ICSG: Refined copper balance data indicate a production surplus

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

Lisbon, Portugal – According to preliminary data of the International Copper Study Group (ICSG), the refined copper market for August 2015 showed an apparent production surplus of around 80,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, August showed a production surplus of 16,000 t. The refined copper balance for the first eight months of 2015, including revisions to data previously presented, indicates a production surplus of around 70,000 t (and a seasonally adjusted surplus of about 100,000 t). This compares with a production deficit of around 460,000 t (a seasonally adjusted deficit of about 430,000 t) for the same period of 2014.

In the first eight months of 2015, world apparent usage is estimated to have declined by around 2 percent (295,000 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 0.5 percent, usage declined by 5 percent and 7 percent in the EU and Japan, respectively, and by 50 percent in Russia (following the withdrawal of Russia’s cathode export tax in September 2014). On a regional basis, usage is estimated to have remained essentially unchanged in Asia while increasing by around 2 percent in Africa and in the Americas and declining by 11 percent and 63 percent in Europe and Oceania, respectively.

World mine production is estimated to have increased by around 3 percent (350,000 t) in the first eight 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 percent. The increase in world mine production was mainly due to a recovery in production levels at operating mines in Indonesia (64 percent growth in Indonesian mine production as in 2014 output was constrained by the ban on concentrates exports) and a 13 percent increase in Peruvian output (benefited from higher production rates at operating mines and ramp-up production from mines that started in 2014/2015). Production increased by 0.7 percent in Chile and in the United States and China production declined by 1 percent and 3 percent, respectively. On a regional basis, production rose by 1 percent in Africa, 3 percent in South America, 9 percent in Asia and 2 percent in Europe, but declined by 2 percent and 5 percent in North America and Oceania, respectively. The average world mine capacity utilization rate for the first eight months of 2015 declined to around 83 percent from 85 percent in the same period of 2014.

World refined production is estimated to have increased by 1.6 percent (235,000 t) in the first eight months of 2015 compared with refined production in the same period of 2014: primary production was up by 1 percent and secondary production (from scrap) was up by 3.5 percent. The main contributor to growth was China (up by 4 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 (+8 percent). Output in Chile and Japan (the second and third leading refined copper producers) declined by 3 percent and 2 percent, respectively, while in the United States (the fourth largest producer of refined copper), production dropped by 7 percent. On a regional basis, refined output is estimated to have increased in Africa (8 percent) and Asia (4 percent) and decreased in the Americas (-2.5 percent) and in Oceania (-19 percent) while remaining essentially unchanged in Europe. The average world refinery capacity utilization rate for the first eight months of 2015 declined slightly to around 81 percent from 81.5 percent in the same period of 2014.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks declined by around 75,000 t in the first eight months of 2015 from the year-end 2014 level. Stocks increased by 43,000 t in the same period of 2014. In the first eight months of 2015, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production deficit of around 5,000 t compared with a deficit of around 420,000 t in the same period of 2014.

The average LME cash price for October was US$5,222.61 per tonne, up from the September average of US$5,208.09 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$5,648.94 per tonne (18 percent below 2014 annual average). As of the end of October, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 496,557 t, an increase of 190,120 t (62 percent) from stocks held at the end of December 2014. Compared with the September levels, stocks were up at COMEX and SHFE and down at the LME.

The November 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)