China's Jiangxi Copper plans output cuts after profit fall

SINGAPORE: Jiangxi Copper Co Ltd, China's biggest integrated copper producer, said it plans to cut refined copper output by 6.7% this year, in line with a proposal by the country's big smelters to reduce output to support prices.

The move would cut production by 80,000 tonnes to 1.175 million tonnes, and follows a pledge last week by No. 2 producer Tongling Nonferrous Metals Group to reduce output by 110,000 tonnes.

Nine of China's large copper smelters agreed last year to cut output by at least 350,000 tonnes in 2016, and said they could deepen the cuts if prices and profitability deteriorate.

Copper prices have come under pressure from high supply and reduced demand in China, the world's top consumer, but have recovered around 7% this year, supported by output cuts from firms like Glencore and Freeport McMoRan.

Jiangxi Copper on Tuesday reported a fourth straight fall in annual earnings, with 2015 net profit tumbling 77% to 637.2 million yuan (US$98.2 million) due to lower metal prices, it said in a filing with the Shanghai stock exchange.

Economic conditions could restrict demand growth for nonferrous metals this year, the company said, but forecast a 6% rise in global copper mine production, adding pressure to prices.

"There was an imbalance in demand and supply in 2015. Copper prices plunged due to oversupply and other factors, such as a relatively stronger US dollar," the company said in its earnings report.

The move to cut output came after Jiangxi produced 1.259 million tonnes of refined copper in 2015, up about 50,000 tonnes from the previous year.

The company said it would also cut gold and silver production, taking gold to 25 tonnes from 26.115 tonnes in 2015 and silver to 530 tonnes from 570.8 tonnes. It would also trim production from its copper mines but planned to raise output of semi-finished copper products such as rods by 50,000 tonnes in 2016 to 1 million tonnes.

The results came after China and Hong Kong markets closed on Tuesday. Its Shanghai shares were down 1.8% while its Hong Kong stock fell 2%, both underperforming the main index in their respective markets. - Reuters