ICSG: First nine months in 2015 resulted in copper production surplus

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Kupferdraht-Rolle (Foto: © FotoHiero/ http://www.pixelio.de)

Lisbon, Portugal – According to preliminary International Copper Study Group (ICSG) data, the refined copper market for September 2015 showed an apparent production deficit of around 25,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, September showed a production surplus of 30,000 t. The refined copper balance for the first nine months of 2015, including revisions to data previously presented, indicates a production surplus of around 35,000 t (and a seasonally adjusted surplus of about 122,000 t). This compares with a production deficit of around 450,000 t (a seasonally adjusted deficit of about 375,000 t) for the same period of 2014.

In the first nine months of 2015, world apparent usage is estimated to have declined by around 1.5 percent (250,000 t) compared with that in the same period of 2014. Excluding China, world usage declined by around 3.5 percent. Although Chinese apparent demand increased by around 0.5 percent, usage declined by 4 percent and 8 percent in the EU and Japan, respectively, and by 47 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 3 percent in Africa and 1.5 percent in the Americas and declining by 10 percent and 60 percent in Europe and Oceania, respectively.

World mine production is estimated to have increased by around 3 percent (450,000 t) in the first nine months of 2015 compared with production in the same period of 2014. Concentrate production increased by 4 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 (63 percent growth in Indonesian mine production as in 2014 output was constrained by a seven month ban on concentrates exports) and a 16 percent increase in Peruvian output (benefitting from higher production rates at operating mines and a ramp-up in production from mines that started in 2014/2015). Production increased by 0.7 percent in Chile while remaining essentially unchanged in the United States and China. On a regional basis, production rose by 4 percent in South America, 10 percent in Asia and 1.5 percent in Europe. However, production declined by 4 percent in Oceania and remained flat in Africa and North America. The average world mine capacity utilization rate for the first nine months of 2015 declined to around 84 percent from 85 percent in the same period of 2014.

World refined production is estimated to have increased by about 1.5 percent (230,000 t) in the first nine 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 4.5 percent. The main contributor to growth was China (up by 3.5 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 (+7 percent). Output in Chile and Japan (the second and third leading refined copper producers) declined by 2.5 percent and 2 percent, respectively, while in the United States (the fourth largest producer of refined copper), production dropped by 5 percent. On a regional basis, refined output is estimated to have increased in Africa (7 percent) and Asia (3.5 percent) and decreased in the Americas (-2 percent) and in Oceania (-17 percent) while remaining essentially unchanged in Europe. The average world refinery capacity utilization rate for the first nine months of 2015 declined slightly to around 82 percent from 82.5 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 95,000 t in the first nine months of 2015 from the year-end 2014 level. Stocks declined by 30,000 t in the same period of 2014. In the first nine months of 2015, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production deficit of around 60,000 t compared with a deficit of around 480,000 t in the same period of 2014.

The average LME cash price for November was US-$ 4,808.24 per tonne, down from the October average of US-$ 5,222.61 per tonne. The 2015 high and low copper prices through the end of November were US-$ 6,448.00 (on 12th May) and US-$ 4,515.50 per tonne (on 23rd November), respectively, and the year-to-date average was US-$ 5572.84 per tonne (19 percent below 2014 annual average). As of the end of November, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 496,342 t, an increase of 189,905 t (62 percent) from stocks held at the end of December 2014. Compared with the October levels, stocks were up at COMEX and SHFE and down at the LME.

The December 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)