ICSG: Preliminary data for 2014 indicate copper production deficit

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Kupferschrott (Foto: Aurubis AG)

Lisbon, Portugal — According to preliminary data by the International Copper Study Group (ICSG) , the refined copper market balance for November 2014 (excluding the adjustment for changes in China’s bonded stocks) showed an apparent production deficit of about 40,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, November showed a balanced market. The refined copper balance for the first eleven months of 2014, including revisions to data previously presented, indicates a production deficit of 640,000 t (a seasonally adjusted deficit of 524,000 t). This compares with a production deficit of 278,000 t (a seasonally adjusted deficit of 147,000 t) for the same period of 2013.

In the first eleven months of 2014, world usage is estimated to have increased by around 10 percent ([1.9 Million tons (Mt)] compared with that in the same period of 2013, supported by strong demand in China and a shortage of high-grade scrap that led to the use of more cathode by semi-manufacturers. Chinese apparent demand increased by 17 percent (+1.5 Mt) based on a 16 percent increase in net imports of refined copper. Excluding China, world usage increased by 4 percent, supported mainly by apparent usage growth of 9 percent in the European Union and 9.5 percent in Japan, as well as by growth of 6 percent in other Asian countries (excluding China and Japan) and 8 percent in the Middle East/North Africa region. Usage in the United States declined by 1.5 percent.

World mine production is estimated to have increased by around 1.5 percent (236,000 t) in the first eleven months of 2014 compared with mine production in the same period of 2013. Concentrate production increased by 1 percent (151,000 t) while solvent extraction- electrowinning increased by 2.5 percent (85,000 t). Although world mine production increased by 4 percent in the 1st half compared with 1st half 2013 production, output in July through November declined by 1 percent from that in the same period of 2013. In the first eleven months of 2014 production remained essentially unchanged in Chile, and declined by 25 percent in Indonesia, where production through August remained constrained by the ban on concentrates exports; by 7 percent in Zambia owing to an operational failure at the Lumwana mine and lower production at other mines; by 3 percent in Australia owing to the temporarily closure of two mines; and by 26 percent in Papua New Guinea, where output at Ok Tedi mine was constrained by a landslide and heavy rains. However, production increased by 1.5 percent in Peru, 8 percent in the United States, 9 percent in the Democratic Republic of Congo (DRC), 7 percent in Mexico, 11 percent in Canada, 9 percent in Brazil and 35 percent in Mongolia. The average world mine capacity utilization rate for the first eleven months of 2014 fell to 84 percent from 86.5 percent in the same period of 2013, as the growth in capacity outstripped the increase in production.

World refined production is estimated to have increased by around 8 percent (1.6Mt) in the first eleven months of 2014 compared with refined production in the same period of 2013: primary production increased by 9 percent, and secondary production (from scrap) increased by 3 percent. The main contributor to growth was China (18 percent, 1.1 Mt), followed by India, the DRC, Japan and the United States, where aggregated production increased by 13 percent (425,000 t). Output in Chile, the second leading refined copper producer, declined by 1 percent owing to a 4.5 percent decline in electrowon production. On a regional basis, refined production is estimated to have increased in Africa (7 percent), North America (7 percent), Asia (14 percent), Europe (3 percent), and Oceania (10 percent) and to have declined in South America (-1.5 percent). The average world refinery capacity utilization rate for the first eleven months of 2014 increased to 83 percent from 79.5 percent in the same period of 2013.

Based on the average of stock estimates provided by independent consultants Chinese bonded stocks declined by around 30,000 t in the first eleven months of 2014 from the yearend 2013 level. Stocks declined by around 300,000 t in the same period of 2013. In the first eleven months of 2014, the world refined copper balance adjusted for the decrease in Chinese bonded stocks indicates a production deficit of around 668,000 t compared with a deficit of around 584,000 t in the same period of 2013.

The average LME cash price for January 2015 was US$5,815.83 per tonne, down from the December 2014 average of US$6,422.95 per tonne. The 2015 high and low copper prices through the end of January were US$6,309.00 (on 2nd Jan) and US$5,390.50 per tonne (on 29th Jan), respectively, and the year-to-date average was US$5,815.83 per tonne. As of the end of January, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 406,380 t, an increase of 99,943 t from stocks held at the end of December 2014. Compared with the December 2014 levels, stocks were up at LME and SHFE and down at Comex.

The February 2015 Copper Bulletin is available for sale upon request. Please visit the ICSG website for further copper market related information.

Source: International Copper Study Group (ICSG)