ICSG: First ten months of 2015 show a copper production surplus

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

Lisbon, Portugal — According to preliminary ICSG data by the International Copper Study Group (ICSG), the refined copper balance for the first ten months of 2015 indicates a production surplus of around 60,000 metric tonnes (t) and a seasonally adjusted surplus of about 122,000 t. This compares with a production deficit of around 485,000 t (a seasonally adjusted deficit of about 426,000 t) for the same period of 2014. the refined copper market for October 2015 (excluding the adjustment for changes in China’s bonded stocks) was roughly balanced with an apparent production surplus of only 2,000 t. When making seasonal adjustments for world refined production and usage, October showed a small production deficit of 3,000 t.

In the first ten months of 2015, world apparent usage is estimated to have declined by around 1 percent (210,000 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 1.5 percent, usage declined by 4.5 percent and 7 percent in the EU and Japan, respectively, and by 46 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 around 1 percent in Africa, in Asia and in the Americas, respectively while declining by around 10 percent and 60 percent in Europe and Oceania, respectively.

World mine production is estimated to have increased by around 3.5 percent (520,000 t) in the first ten 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 (61 percent growth in Indonesian mine production as in 2014 output was constrained by a seven month ban on concentrates exports) and an 18 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 2 percent and 3.5 percent in Africa and Oceania, respectively and remained flat in North America. The average world mine capacity utilization rate for the first ten 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 1.8 percent (330,000 t) in the first ten months of 2015 compared with refined production in the same period of 2014: primary production was up by 2 percent and secondary production (from scrap) remained essentially unchanged. The main contributor to growth in world refined production was China (up by 4 percent) followed by the DRC and India where production increased by 5 percent, respectively. Output in Chile and Japan (the second and third leading refined copper producers) declined by 2 percent and 3 percent, respectively, while in the United States (the fourth largest refined copper producer), production dropped by 2 percent. On a regional basis, refined output is estimated to have increased in Africa (5 percent) and Asia (4 percent) and decreased in the Americas (-1 percent) and in Oceania (-7 percent) while remaining essentially unchanged in Europe. The average world refinery capacity utilization rate for the first ten months of 2015 remained practically unchanged at around 83 percent as compared to the same period of 2014.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks declined by around 160,000 t in the first ten months of 2015 from the year-end 2014 level. Stocks declined by 63,000 t in the same period of 2014. In the first ten months of 2015, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production deficit of around 100,000 t compared with a deficit of around 550,000 t in the same period of 2014.

The average LME cash price for December was US-$ 4,629.00 per tonne, down from the November average of US-$ 4,808.24 per tonne. The 2015 high and low copper prices were US-$ 6,448.00 (on 12th May) and US-$ 4,515.50 per tonne (on 23rd November), respectively, and the year average was US-$ 5,494.50 per tonne (20 percent below 2014 annual average). As of the end of December, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 481,868 t, an increase of 175,431 t (57 percent) from stocks held at the end of December 2014. Compared with the December 2014 levels, stocks were up at the three exchanges.

The January 2016 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)