to September was 2.7305 million mt, a year-on-year decrease of 2.03%.

The output of secondary lead and secondary refined lead decreased in September, mainly because secondary lead smelters reduced the production as the lead prices remained relatively low for a long time, and enterprises suffered losses for 3 or 4 consecutive months. Lead prices still hovered at a low level in September and the production of secondary lead smelters was relatively stable after the production reductions without signs of resuming the production in September. At the end of August, a large-scale smelter in Anhui halved the production until late September due to equipment problems. In mid-September, another large-scale smelter in Henan suspended the production for half a month due to equipment failure. In addition, the pandemic control measures led to the production reduction of secondary lead smelters in the region, and the pandemic continued until the end of the National Day holiday. At the end of September, Anhui Dahua Co. stopped the production for annual routine maintenance. As the power cuts ended, a smelter in Hunan resumed the production. Although a smelter in Anhui reduced the production in August due to market factors, its production gradually recovered with the slight increase in lead prices in early September, leading to some output increase.

In October, the pandemic in Jieshou City, Anhui Province has ended, and the production of enterprises in the area has gradually resumed. However, the pandemic in Taihe County, Anhui gradually became serious and two smelters have reduced the production due to the transportation problem. In general, the production of smelters in Anhui will recover slightly as Dahua Co. may complete the overhaul and resume the production in late October. A smelter in Hebei resumed the production at the end of September. A smelter in Henan has reached full production in October after addressing the equipment failures in September. A smelter in Ningxia has returned to normal production after being shut down and a smelter in Jiangxi has completed the technical transformation and has gradually resumed the production. During the National Day holiday, LME lead prices rose sharply by 8.15%, driving domestic lead prices to run high after the holiday. In this scenario, secondary lead smelters have turned from losses to breakeven, and some smelters are able to make profits. As such, smelters that reduced the production in the early stage may resume in October.

China's refined zinc output stood at 503,900 mt in September, which was less than expected. The output in September increased by 41,200 mt or 8.91% on the month but fell 8,000 mt or 3.08% on the year. From January to September 2022, the combined refined zinc output was 4.414 million mt, a decrease of 3.08% year on year.

SMM survey showed that the output of domestic refined zinc increased significantly in September but the increase was less than expected. Smelters in Sichuan resumed normal production after the power cuts ended, and some smelters increased the production, which brought major increases. Some large-sized smelters in Inner Mongolia, Anhui, and Gansu resumed after maintenance, and rushed to meet their annual production targets. Some smelters in Shaanxi and Guangxi ramped up the production, and the output increased slightly. However, a large-sized smelter in Xinjiang was suspended for routine overhaul, resulting in major reductions. Some small-sized smelters in Hunan, especially secondary zinc smelters, were suspended in September due to water quality testing and other issues, resulting in lower-than-expected production recovery. A smelter in Guangdong embarked on the maintenance at the end of September, which will continue to affect the output until October. In addition, a smelter in Inner Mongolia failed to resume normal production as scheduled due to equipment problems, which was also one of the main reasons for the lower-than-expected production in September.

China's refined zinc output is expected to increase by 12,700 mt to 516,700 mt in October, an increase of 17,400 mt or 3.48 % YoY, which is also less than the previous expectation. From January to October 2022, the combined refined zinc output is estimated to be 4.93 million mt, a decrease of 2.43% year on year. As smelters in west Hunan gradually resume the production and a large-scale smelter plans to increase the production, the output in Hunan may increase more significantly. A large-scale smelter in Xinjiang has recovered after maintenance, and the increase is considerable. Smelters in Sichuan, and Henan have plans to increase the production. In addition, a small-sized smelter in Jiangxi will be put into operation in October. However, due to the regular maintenance of some smelters in Yunnan and Guangdong, the output will see some declines. At the same time, affected by the impact of power cuts in Yunnan, the output may fall by around 5,000 mt. In addition, some smelters in Inner Mongolia, Shaanxi and other places still fail to resume normal production.

Domestic refined tin output was 15,098 mt in September, up 5.95% MoM and 15.98% YoY, and the combined output from January to September fell by 5.21% YoY, according to SMM research. In September, the domestic refined tin output increased slightly as expected.

The output rose slightly mainly due to the stable production of smelters. In terms of regions: 1. The smelters in Yunnan continued to ramp up the production on the month. The output of major smelters in the region remained normal in September. The supply tightness of raw materials that a few smelters were worried about did not have a significant impact on the actual output. The local power rationing policy in Yunnan at the end of September also had limited impact on the production of enterprises in the month. 2. The output of smelters in Guangxi fell significantly on the month mainly because of the tight raw materials supply and other factors, but major companies in the region are expected to resume normal production in October. 3. The output of smelters in Jiangxi declined on the month. The actual production performance of smelters in the region diverged. Some large-scale smelters experienced a decline in output due to shortage of raw materials and equipment maintenance, while other relatively small companies also reduced their output due to shortage of recycled raw materials. In addition, some smelters’ refining process was stopped for technological transformation. 4. The total output of smelters in other regions increased month on month in September. Major smelters produced stably, and smelters that were previously delayed in production resumption due to high temperatures resumed the production of finished products in September.

In October, the domestic conversion margin of tin concentrate has remained stable, and the fear of tight raw materials is expected to gradually subside. However, at this stage, the power rationing in Yunnan and the disturbance of the pandemic in Gejiu area have actually affected the smelters in the area, and the final degree of impact is still difficult to assess. To sum up, SMM expects that the domestic refined tin output will decrease to 14,680 mt in October.

China produced 15,400 mt of refined nickel in September, down 0.65% on the month but up 7.67% on the year. The domestic pure nickel output in September changed little compared with August. Although the refined nickel factories in west and north China saw a slight reduction in production, the production was still in a reasonable range. In addition, the refined nickel production lines of domestic nickel sulphate manufacturers were back online as scheduled, hence the output increased month by month. Although nickel prices remained high during September, the refined nickel output did not fall significantly as the rigid demand of the downstream enterprises was still strong.

It is expected that the domestic refined nickel output will stand at 16,100 mt in September, up 4.55% on the month and 10.92% on the year. The refined nickel output may increase slightly in October, mainly due to the strong expectation of production increase in stainless steel in October. In addition, the demand for refined nickel from the alloy industry is improving. The consumption of pure nickel shows an upward trend in 2022 and is expected to increase by 1.89% on the month in October. The refined nickel output is expected to increase due to the production resumption of salt factories.

China’s NPI output in September stood at 31,500 mt in Ni content, up 6.67% MoM and 2.53% YoY. The spot prices of stainless steel rose in September, hence the losses of stainless steel mills narrowed. At the same time, stainless steel orders increased compared with August. Therefore, steel mills ramped up the production significantly in September, hence the demand for NPI increased. The output of high-grade NPI stood at 24,600 mt (Ni content), up 6.67% on the month. And the output of low-grade NPI was 6,900 mt (Ni content), up 3.23% on the month. In September, the prices of high-grade NPI showed an upward trend. The NPI plants suffered serious losses in the early stage, but driven by the improving stainless steel market, the NPI prices also rebounded. In addition, the profits of 200-series stainless steel was good in September, hence the output also increased slightly, heightening the output of low-grade NPI. As the demand for NPI improved, the inventory pressure of NPI plants eased, and the overall supply and demand of NPI tended to balance.

China's NPI output in October is expected to be 33,300 mt (Ni content), up slightly compared with September. On the demand side, some stainless steel mills are currently profitable, and considering the issue of the output cap in the coming year, the production will increase slightly in October. On the supply side, with the development of the stainless steel production projects of integrated enterprises, the NPI available in the market will reduce. In addition, affected by the rainy season, the supply and demand of nickel ore is tight and the prices have risen. Therefore, the prices of NPI is firm under the cost support. The market supply and demand will gradually move towards a balanced or tightly balanced state, and the NPI prices will remain stable with some upward momentum.

China's nickel sulphate output in September stood at 41,500 mt in metal content and 189,000 mt in physical content, up 15% on the month and 48.8% on the year. In September, the battery-grade nickel sulphate output increased significantly again. Among them, the production of nickel sulphate produced with high-grade nickel matte accounted for 28% of the total output, MHP accounted for 45%, and nickel briquette and nickel powder only took up 9%. The causes of output increase in September were similar to that in August. Due to the increased production capacity of the integrated precursor plants in the early stage, coupled with the increase in the capacity utilisation rate of the MHP production lines of a few manufacturers, the output in September increased obviously. Currently, the supply of nickel sulphate in the form of small orders is still relatively tight. Under the expectation of tight supply, the prices of battery-grade nickel sulphate continue to rise, which has stimulated the increase of new production capacity and the conversion of some production lines. These production lines are expected to be put into operation in November and December. Battery-grade nickel sulphate output will continue to see growth in 2022. The output in October is expected to increase by 7.9% on the month and 51% on the year to 44,800 mt amid the considerable profits and rising demand.

China's battery-grade manganese sulphate output stood at 23,800 mt in September 2022, an increase of 4.39% MoM. According to SMM research, the delivery of long-term orders of most mainstream manganese sulphate factories improved in September, and their output exceeded expectations mainly as the demand for manganese picked up compared to August. According to SMM, the overseas demand increased amid the peak season in new energy vehicle sector, which drove the exports of ternary precursors. Meanwhile, the increase in orders from the top-tier battery cell factories stimulated the production of 5-series ternary precursors. In addition, due to the economic advantages of the 6-series ternary precursors, the orders continued to increase. Therefore, the destocking speed of most manganese sulphate plants’ in-plant inventory accelerated.

In October, the prices of nickel sulphate rise, and the cost advantages of the 6-series ternary precursors have been highlighted again. Amid the concentrated production of car makers, the manganese sulphate plants are more optimistic about the future demand, and the output in October is estimated at 30,000 mt.

SMM data showed that China's high-carbon ferrochrome output stood at 424,700 mt in September, down 43,300 mt MoM and 10,000 mt or 4.53% YoY. The output in Inner Mongolia was 272,700 mt, a MoM decline of 20,000 mt or 6.8%. The output in Shanxi was 27,000 mt, down 35.71% MoM. Amid the traditional peak season on the consumption side in September and October, stainless steel consumption picked up and steel mills increased the production, hence the demand for ferrochrome increased as well. However, due to the supply surplus of ferrochrome in the early stage, the purchasing prices of high-carbon ferrochrome offered by mainstream steel mills in September greatly declined. As the prices of chrome ore went up, the ferrochrome manufacturers suffered losses, and the operating rates further declined.

The output of high-carbon ferrochrome in October is expected to stand at 415,000 mt, slightly lower than that in September. In October, the purchasing prices of high-carbon ferrochrome offered by mainstream steel mills have rebounded slightly, but the prices of chrome ore have further increased. In this scenario, ferrochrome manufacturers continue to suffer losses. As the rainy season in south China is coming to an end, electricity costs may rise, hence manufacturers that have stopped the production are less willing to resume. In north China, such as Inner Mongolia, the temperature drops steeply in winter, and it is more difficult for the manufacturers to resume the production after the equipment is shut down. Therefore, the factories may maintain the current status. However, at this stage, most of the enterprises in production are medium and large-sized ferrochrome plants. Under the pressure of long-term orders, the production is likely to be maintained. In addition, the retail prices of ferrochrome have increased recently, hence the losses of ferrochrome have eased. As such, the confidence of ferrochrome plants has recovered and there is little room for further decline in ferrochrome production.

According to SMM survey, the domestic stainless steel output in September totalled about 2.7594 million mt, up 21.10% MoM and 29.52% YoY. The output of 200 series stainless steel stood at 859,000 mt, up 12.58% MoM. The output of 300 series stainless steel was 1.5209 million mt, up 23.84% MoM. The output of 400 series stainless steel was 379,500 mt, up 31.95% MoM.

Most domestic steel mills increased the production significantly in September, but Indonesia stainless steel output decreased. In terms of series, the output of 400-series stainless steel increased the most. However, since the demand of major terminal industries such as white goods and infrastructure has not yet recovered significantly, the in-plant inventory of 400-series stainless steel accumulated slightly. The transactions of 200 and 300 series stainless steel improved slightly compared with August, and the inventory of steel mills continued to decrease slightly.

On the basis of the substantial resumption of production in September, 200, 300 and 400 series stainless steel production across the country are expected to further increase in October. The increase is mainly contributed by some large-sized steel plants and new projects while medium and small-sized steel mills still maintain conservative production scheduling. Indonesia stainless steel output may increase slightly. From the perspective of different series, the output of 200 and 300 series stainless steel will increase more significantly, mainly due to certain profitability. And due to the high cost of raw materials such as ferrochrome and plain carbon steel scrap, as well as slowly falling in-plant and social inventory, the output increase of the 400 series stainless steel may be limited. In terms of demand, although the market in October is not as good as in the previous years, many regions have successively introduced favourable macro policies in October this year. But the market still needs to wait and see the implementation of the policies. On the whole, the overall supply and demand of stainless steel are increasing at the same time and the supply is sufficient. The cost support is strong but the room for price hike is limited. SMM believes that stainless steel prices will decline slightly in October.

China produced 41,900 mt of EMM in September, down 20.83% MoM and 60.19% YoY, according to SMM statistics. The combined output in January-September totalled 557,300 mt, down 35.03% YoY. According to SMM research, due the high domestic manganese prices, the demand from stainless steel sector continued to be sluggish. Orders of EMM mainly came from special steel and alloy sector. In this scenario, the overall demand was weak, and the market transactions were in a stalemate. Under this circumstance, a large-sized manganese factory, which accounted for more than 50% of market share in China, suspended for environmental protection-oriented maintenance. Therefore, although some manganese factories resumed the production in September, the output still declined.

In October, this large-sized manganese plant will remain suspended, and the market supply will continue to tighten. The relationship between supply and demand may ease, and the small-sized factories will have low inventory. Therefore, although the demand is relatively weak, under the circumstance of low raw material prices, the manganese plants are still willing to resume the production. However, due to their small market share, the output is expected to increase limitedly to about 43,600 mt.

SMM data shows that China's industrial silicon metal output was 323,400 mt in September, an increase of 11.5% month-on-month and 17.9% year-on-year. The output totalled 2.56 million mt from January to September, an increase of 23.8% on the year. At the end of August, silicon metal plants in Sichuan resumed the operation one after another amid recovering power supply. The growing operating rates led to an increase of 14,000 mt in silicon metal output, bringing about major output increase in September. The output increased slightly in Xinjiang, where silicon metal plants, which had been previously shut down due to the pandemic, also resumed the production. Besides, the rising operating rates of silicon metal plants in Fujian, Inner Mongolia, and other provinces in north-east China also contributed to the increase in total output. Sichuan is expected to enter the normal water period at the end of October, and the electricity prices are likely to be raised following the impact of power shortage in August. However, the production of local silicon metal plants will be little constrained since the profits are modest. The production in Yunnan has been limited since September 26, when production restriction policy was implemented and will have great negative impact on the output in October. At the same time, new production capacity continues to be commissioned in October, and the production capacity of large factories in Xinjiang and Sichuan continues to be released, thus it is expected that the domestic output of silicon metal will maintain a month-on-month increase in October.

SMM statistics show that the domestic output of polysilicon stood at 76,200 mt in September, up 23% or nearly 15,000 mt on the month. The dreastic growth in output greatly alleviated the supply tightness of polysilicon. There were two reasons behind the skyrocketing increase. On the one hand, the lift of power rationing policy and the production resumption of some manufactures from maintenance underpinned the supply of polysilicon. Specifically, the first-tier manufacturers, such as Xinte Energy, Sichuan GCL, East Hope, together contributed to an increase of 9,000 mt in polysilicon output. On the other hand, the successful ramp-up of new production capacity also stimulated the growth in supply. For example, GCL, Inner Mongolia Xinte, Qinghai Lihao and other manufacturers brought about an additional output of 7,000 mt. In terms of output reduction, several manufacturers carried out routine maintenance in September, but most of them were second and third-tier enterprises such as Huanghe Hydropower Development, thus the overall impact was relatively limited.

SMM data shows that China produced 722,800 mt of silicon-manganese alloys (including 42,000 mt of high-silicon silicon-manganese) in September 2022, an increase of 17.30% month-on-month and 10.05% year-on-year. The combined output from January to September totalled 7.55 million mt, down 8.57% YoY. According to SMM survey, the operating rates of steel mills increased amid frequent positive news from the terminal sectors, which fuelled the demand for silicon-manganese alloy and improved the transactions. Therefore, the SiMn alloy factories were motivated to produce with lucrative profits, and the output in September thus increased month-on-month. In October, the market confidence has been boosted with the slight increase in the October SiMn alloy bid price offered by most steel mills. Although the bid price of leading steel mills is yet to be announced, inquiry prices in the first round have increased month-on-month and are relatively close to spot prices. Therefore, the SiMn alloy plants still have high enthusiasm for production as the profit margins extend. In addition, although it is expected that the steel mills will have to cut the production soon due to environmental protection policies, the reduction in output will be limited as the production restriction is temporary. In this case, the demand for SiMn alloy still exists. The SiMn alloy output is expected to see a slight increase and stand at 743,200 mt in October.

China's magnesium ingot output stood at 81,600 mt in September, up 10.57% MoM and 62.07% YoY, according to SMM statistics. The output totalled 728,300 mt from January to September, a year-on-year increase of 28.15%. According to SMM survey, the domestic magnesium ingot output in September has returned to the annual average level. The magnesium plants across the country have basically resumed normal production except for those in Inner Mongolia, where some factories were disturbed by the pandemic and thus the recovery of local output fell short of expectations. In the wake of the holiday, the poor downstream orders dampened the willingness of magnesium plants to expand the production. According to the existing production schedules of magnesium plants in the main production areas, the total domestic output of magnesium ingots in October is likely to remain stable at about 83,000 mt.

China's magnesium alloy output stood at 28,000 mt in September, up 8.11% MoM and 81.77% YoY, according to SMM statistics. The output in January-September declined 10.61% year-on-year to 233,200 mt. The average operating rate of magnesium alloy industry stood at 49.33% in September, up 8.11 percentage points on the month and 73.22 percentage points on the year. According to the feedback from leading domestic magnesium alloy enterprises, the orders for magnesium alloy improved slightly in September. The growth in the output of some large factories was the driving force behind the increase in the entire output. A salesperson from a large magnesium alloy enterprise revealed that the overseas energy crisis had enduring negative impacts on export orders, and that the overall market inquiries were poorer than those in previous years. At the same time, the weak macro market also resulted in a quiet magnesium alloy market. It is expected that the output of magnesium alloy will remain flat in October at about 27,500 mt.

China's magnesium powder output stood at 6,600 mt in September, up 10% MoM, and the output totalled 62,000 mt in January-September. The domestic magnesium powder output in September picked up slightly. The person in charge of a large-scale magnesium powder company said that the magnesium powder market environment in September was better compared with August, but was still sluggish compared with the same period in previous year. As the operation of domestic steel mills has been under great pressure, the downstream demand for magnesium powder is in a downturn. At the same time, the high prices of magnesium have further expanded the cost advantage of substitutes for magnesium powder. Considering that magnesium prices are unlikely to fall in the fourth quarter, which is the traditional high season for magnesium ingots, the demand for magnesium powder will sustain weakness due to the high costs. Therefore, the domestic output of magnesium powder in October is estimated at 6,800 mt.

Domestic output of PrNd oxide in September 2022 stood at 5,733 mt, up 11.09% month-on-month. The increase in output mainly came from Sichuan and Shandong provinces, with little change in the output of other regions. The domestic supply in September improved slightly compared with August, but the spot PrNd oxide was in short supply. Thus, most of the separation plants were bullish. And after the downstream magnetic material factories restocked before the holiday, the PrNd oxide prices were on the rise. In addition, as the high-temperature-induced power rationing was lifted, the affected manufacturers resumed normal production. The output of PrNd oxide in Sichuan increased about 42.11% month-on-month, and that in Shandong soared 57.14% month-on-month. The PrNd oxide output in October is forecast to inch higher.

Domestic output of PrNd alloy in September increased 1.34% month-on-month to 5,186 mt. The main increase in output was attributed to growing output in Sichuan province, while the output of other regions was flat. In September, leading magnetic material companies received slightly more orders and thus had increasing demand for PrNd alloy apart from pre-holiday stockpiling. The spot supply of rare earth was relatively tight, driving the rare earth prices up. However, as magnetic material companies stopping restocking after the holiday, the rare earth prices also plateaued out. The output of some metal factories in Inner Mongolia in September was flat from August, and that in Sichuan saw a MoM increase of about 13.1% as local plants resumed normal production on the end of power rationing. The PrNd alloy output in October is expected to continue rising.

SMM data shows that in September 2022, the domestic molybdenum concentrate output was 18,860 mt, a drop of 7.5% from the previous month. It is reported that the overall output of mines in September, thanks to the strong downstream demand for ferromolybdenum, was relatively stable. However, some small mines cut or suspended the production of molybdenum due to maintenance or less production schedules, so the ROM output of molybdenum dropped slightly. Ferromolybdenum The domestic ferromolybdenum output in September was 17,200 mt, a decline of 5.18% from the previous month, according to SMM statistics. In September, with the increase in the production schedules of steel mills, the overall demand for ferromolybdenum remained strong, which promoted the stable production of ferromolybdenum smelters. The nearly 5% month-on-month decline in output was attributed to two reasons. First, some smelters were still under maintenance with no output. Second, some smelters were unable to maintain normal production due to inadequate raw materials amid rapid rising molybdenum prices, thus the output was constrained. Generally, the ferromolybdenum output was fairly stable under the support of strong terminal demand.

According to SMM survey, domestic silver output stood at 1,434.18 mt (including production of 1,190.18 mt of mineral silver) in September, up 3.45% from the previous month. The overall output rose slightly, though the specific output in different plants varied. On the macro front, the Fed's Collins delivered a speech, suggesting that a soft landing was challenging but was still attainable. In her opinion, inflation seemed to near its peak, or already had. But Mester said it would take a few more months to see whether inflation had reached the peak, so she suggested that the restrictive measures shall extend. At the same time, the conflict between Russia and Ukraine might escalate again this month, as Medvedev, deputy chairman of the Russian Security Council, said that Russia had the right to use nuclear weapons if necessary. His statement increased the risk aversion sentiment in the market. On October 7, the US non-farm payrolls for September after seasonal adjustment was released, which added 263,000, higher than the expected 250,000 and far lower than the previous 315,000. In terms of the production of domestic silver manufacturers, most manufactures cut the output slightly, such as Chifeng Yuntong, Yantai Penghui , Hunan Shuikoushan, Yantai Penghui and Jiangxi Copper, but few manufacturers saw significant decline in output. In comparison, there were more companies with increased output, such as Guiyan Platinum, Baiyin Nonferrous Metals, Zhejiang Fuye Group, Guangdong Jinye, Shandong Zhaojin, Hunan Shuikoushan, Henan Jinli Gold Lead and Yunnan Copper. Besides, the increase was quite substantial. Therefore, the overall output of domestic silver output gained a slight increase in September. It is expected that the domestic silver output will continue to grow at a low speed in October.

Note: SMM has released Chinese silver output since February 2021. The silver is usually produced along with copper, lead and zinc. Thanks to its high coverage of the base metals industry, SMM has successfully investigated a total of 45 silver production enterprises, which are located in 17 provinces across the country, with a total capacity of 24,000 mt and a total capacity coverage rate of over 99%.

According to SMM statistics, China antimony ingot (including antimony ingot, converted crude antimony, cathode antimony, etc.) output in September 2022 was 7,358 mt, a significant rebound of 40.23% month-on-month. On the whole, the high prices of antimony and its shortage still weighed on the market, but the impact seemed to be diminishing as the output of many manufacturers gradually recovered. There are some rumours that a certain amount of overseas antimony will be imported in October, which has stimulated the sales of domestic antimony. In recent months, the domestic demand for antimony products, especially the antimony oxide, has been sluggish. The downward consumption did not pick up significantly, and the export orders also shrank substantially because the overseas market, especially the European market, was in an economic downturn. As a result, the difficulty in selling antimony oxide affected the purchase of refined antimony by antimony oxide manufacturers, dampening the confidence of some refined antimony smelters in prices. Judging from the production situation in September, fewer manufacturers cut or suspended the output, while more resumed normal production compared with the previous month. Among the 33 survey respondents, 12 manufacturers halted the production in September, down by 1 from August; 12 curtailed their production, down by 3 MoM; and 9 maintained normal production, 4 more than the previous month. For example, Flash Star Antimony, one of the largest antimony producers in China, resumed the production of antimony in early September, and its output returned to 80-90% of the normal level. In fact, the resumption of production was the main explanation for the aggressive growth rate of 40.23% in September output. SMM predicts that the supply and demand of the domestic antimony product market in October will remain basically unchanged under the current economic situation, and worse still, the weak demand will extend. Given that the operating rates of plants are picking up gradually, the domestic antimony ingot production in October is expected to see a modest increase on the month.

Notes: SMM starts to disclose the output of antimony ingots (including antimony ingots, converted crude antimony, cathode antimony, etc.) since May 2022. Thanks to high coverage of the antimony industry, SMM has successfully investigated a total of 33 antimony ingot manufacturers, which are located in 8 provinces across the country, with a total capacity of nearly 20,000 mt and a total capacity coverage rate of over 99%.

The increase in domestic output of silver nitrate in September was driven by rising demand. The domestic silver nitrate plants with qualification certificates combined produced 586 mt of silver nitrate in September, up 17% on the month. The total output of silver nitrate nationwide reached 617 mt. Among them, the output in central China and northwest China both increased 21% month-on-month, that in east China increased 24% month-on-month, and that in south China changed little. According to SMM, there are three reasons for the increase in silver nitrate output in September. First, the downstream demand for domestically-produced silver powder increased. Second, since the market would be closed during the National Day holiday and the no trade could be made, silver nitrate manufacturers had stocked up before the holiday. Third, downstream demand for silver nitrate increased steadily as production restriction was lifted with the end of power rationing. SMM learned through survey that most of the domestic silver nitrate manufacturers assigned their production departments to continue producing and delivering during the National Day, which means that the output will not be significantly affected. Taking the boost in downstream demand into account, SMM predicts that the output of silver nitrate will remain stable in October.

SMM data shows that China's titanium dioxide output stood at 281,300 mt in September 2022, down 2.75% from the previous month and 6.03% from the previous year. The output in the first nine months of 2022 increased 3.26% year-on-year to 2.897 million mt. According to SMM research, affected by the downturn in the market, the overall domestic output of titanium dioxide maintained a downward trend in September. The salesperson of a large titanium dioxide enterprise said that September was the tradition peak season for titanium dioxide, but the domestic downstream demand did not saw significant increase. As the overall market transaction was poor, the factories were on the edge of losses, and the risk of accumulating inventory became higher. As a result, plants had no choice but to curtail the production. Currently, the terminal demand continues to be sluggish under the weak marco environment, hurting the enthusiasm of titanium dioxide enterprises for production. In this case, it is expected that the output of titanium dioxide in October will remain relatively stable at about 290,000 mt.

The domestic APT output in September stood at 12,840 mt, an increase of 12% from the previous month, according to SMM statistics. In September, most domestic smelters maintained normal production, while a small number were under shakedown test with a small amount of output. Although the domestic tungsten prices were in a downward trend, the demand for the delivery of long-term orders ensured the stable production of APT. In addition, large enterprises and private enterprises with sufficient raw material stocks tended to produce extra APT for potential spot supply. Therefore, the supply of APT in September increased steadily.

China lithium carbonate output stood at 32,798 mt in September up 10% MoM and 79% YoY. With the end of power rationing in Sichuan, the operating rates of local lithium carbonate producers increased, and the output also gradually recovered. The output in Sichuan dropped slightly from its peak due to pandemic, that in Qinghai was flat despite the restricted transportation caused by pandemic, and that in Jiangxi increased with the ramp-up of capacity in local enterprises. Altogether, the lithium carbonate output increased slightly month-on-month. In October, the output in Qinghai has slid as a result of falling temperature, yet the output in Jiangxi has risen with continued increase of capacity. Combined, the lithium carbonate output has increased from the previous month. China lithium carbonate output in October is estimated at 33,996 mt, up 4% on a monthly basis and 86% on a yearly basis. Due to the rapid changes in the industry dynamics, and in order to ensure the accuracy and reliance of SMM data, SMM has added 1 lepidolite sample company in September 2022.

China lithium hydroxide output increased 39% MoM and 45% YoY to 23,861 mt in October. The top-tier smelting enterprises have resumed the production gradually after maintenance completion. They have been operating normally so far. Some causticising plants had previously slashed their output in the previous month due to power rationing. This month, their operating rates have returned to a normal level, and the overall supply has also inched higher. October is still the peak season for lithium hydroxide, and the higher downstream demand for lithium salts has induced more production schedules. China lithium hydroxide output in October is estimated at 24,909 mt, up 4% on a monthly basis and up 49% on a yearly basis.

China cobalt sulphate output was 6,806 mt in metal content in September, a month-on-month increase of 6% and a year-on-year growth of 28%. In terms of raw material costs, the MB cobalt price continued to edge higher slightly, and the exchange rate of USD/CNY advanced, adding to the cost of cobalt intermediate products. At the same time, the coefficient of ternary battery scrap skyrocketed amid booming lithium carbonate prices, and the recycling cost rose. On the supply side, as the production of cobalt salt enterprises returned to normal in September with the end of power rationing, the output of cobalt sulphate increased compared with the previous month. Meanwhile, some integrated precursor enterprises continued to ramp up the in-house production of cobalt salts. On the demand side, the demand for ternary precursors continued to recover in September, and the downstream buyers were more active in sourcing cobalt sulphate. Therefore, the cobalt sulphate inventory dropped. The recovery of downstream demand, together with the cost support from raw materials, kept the cobalt sulphate prices stable. Generally, the demand for cobalt sulphate increased from the prior month. It is expected that the demand for ternary precursors will go upward further in October, and with the increase in the cobalt salt production capacity of leading integrated precursor plants, and the output of cobalt sulphate in October will be higher than that in September. The output is forecast to be 7,459 mt in metal content, a month-on-month increase of 10% and a year-on-year growth of 29%.

China produced 6,507 mt of Co3O4 in September, up 32% on the month and 5% on the year. In September, the launch of new models of electronic products spurred the demand from the digital market. On the supply side, cobalt salt prices remained stable. Amid improving demand and small risks, leading Co3O4 enterprises as well as small and medium-sized ones increased their output. As a whole, the supply of Co3O4 saw a rather palpable recovery, and the market prices also rose slightly. On the demand side, the launch of new models of electronic products stimulated the demand for Co3O4, whose prices stabilised amid thriving demand. And the downstream buyers made more purchases. Considering that the explosive growth of Co3O4 output in September has led to accumulation of inventories, it is expected that the output of Co3O4 in October will fall on the month. The output of Co3O4 is estimated at 5,724 mt in October, down 12% MoM and 10% YoY.

The domestic PCAM (precursor of cathode active materials) output was 88,434 mt in September, a month-on-month increase of 11% and a year-on-year increase of 68%. On the supply side, the increase in the production capacity of top-tier precursor plants prompted the output of PCAM to grow. In particular, the growth in the output of 5-series product for power battery was outstanding, while and the 8-series product output rose steadily with flat overseas demand. On the demand side, fuelled by the rising demand for new models of electric car, the domestic top-tier power battery factories received increased orders for the 5-series NMC precursors, and second-tier battery factories also enhanced their production. The demand for high-nickel battery was growing steadily mainly driven by the improving demand in the US market, while the demand from the European market dropped further. It is expected that both domestic and overseas demand will extend the increase in October, thus the output of PCAM is estimated to rise 4% on the month and 60% on the year to 91,908 mt.

China’s NMC cathode material output stood at 67,392 mt in September, up 15% MoM and 82% YoY. On the one hand, the NMC cathode material output base in August was lowered due the impact of power rationing. On the other hand, the terminal car market embarked on the peak season in September and October, when the demand was booming and the battery cell companies were motivated to produce. Therefore, the overall output of NMC cathode materials in September increased significantly compared with August. In October, the demand in the auto market continued to improve. In addition, Shanghai introduced a new policy that plug-in hybrid electric vehicles (including extended-range ones) would no longer enjoy the special quota of license plates. It is expected that some companies will rush to produce before the policy is implemented, thus the demand will stimulate enduring growth in the output of NMC cathode materials. China is expected to produce 71,546 mt of NMC cathode materials in October, up 6% MoM and 84% YoY.

The domestic iron phosphate output stood at 89,939 mt in September, up 18% on a monthly basis. In September, the enterprises resumed the operation as the power rationing subsided. The start-ups were successful in ramping up their production capacity, contributing to an obvious growth in existing iron phosphate capacity. Thanks to the seasonal high at year-end, the orders for iron phosphate gained substantial upward momentum as the downstream players were rushing to install batteries, and the operating rates of the industry were also on the rise. A leading manufacturer even boasted of 30,000 mt in production and sales, which promoted an upsurge in the overall output of iron phosphate. In October, considering the subsidies for new energy vehicles will be reduced before the end of this year, some downstream enterprises will need to stock up raw materials in advance. Therefore, it is expected that the production and sales of iron phosphate will remain high in the near future. The domestic iron phosphate output is estimated at 100,347 mt in October, up 12% MoM.

China’s LFP material output was 112,060 mt in September, a month-on-month increase of 24% and a year-on-year increase of 195%. On the supply side, the enterprises in Sichuan and Chongqing resumed normal production and sales as the previous production restriction imposed by power rationing policy was lifted. In September, some companies gradually released new capacity, and the commissioned capacity of other companies also ramped up rapidly, driving the capacity and output of the industry as a whole to surge. On the demand side, since the subsidies for new energy vehicles will be completely removed this year, the downstream buyers were enthusiastic about stocking up in advance to scramble for the battery instalment. As a result, the demand for LFP showed an upward trend, and the output rose sharply. The terminal demand has remained robust in October, thus SMM predicts that domestic LFP output will stand at 121,818 mt in October, an increase of 9% month-on-month and 168% year-on-year.

The domestic LCO cathode material output stood at 7,005 mt in September, up 24% from August and down 12% from the previous year. In September, the launch of new models of electronic products spurred the demand from the digital market. On the cost side, Co3O4 prices were stable while the lithium carbonate prices were on the rise due to its shortage. The increasing costs pushed the LCO prices higher. On the supply side, the output of the top-tier LCO enterprises enjoyed a considerable increase in September because the power rationing was removed. On the demand side, new models of electronic products were released in September, and the orders for LCO improved thanks to the thriving demand from the digital market. At the same time, some battery producers also considered stockpiling large amounts of raw materials due to the surging prices of lithium carbonate. It is worth mentioning that the demand for e-cigarettes in September and other market segments increased steadily and saw a palpable increase in orders. The LCO market activity has recovered from the previous weakness, but the digital market has not yet returned to the level of the same period last year. The increase in the LCO output in September might lead to accumulated inventories, and the LCO costs are also subject to lithium carbonate prices. Therefore, the LCO output in October is expected to drop from September and stand at 6,898 mt, down 2% MoM and flat from the previous year. 

China’s LMO output stood at 6,005 mt in September, up 5% MoM, but down 16% YoY. In September, the LMO market was busy stockpiling for the Double Eleven shopping festival. The downstream demand for electronics increased slightly, which resulted in increases in the production, sales and operating rates of LCO enterprises. In mid-to-late September, when the rapid rise in the prices of lithium salts pushed the LMO prices upward, the downstream buyers were resistant to the high prices, hence the market purchases and transactions became muted. Since the prices of lithium salts are still in an upward trend, the high cost of raw materials will suppress the terminal demand for LMO to a certain extent. It is expected that the output of LMO in October will slip 10% month-on-month and 8% year-on-year to 5,420 mt.  

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