Top Chinese copper producers just reached an agreement to cut refined copper production within the end of 2016. In addition, the producers urged the state planner, the National Development and Reform Commission (NDRC), to buy surplus supply of copper in order to maintain price stability in market. A joint statement to this effect was issued after the 3-day meeting of producers that began Saturday. 
According to the statement, the ten copper producers including smelters Jiangxi Copper Corporation and Yunnan Copper Industry have noted that reduction in output next year is mandatory in order to sustain healthy development of the industry. As part of the agreement, the companies will implement immediate shutdown of certain loss making facilities. The companies have also agreed upon to not increase existing smelting capacities. At the same time, necessary action will be taken to eliminate outdated smelter operation over the next few years.
The agreement proposes a production cut of 350,000 mt during the entire year 2016. This is equivalent to 4.4% of the country’s total copper output in 2014, as per statistics released by the Chinese National Bureau of Statistics. The proposal also urges the government to halt licensing of additional copper smelters and promote private capital investments in the industry. It also calls for absorption of surplus copper output through a comprehensive purchase agreement plan.
Earlier, eight nickel producers had decided to initiate production cut of 15,000 metric tons next month and cut the 2016 output by at least 20%, on the back of concerns over rising overcapacity and plunging prices. It must be noted that copper prices have dropped almost 27% since the start of the year.
Meantime, the copper futures contract for March delivery surged over 1% Tuesday to settle at $2.0715 a pound on the Comex division of the New York Mercantile Exchange, after the supply cut announcement by Chinese producers.
