China is considering tightening the standards for new copper processing projects due to rising capacity in mainland China, industry sources said Friday.


The China Non-ferrous Metals Fabrication Industrial Association said at a national copper industry conference Thursday that the CNFA was doing work on formulating rules for new domestic copper processing plants.
CNFA officials were not available to elaborate when contacted Friday.


In Beijing, a commodity analyst with Beijing Antaike, the state-run metals consultancy said: "CNFA's view is that expanding [domestic] copper processing capacity, possibly leading to a surplus, makes it necessary to enhance the sector's entry standards."


Based on CNFA's estimates, as of end 2011 China had a copper processing capacity of 12 million mt/year, with utilization rates coming close to 90%. However, due to ongoing copper processing projects, which are expected to come on stream by 2015, there could be a surplus by then.


CNFA deemed it healthy if copper processing capacity exceeded output by 5-10%, but dangerous if capacity was 15% higher than output.


"The idea of introducing standards in a bid to keep out inefficient plants while retaining the more efficient ones, streamlining the industry and ensuring healthy sector development is of course good, but for the time being it will be a bit hard to evaluate the exact impact due to market uncertainties," the Antaike analyst said.


China produced 10.28 million mt of processed copper products in 2011, up 18% from 2010, CFNA figures showed.