ILCSG: World refined copper balance indicates a deficit in Jan-Oct 2016

824
Altkupfer (Foto: Kroll / Recyclingportal.eu)

Lisbon, Portugal — World mine production is estimated to have increased by around 5 percent (815,000 t) in the first ten months of 2016 with concentrate production increasing by 7 percent and solvent extraction-electrowinning (SX-EW) declining by 1.5 percent, according to preliminary data released in the January 2017 Copper Bulletin of the International Copper Study Group (ICSG).

  • The increase in world mine production was mainly due to a 43 percent (590,000 t) 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, Indonesia and the United States, and expanded capacity in Mexico, also contributed to world mine production growth
  • However overall growth was partially offset by a 4.5 percent decline in production in Chile, the world’s biggest copper mine producer, and a 6 percent decline in DRC where output is being constrained by temporary production cuts
  • On a regional basis, production rose by 6 percent in the Americas and 10 percent in Asia but declined by 4 percent in Africa while remaining essentially unchanged in Europe and Oceania

World refined copper production is estimated to have increased by about 3 percent (540,000 t) in the first ten months of 2016 with primary production (including Electrowinning increasing by 2.5 percent and secondary production (from scrap) by 6 percent:

  • The main contributor to growth was China (increase of 7 percent), followed by the United States where production increased by 12 percent and Mexico (18 percent) where expanded SX-EW capacity is contributing to refined production growth
  • Output in Chile and Japan, the second and third leading refined copper producers, declined by around 1 percent and increased by about 4 percent respectively
  • Production in the DRC and Zambia declined by an aggregated 13 percent mainly due to the impact of temporary production cuts
  • On a regional basis, refined output is estimated to have increased in the Americas (3 percent), Asia (6 percent) and Oceania (3 percent) while declining in Africa (12 percent) and in Europe (including Russia) (3 percent)

World apparent refined usage is estimated to have increased by around 3 percent (515,000 t) in the first ten months of 2016:

  • Growth mainly due to increase in Chinese apparent demand as world usage excluding China remained essentially unchanged
  • Chinese apparent demand (excluding changes in unreported stocks) increased by around 5 percent based mainly on 7 percent growth in refined production as in fact net imports of refined copper declined by 4 percent. Net refined copper imports have been on a declining trend in 2016 with the monthly average in the third quarter 40 percent below that of the 1st half. Monthly average Chinese apparent demand in the 3rd quarter 2016 is 5 percent below that in the first half
  • Usage in the United States and Japan, the second and third leading refined copper using countries, is down by 4 percent and 3 percent respectively
  • On a regional basis, usage is estimated to have increased by 4 percent in Asia (when excluding China, Asia usage increased by 2 percent) and by 1.5 percent in Europe (by 1 percent in the EU), while declining by 3.5 percent in the Americas

World refined copper balance for the first ten months of 2016 indicates a deficit of around 64,000 t:

  • This is mainly because of a 5 percent increase in Chinese apparent demand in the first ten months of 2016
  • In developing its global market balance, ICSG uses an apparent demand calculation for China that does not take into account changes in unreported stocks [State Reserve Bureau (SRB), producer, consumer, merchant/trader, bonded]. To facilitate global market analysis, however, an additional line item—Refined World Balance Adjusted for Chinese Bonded Stock Changes—is included in the table below that adjusts the world refined copper balance based on an average estimate of changes in unreported inventories provided by three consultants with expertise in China’s copper market
  • In the first ten months of 2016, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a deficit of around 24,000 t
  • The refined copper market balance for the month of October 2016 showed a surplus of around 48,000 t

Prices and stocks:

  • Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 40,000 t in the first ten months of 2016 from the year-end 2015 level. Bonded stocks decreased by around 115,000 t in the same period of 2015
  • The average LME cash price for December was US$5,658.89 per tonne, up from the November average of US$5,443.25 per tonne
  • The 2016 high and low copper prices were US$5,935.50 (on 28th Nov) and US$4,310.50 per tonne (on 15th Jan), respectively, and the year average was US$4,862.59 per tonne (11.5 percent below 2015 annual average)
  • As of the end of December, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 539,073 t, an increase of 57,205 t (12 percent) from stocks held at the end of December 2015. Compared with the December 2015 levels, stocks were down at SHFE and up at the LME and COMEX

The January 2017 Copper Bulletin is available for sale (single issues €100/€150, annual subscription €500/€750 for orders originating from/outside institutions based in ICSG member countries). The ICSG website can be visited for further copper market related information.

Source: International Copper Study Group (ICSG)