February 5, 2020 / 11:42 AM / 15 days ago

UPDATE 1-China Feb copper output to fall on virus woes, zinc backlog builds - Antaike

* China Feb copper output to fall at least 15% from Jan - Antaike

* Extended holiday due to virus leaves processing plants shut

* Zinc stocks 70,000 T higher than normal amid transport curbs (Adds details on zinc in paragraphs 1, 9-11)

By Tom Daly

BEIJING, Feb 5 (Reuters) - China’s copper smelters will reduce output by more than 15% in February from last month due to the coronavirus outbreak, research house Antaike said, warning zinc production could also drop if transport restrictions aimed at curbing the spread of the disease are not eased soon.

Base metal prices slumped last week as the number of coronavirus deaths and infections rose, spurring fears the outbreak will reduce economic activity and metals demand in China, the world’s biggest copper and zinc consumer.

The death toll in China rose to 490 on Wednesday.

Weak downstream demand, high inventories of sulphuric acid and logistical problems mean it is inevitable there will be some reduction in copper output this month, Antaike said in a note late on Tuesday, adding its estimate of more than 15% was conservative and March output may also be affected.

Antaike, the research arm of the China Nonferrous Metals Industry Association, did not provide a tonnage figure for January production but China’s December refined copper output came in at a record monthly high of 930,000 tonnes, according to the National Bureau of Statistics.

“It is currently known that some ports have been temporarily closed,” Antaike said. “And it remains to be seen whether the epidemic will affect the subsequent import of copper concentrate into the ports,” it added, referring to the partially processed copper ore used to make refined metal.

Downstream copper-processing firms in southern and eastern China have postponed their return to work until Feb. 10 but some Chinese firms will not restart until after Feb. 15, Antaike said, after several regions extended the Lunar New Year holiday.

The majority of scrap copper companies plan to resume work on Feb. 10, it added.

Most producers of zinc, used to galvanise steel, in China, have so far kept output steady despite the outbreak, with only a slight drop in January overall, Antaike said in a separate note.

But transportation curbs have caused a build-up of at least 70,000 tonnes of zinc ingot inventories at smelter sites and in transit - about five more days’ worth of production than normal, it said.

Most zinc smelters, which also have high sulphuric acid stocks, are waiting for the situation to improve after Feb. 8, Antaike said. “If 7-10 days later the logistics recovery situation is not satisfactory, several smelters have indicated they will limit zinc ingot production,” it added. (Reporting by Tom Daly; Editing by Michael Perry and David Evans)

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