ICSG: April 2016 data showing copper production deficit

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

Lisbon, Portugal — According to preliminary International Copper Study Group (ICSG) data, the refined copper market for April 2016 showed an apparent production deficit of around 110,000 metric tonnes (t) mainly due to strong Chinese apparent refined copper demand. When making seasonal adjustments for world refined production and usage, April showed a production deficit of about 32, 000 t.

The refined copper balance for the first four months of 2016, including revisions to data previously presented, indicates a production deficit of around 119,000 t (and a seasonally adjusted deficit of about 129,000 t). This compares with a production surplus of around 13,000 t (a seasonally adjusted surplus of about 12,000 t) for the same period of 2015.

In the first four months of 2016, world apparent refined usage is estimated to have increased by around 6 percent (460,000 t) compared with that in the same period of 2015 mainly due to strong Chinese apparent demand. Chinese apparent demand increased by around 14 percent based on a 30 percent increase in net imports of refined copper from the lower net import level in early 2015 and consequently lower apparent demand. Excluding China, world usage declined by around 1 percent. On a regional basis, usage is estimated to have increased by 6 percent in Europe and 9 percent in Asia (when excluding China, Asia usage declined by 3 percent), while declining by 20 percent and 4.5 percent in Africa and in the Americas respectively and remaining essentially unchanged in Oceania.

World mine production is estimated to have increased by around 4 percent (260,000 t) in the first four months of 2016 compared with production in the same period of 2015. Concentrate production increased by 5 percent while solvent extraction-electrowinning (SX-EW) remained essentially unchanged. The increase in world mine production was mainly due to a 51 percent rise in Peruvian output that is benefitting from new and expanded capacity brought on stream in the last two years. A recovery in production levels in Canada and the United States, expanded capacity in Mexico and a ramp-up in production in Mongolia also contributed to world growth. However overall growth was partially offset by a 4 percent decline in production in Chile, the world’s biggest copper mine producer and a 13 percent decline in DRC where output is constrained by temporary production cuts. On a regional basis, production rose by 7 percent in the Americas and 4.5 percent in Asia but declined by 5 percent and 1 percent in Africa and in Oceania respectively while remaining essentially unchanged in Europe. The average world mine capacity utilization rate for the first four months of 2016 remains practically unchanged from that in the same period of 2015.

World refined production is estimated to have increased by about 4.5 percent (330,000 t) in the first four months of 2016 compared with refined production in the same period of 2015: primary production was up by 4 percent and secondary production (from scrap) was up by 5.5 percent. The main contributor to growth was China (+8 percent), followed by the United States where production increased by 18 percent. Output in Chile and Japan, the second and third leading refined copper producers, increased by 5 percent respectively. Refined production in the DRC and Zambia declined due to the impact of temporary production cuts. On a regional basis, refined output is estimated to have increased in the Americas (9 percent), Asia (7 percent) and Oceania (14 percent) while declining in Africa (-15 percent) and in Europe (-3 percent). The average world refinery capacity utilization rate for the first four months of 2016 increased to 84 percent from 82 percent in the same period of 2015.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 140,000 t in the first four months of 2016 from the year-end 2015 level. Stocks increased by around 40,000 t in the same period of 2015. In the first four months of 2016, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production surplus of around 21,000 t compared to a surplus of about 53,000 t in the same period of 2015.

The average LME cash price for June was US$4,630.64 per tonne, down from the May average of US$4,708.35 per tonne. The 2016 high and low copper prices through the end of June were US$5,103.00 (on 18th Mar) and US$4,310.50 per tonne (on 15th Jan), respectively, and the year-to-date average was US$4,700.58 per tonne (14.4 percent below 2015 annual average). As of the end of June, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 401,005 t, a decline of 80,863 t (-17 percent) from stocks held at the end of December 2015. Compared with the December 2015 levels, stocks were down at the three exchanges.

The July 2016 Copper Bulletin is available for sale upon request. Please visit the ICSG website for further copper market related information.

Source: The International Copper Study Group (ICSG)