ICSG: Refined copper balance for half-year 2015 shows small production surplus

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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 for July 2015 was roughly balanced with an apparent production surplus of only 8,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, July showed a production surplus of 12,000 t.

The refined copper balance for the first seven months of 2015, including revisions to data previously presented, indicates a small production surplus of around 10,000 t (and a seasonally adjusted surplus of about 85,000 t). This compares with a production deficit of around 560,000 t (a seasonally adjusted deficit of about 490,000 t) for the same period of 2014.

In the first seven months of 2015, world apparent usage is estimated to have declined by around 2 percent (250,000 t) compared with that in the same period of 2014. Excluding China, world usage declined by around 4 percent. Although Chinese apparent demand increased by around 1 percent, usage declined by 8 percent and 6 percent in Japan and the EU, respectively, and by 52 percent in Russia (following the withdrawal of Russia’s cathode export tax in September 2014). On a regional basis, usage is estimated to have increased by 1 percent in Africa, 0.6 percent in Asia (when excluding China, Asia usage declined by around 0.3 percent) and by 2 percent in the Americas while declining by 12 percent and 66 percent in Europe and Oceania, respectively.

World mine production is estimated to have increased by 3 percent (315,000 t) in the first seven months of 2015 compared with production in the same period of 2014. Concentrate production increased by 3.5 percent while solvent extraction-electrowinning (SX-EW) increased by 1.5 percent. 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 5.5 percent. Production in Peru increased by 12 percent, and in the United States and China production declined by 4 percent and 3 percent, respectively. On a regional basis, production rose by 1.5 percent in Africa, 4 percent in South America, 9 percent in Asia and 1.5 percent in Europe, but declined by 3 percent and 5 percent in North America and Oceania, respectively. The average world mine capacity utilization rate for the first seven months of 2015 declined slightly to 83.5 percent from 85 percent in the same period of 2014.

World refined production is estimated to have increased by 2.5 percent (320,000 t) in the first seven months of 2015 compared with refined production in the same period of 2014: primary production was up by 1.5 percent and secondary production (from scrap) was up by 7 percent. The main contributor to growth was China (up by 5.5 percent), 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 (+9 percent). Output in Chile and Japan (the second and third leading refined copper producers) declined by 3 percent and 2.5 percent, respectively, while in the United States (the fourth largest producer of refined copper), production dropped by 6 percent. On a regional basis, refined output is estimated to have increased in Africa (8 percent) and Asia (6 percent) and decreased in the Americas (-2 percent) and in Oceania (-20 percent) while remaining essentially unchanged in Europe. The average world refinery capacity utilization rate for the first seven months of 2015 remained unchanged at around 81 percent as compared to the same period of 2014.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 50,000 t in the first seven months of 2015 from the year-end 2014 level. Stocks increased by 110,000 t in the same period of 2014. In the first seven months of 2015, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production surplus of around 55,000 t compared with a deficit of around 455,000 t in the same period of 2014.

The average LME cash price for September was US-$ 5,208.09 per tonne, up from the August average of US-$ 5,088.93 per tonne. The 2015 high and low copper prices through the end of September 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-$ 5,698.56 per tonne (17 percent below 2014 annual average). As of the end of September, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 512,341 t, an increase of 205,904 t (67 percent) from stocks held at the end of December 2014. Compared with the August levels, stocks were up at COMEX and SHFE and down at the LME.

The October 2015 Copper Bulletinis available for sale upon request. Please visit the ICSG website for further copper market related information.

Source: International Copper Study Group (ICSG)