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China Molybdenum's H1'19 profit down 74.12% YOY on lower copper, cobalt prices

In the first half of 2019, China Molybdenum Co. Ltd.'s attributable net profit plunged 74.12% year on year to 808.0 million yuan, or 3.7 fen per share, from 3.12 billion yuan, or 14.5 fen per share, driven by lower copper and cobalt prices.

Operating revenue slumped about 29% to 9.98 billion yuan from 14.06 billion yuan a year ago, according to an Aug. 27 release.

The company recently flagged high operating costs at its Tenke Fungurume in the Democratic Republic of Congo, where copper production increased 5% to 88,493 tonnes and cobalt production was down 5% to 8,614 tonnes.

China Molybdenum noted that copper prices failed to pick up amid the ongoing U.S.-China trade war and a weakening global economic outlook, with the London Metal Exchange prices slipping 11.4% year on year to US$6,164 per tonne. It also said that average cobalt prices declined nearly 61% to about US$14.87 per pound due to a supply imbalance and destocking by metal producers.

The company anticipates a better copper market in the second half, especially with the disrupted trade flows of copper scrap caused by China’s import restrictions on lower grades of these materials. However, cobalt prices are expected to remain stable due to oversupply, which may be addressed after Glencore PLC shutters its Mutanda mine in Congo.

Meanwhile, molybdenum output dropped 8% yearly to 7,302 tonnes, tungsten output fell 9% to 5,166 tonnes and niobium output sagged 6% to 4,245 tonnes. Phosphate fertilizer production decreased 3% to 526,643 tonnes.

As of Aug. 26, US$1 was equivalent to 7.15 yuan.