ICSG: Copper world secondary production from scrap increased by 12 percent

1106
Kupferverkleidung (Foto: Free-Fotos / Pixabay)

Lisbon, Portugal — World mine production is estimated to have declined by around 3.5 percent in the first four months of 2017, with concentrate production declining by around 3 percent and solvent extraction-electrowinning (SX-EW) declining by around 5 percent, according to preliminary data for April 2017 world copper supply and demand released by the International Copper Study Group (ICSG).

The decline in world mine production was mainly due to several reasons. A 12 percent decline in production in Chile, the world’s biggest copper mine producing country, negatively affected by the strike at Escondida mine and lower output from Codelco mines. A decline in Canada and Mongolia concentrates production of 19 percent and 22 percent, respectively, mainly due to lower grades in planned mining sequencing. A 14 percent decline in Indonesian concentrate production 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 a 13 percent and 7 percent rise in Mexican (concentrate and SX-EW) and Peruvian (concentrate) output, respectively, with 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 4 percent in Europe (including Russia) and 7 percent in Oceania while declining by 6 percent in the Americas, 1.5 percent in Asia and 4 percent in Africa.

World refined production is estimated to have remained essentially unchanged in the first four months of 2017 with primary production (electrolytic and electrowinning) declining by 2 percent and secondary production (from scrap) increasing by 12 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 6.5 percent), followed by Mexico (11 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 largest 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 (4 percent), in Africa (3 percent) and in Europe (including Russia) (2 percent) while declining in the Americas (10 percent) and in Oceania (11 percent).

World apparent refined usage is estimated to have declined by around 3 percent in the first four months of 2017. Preliminary data indicates that although world ex-China usage might have grown slightly by around 0.5 percent, growth was more than offset by a 7 percent decline in Chinese apparent demand. Chinese apparent demand (excluding changes in unreported stocks) declined by 7 percent because although refined copper production increased by 6.5 percent, net imports of refined copper declined by 36 percent. Among other major copper using countries, usage increased in India, Japan and Taiwan but declined in the United States and Germany. On a regional basis, usage is estimated to have declined in all regions: in Africa by 1 percent, in Asia by 3 percent (when excluding China, Asia usage increased by 7 percent), in the Americas by 1 percet and in Europe by 6 percent.

World refined copper balance for the first four months of 2017 indicates a surplus of around 80,000 t (including revisions to data previously presented). This is mainly due to the decline in Chinese apparent demand (China currently represents 48 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 four months of 2017, the world refined copper balance adjusted for changes in Chinese bonded stocks indicates a surplus of around 220,000 t.

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 2017 from the year-end 2016 level. Bonded stocks increased by a similar 140,000 t in the same period of last year. The average LME cash price for June 2017 was US-$ 5,699.48 per tonne, down from the May average of US-$ 5,591.50 per tonne. The 2017 high and low copper prices through the end of June were US-$ 6,145.00 (on 14th Feb) and US-$ 5,466 per tonne (on 8th May), respectively, and the year average was US-$ 5,748.64 per tonne (18 percent above 2016 annual average). As of the end of June, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 602,831 t, an increase of 63,758 t (12 percent) from stocks held at the end of December 2016. Compared with the December 2016 levels, stocks were down at the LME (-11 percent) and up at SHFE (20 percent) and COMEX (83 percent).

The 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 undericsg.org.

Source: International Copper Study Group (ICSG)