ICSG: World copper mine production declined, refined production unchanged

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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 world mine production is estimated to have declined by around 2 percent in the first two months of 2017. The concentrate production declined by around 1 percent and solvent extraction-electrowinning (SX-EW) by 5 percent.

The decline in world mine production was mainly due to a 10 percent decline in Chilean mine production negatively affected by the strike at Escondida mine and lower output from Codelco mines. Canada and Mongolia concentrates production declined 19 percent and 23 percent, respectively, mainly due to lower grades in planned mining sequencing. The Indonesian concentrate production was lowered by 10 percent as output was constrained by a temporary ban on concentrate exports that started in January and ended in April. However overall decline was partially offset by an 18 percent and 15 percent rise in Mexican (concentrate and SX-EW) and Peruvian (concentrate) output, respectively, both countries benefitting from new and expanded capacity that was not yet fully available in the same period of last year. On a regional basis, production rose by 5 percent in Europe (including Russia) and 10 percent in Oceania while declining by 4 percent in the Americas and 6 percent in Africa, and remaining essentially unchanged in Asia.

World refined production is estimated to have remained essentially unchanged in the first two months of 2017 with primary production (electrolytic and electrowinning) declining by 3 percent and secondary production (from scrap) increasing by 11 percent. Increased availability of scrap allowed world secondary refined production to increase, notably in China. The main contributor to growth in world refined production was China (increase of 4 percent) followed by Mexico (14 percent) where expanded SX-EW capacity contributed to refined production growth. However, overall growth was partially offset by a 16 percent decline in Chile, the second world leading refined copper producer, where both primary electrolytic refined production and electrowinning production declined. Production also declined in the third and fourth world leading refined copper producers, namely, Japan (in electrolytic production from concentrates) and in the United States (mainly in electrowinning output). On a regional basis, refined output is estimated to have increased in Asia (3 percent), in Africa (2 percent) and in Europe (including Russia) (1.5 percent) while declining in the Americas (11 percent) and in Oceania (5 percent).

World apparent refined usage is estimated to have declined by around 3 percent in the first two months of 2017. Preliminary data indicates that although world ex-China usage might have grown by around 2.5 percent, growth was more than offset by a 9.5 percent decline in Chinese apparent demand. Chinese apparent demand (excluding changes in unreported stocks) declined by 9.5 percent because although refined copper production increase by 4 percent, net imports of refined copper declined by 29 percent. Some countries in Asia and in Europe saw growth. On a regional basis, usage is estimated to have increased by 1.5 percent in Europe while declining by 1 percent in the Americas and 5 percent in Asia (when excluding China, Asia usage increased by 6 percent).

The world refined copper balance for the first two months of 2017 indicates a surplus of around 150,000 t (including revisions to data previously presented). This is mainly due of the decline in Chinese apparent demand (China currently represents 47 percent of the world copper refined usage). 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 two months of 2017, the world refined copper balance adjusted for changes in Chinese bonded stocks indicates a surplus of around 255,000 t.

Concerning copper prices and stocks, Bbased on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 105,000 t in the first two months of 2017 from the year-end 2016 level. Bonded stocks increased by around 80,000 t in the same period of last year. The average LME cash price for April 2017 was US$5,697.67 per tonne, down from the March average of US$5,821.52 per tonne. The 2017 high and low copper prices through the end of April were US$6,145.00 (on 14th Feb) and US$5,500.50 per tonne (on 4th Jan), respectively, and the year average was US$5,802.07 per tonne (19 percent above 2016 annual average). As of the end of April, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 623.917 t, an increase of 84,844 t (16 percent) from stocks held at the end of December 2016. Compared with the December 2016 levels, stocks were down at the LME (-3 percent) and up at SHFE (33 percent) and COMEX (51 percent).

The May 2017 Copper Bulletin is available for sale. The ICSG website can be visited for further copper market related information.

Source: International Copper Study Group (ICSG)