ICSG: Refined copper balance for 2014 indicates a production deficit of 475,000 t

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Kupferschrott (Foto: Aurubis AG)

Lisbon, Portugal — According to preliminary International Copper Study Group (ICSG) data, the refined copper balance for the full-year 2014 indicates a production deficit of 475,000 t (a seasonally adjusted deficit of 472,000 t). This compares with a production deficit of 270,000 t (a seasonally adjusted deficit of 231,000 t) in 2013.

The refined copper market balance for December 2014 showed an apparent production surplus of 104,000 metric tonnes (t) as, despite strong Chinese apparent demand, refined usage was weak in major consuming regions during the yearend holiday period. When making seasonal adjustments for world refined production and usage, December showed production and usage essentially balanced.

In 2014 world apparent usage is estimated to have increased by 8 percent [1.7 Million tons (Mt)] to 23 Mt compared with that in 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. It should be noted that as compared to the data presented in the February 2015 press release two significant revisions have been made: Chinese apparent usage was revised downwards based on revised official refined production data for 2014 and EU apparent usage was revised downwards due to previously under-reported exports data. Chinese apparent demand increased by 13.5 percent (+1.3 Mt) based on a 14 percent increase in net imports of refined copper. Excluding China, world usage increased by 3 percent, supported mainly by apparent usage growth of 6 percent in the European Union and 7.5 percent in Japan, as well as by growth of 5.5 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 1.3 percent (233,000 t) to 18.3 Mt in 2014 compared with that in 2013. Concentrate production increased by 1 percent (125,000 t) while solvent extraction-electrowinning increased by 2.8 percent (108,000 t). In 2014 production remained essentially unchanged in Chile and in Peru – the 1st and 3rd world biggest copper mine producers – and it declined by 26 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 temporary closure of two mines; and by 28 percent in Papua New Guinea, where output at Ok Tedi mine was constrained by a landslide and heavy rains. However, production increased by 8 percent in the United States, 8 percent in the Democratic Republic of Congo (DRC), 7 percent in Mexico, 10 percent in Canada, 8 percent in Brazil and 34 percent in Mongolia. The average world mine capacity utilization rate for 2014 declined to around 84 percent from around 87 percent in 2013 as the growth in capacity outstripped the increase in production.

World refined production is estimated to have increased by around 7 percent (1.5Mt) to 22.6 Mt in 2014 compared with refined production in 2013: primary production was up by around 8 percent and secondary production (from scrap) increased by 1 percent. The main contributor to growth was China (14.5 percent, 970,000t), followed by India, the DRC, Japan and the United States, where aggregated production increased by 11 percent (430,000 t). Output in Chile, the second leading refined copper producer, remained basically unchanged as growth in electrolytic production was offset by a decline in electrowon production. On a regional basis, refined production is estimated to have increased in Africa (7 percent), North America (6 percent), Asia (15 percent), Europe (3.5 percent), and Oceania (6 percent) and to have declined in South America (-1 percent). The average world refinery capacity utilization rate for 2014 increased to around 83 percent from about 80 percent in 2013.

Based on the average of stock estimates provided by independent consultants Chinese bonded stocks declined by around 25,000 t in 2014 from the yearend 2013 level. Stocks declined by around 250,000 t in the same period of 2013. In 2014, the world refined copper balance adjusted for the decrease in Chinese bonded stocks indicates a production deficit of around 500,000 t compared with a deficit of around 520,000 t in 2013.

The average LME cash price for February was US$5,702.08 per tonne, down from the January average of US$5,815.83 per tonne. The 2015 high and low copper prices through the end of February 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$5760.34 per tonne (16 percent below 2014 annual average). As of the end of February, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 518,706 t, an increase of 212,269 t from stocks held at the end of December 2014. Compared with the January levels, stocks were up at LME and SHFE and down at Comex.

The International Copper Study Group (ICSG) released preliminary data for December 2014 world copper supply and demand in its March 2015 Copper Bulletin. The Bulletin is available for sale upon request. Please visit the ICSG website for further copper market related information.

Source: International Copper Study Group (ICSG)