China's copper data raises concerns
The mainland's production of refined copper may have been inflated by more than 15 per cent this year, smelter sources said, raising fresh concerns about the quality of data from the country.
The mainland is the world's top copper producer and importer and a pumped-up production figure would exaggerate its underlying demand, adding to analysts' suspicion about the reliability of data ranging from jobs to exports. Fake invoicing inflated the country's overall trade figures by about US$75 billion in January-April this year.
Nine top mainland smelters met last weekend to seek clarity on supply and demand fundamentals after the National Bureau of Statistics reported record refined copper output in October and annualised 2013 production of 6.8 million tonnes.
Executives from three large smelters, which will meet global miners for term contract talks later this year, said the official headline figure had likely been boosted by double-counting, as well as product from smaller plants being wrongly categorised.
"Our production has been double-counted and other producers should be in the same situation," said one of the executives, who declined to be named, given the sensitivity of the issue.
The three estimated the mainland's actual refined copper output for this year at about 5.6 million tonnes, 17 per cent below the official figure, based on production schedules at 31 firms. They forecast next year's output at about 6.3 million tonnes.
"Based on our refined output estimate, there has not been as much supply in the domestic market as the statistics indicated," one of the executives said. "The fact is that tens of thousands of tonnes of bonded stocks have already been used because of a supply shortage."
The executives said copper output figures had been inflated for years, but the problem was getting worse as smelters expanded operations to other provinces, exacerbating the issue of double-counting.
In one example, Jiangxi Copper included output at its 100,000-tonnes-a-year Penghui unit in Shandong province when reporting production to the Jiangxi government, where the firm is headquartered. But the subsidiary also reported its own output to Shandong authorities, said two people familiar with operations at the firms.