China Copper Giant Cuts Output as Power Squeeze Hits Acid Sales

(Bloomberg) -- A major Chinese copper producer has deepened output cuts as the country’s power curbs threaten demand for a key by-product of making metal.

Tongling Nonferrous Metals Group Co. has been running at 80% of its 1.4 million tons of annualized copper capacity since the middle of last week, according to people with knowledge of operations who asked not to be identified because the information isn’t public. 

The firm wants to avoid holding a glut of sulfuric acid, a by-product from copper smelters that’s typically sold to chemical and fertilizer companies. There’s expectations that power curbs in those industries could hit demand for the acid, the people said. Smelters generally have limited space to store any surplus.

Tongling’s move highlights how China’s efforts to stem a power crisis are having complex knock-on effects across supply chains. Cuts in China’s magnesium output triggered a recent warning about major disruptions in Europe’s aluminum industry.

China’s government ordered sweeping curbs on electricity usage and a rapid expansion of fuel supplies to ease an energy shortage. The power crisis has shown some near-term signs of easing with fewer provinces suffering significant shortages, according to BloombergNEF. 

Tongling Nonferrous, based in Anhui province, was earlier running at 90% of capacity because of power constraints, the people said. A representative for Tongling Nonferrous didn’t immediately respond to a phone call and WeChat message.

©2021 Bloomberg L.P.

With assistance from Bloomberg