An open pit copper mine in Jiangxi province. On Tuesday, nine large copper companies said they wouldcut refined copper output by 350,000 metric tons next year.
Prices have dropped to unsustainable levels, say companies
Copper producers from China have decided to cut output in 2016, in an effort to rein incommodity prices, which fell to a six-year low recently.
On Tuesday, nine large copper companies said they would cut refined copper output by 350,000metric tons next year. The big smelters said in a joint statement that prices have fallen to a levelthat is no longer viable for companies.
The amount is equivalent to about 4.4 percent of the country's annual output, based on figuresfrom the National Bureau of Statistics.
The nation accounts for 24 percent of the world refined copper supply, according to Bloombergdata.
The nine companies urged the government to support the market by buying and storing copper,as well as by regulating high-frequency trading.
"The smelters will make cuts and take other necessary measures to maintain the healthydevelopment of the industry," the statement said, adding that firms would weed out excesscapacity.
In a significant move, the companies urged the government to stop approvals for new coppercapacity expansion projects and vowed not to expand their projects.
Statistics from the Shanghai Futures Exchange showed that transaction prices of copper fell from38,620 yuan ($6,030) per ton at the beginning of November to 34,830 yuan per ton on Nov 30.
The metals market in China is witnessing its coldest winter since the 2008 financial crisis. Pricesof many major commodities like nickel, zinc, copper, iron ore and aluminum have all plunged torecord lows.
The China Nonferrous metals Industry Association had urged the central government to purchase900,000 tons of aluminum, 30,000 tons of nickel and 400,000 tons of zinc.
"The decrease in output is limited," said Li Xiaobei, a nonferrous metals analyst with SCIInternational, a commodity market information service provider.
"Last year's total output was 7.96 million tons. The 350,000-ton cut accounts for just 4.4 percentof last year's output. Since the current monthly output is nearly 700,000 tons, the impact on themarket is very limited."