ICSG: First half 2015 refined copper market balance indicates production surplus

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Sheet copper (Foto: © H.D. Volz /http://www.pixelio.de)

Lisbon, Portugal – According to preliminary data by the International Copper Study Group (ICSG), the refined copper market for June 2015 was roughly balanced with an apparent production surplus of only 2,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, June showed a production surplus of around 30,000 t. The refined copper balance for the first half of 2015, including revisions to data previously presented, indicates a production surplus of around 20,000 t (and a seasonally adjusted surplus of 91,000 t). This compares with a production deficit of 576,000 t (a seasonally adjusted deficit of 510,000 t) for the same period of 2014.

In the first half of 2015, world apparent usage is estimated to have declined by around 2 Prozent (245,000 t) compared with that in the same period of 2014. Chinese apparent demand declined by around 1 Prozent based on a 10 Prozent decrease in net imports of refined copper from the high net import level in early 2014 and consequently higher apparent usage. Excluding China, world usage declined by around 3 Prozent in the first half of 2015 mainly due to a decline of 53 Prozent in Russia’s apparent usage (following the withdrawal of Russia’s cathode export tax in September 2014) and a decline of 8 Prozent and 5 Prozent in Japan and the EU, respectively. On a regional basis, usage is estimated to have remained essentially unchanged in Africa and Asia (when excluding China, Asia usage increased by around 1 Prozent) while increasing in the Americas by 3 Prozent and declining by 11 Prozent and 68 Prozent in Europe and Oceania, respectively.

World mine production is estimated to have increased by 3 Prozent (280,000 t) in the first half of 2015 compared with production in the same period of 2014. Both concentrate production and solvent extraction-electrowinning (SX-EW) increased by around 3 Prozent. The increase in world mine production was mainly due to a recovery in production levels at mines in Indonesia and Chile, although the latter also benefited from production at mines that started last year. Aggregated production in these two countries increased by 6 Prozent. Production in Peru increased by 8 Prozent and in the United States and China, production declined by 4 Prozent and 3 Prozent, respectively. On a regional basis, production rose by 2 Prozent in Africa, 4 Prozent in South America, 9 Prozent in Asia and 1.5 Prozent in Europe, but declined by 2.5 Prozent respectively in North America and Oceania. The average world mine capacity utilization rate for the first half of 2015 declined slightly to 84 Prozent from 85 Prozent in the same period of 2014.

World refined production is estimated to have increased by 3 Prozent (350,000 t) in the first half of 2015 compared with refined production in the same period of 2014: primary production was up by 2 Prozent and secondary production (from scrap) was up by 8 Prozent. The main contributor to growth was China (up by 5 Prozent), followed by the Philippines and Indonesia where production was reduced in the first quarter of last year due to operational constraints. Production also increased in the DRC (+11 Prozent). Output in Chile and Japan (the second and third leading refined copper producers) declined by 2.5 Prozent each, while in the United States (the fourth largest producer of refined copper), production dropped by 6 Prozent. On a regional basis, refined output is estimated to have increased in Africa (9 Prozent) and Asia (7 Prozent) and decreased in Oceania (-22 Prozent) while remaining essentially unchanged in the Americas and Europe. The average world refinery capacity utilization rate for the first half of 2015 increased slightly to almost 82 Prozent from 81 Prozent in the same period of 2014.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by 72,000 t in the first half of 2015 from the year-end 2014 level. Stocks increased by 145,000 t in the same period of 2014. In the first half of 2015, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production surplus of around 90,000 t compared with a deficit of around 430,000 t in the same period of 2014.

The average LME cash price for August was US-$ 5,088.93 per tonne, down from the July average of US-$ 5,456.91 per tonne. The 2015 high and low copper prices through the end of August were US-$ 6,448.00 (on 12th May) and US-$ 4,888.00 per tonne (on 24th August), respectively, and the year-to-date average was US-$ 5,763.18 per tonne (16 Prozent below 2014 annual average). As of the end of August, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 524,312 t, an increase of 217,875 t (71 Prozent) from stocks held at the end of December 2014. Compared with the July levels, stocks were up at LME and SHFE and down at COMEX.

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

Source: International Copper Study Group (ICSG)