ICSG: Refined copper market balance shows production deficit

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Geshreddertes Kupfer (Foto: Kroll/Recyclingportal.eu)

Lisbon, Portugal — According to preliminary data by the International Copper Study Group (ICSG), the refined copper market balance for February 2014 (excluding the adjustment for changes in China`s bonded stocks) showed an apparent production deficit of 5,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, February showed a production deficit of 24,000 t.

The refined copper balance for the first two months of 2014, including revisions to data previously presented, indicates a production deficit of 128,000 t (a seasonally adjusted deficit of 136,000 t). This compares with a production surplus of 105,000 t (a seasonally adjusted surplus of 95,000 t) in the same period of 2013.

In the first two months of 2014, world usage is estimated to have increased by around 12 percent compared with that in the same period of 2013. Chinese apparent demand increased by 22 percent based on a 60 percent increase in net imports of refined copper from the low net import level in early 2013 and subsequent lower apparent usage. Excluding China, world usage increased by around 5 percent supported by usage growth in the EU, Japan and the United Sates of 15 percent, 13 percent and 2.5 percent respectively. However, comparative usage in the first two months of 2013 had declined by 38 percent in the EU and 7.5 percent in Japan from the level of 2012.

World mine production is estimated to have increased by around 4 percent in the first two months of 2014 compared with mine production in the same period of 2013. Concentrate production increased by 4 percent while solvent extraction-electrowinning (SX-EW) increased by 5.5 percent. With the exception of Indonesia (-26 percent) where production remained constrained by the ban on concentrates exports, all the other major copper mine producing countries had greater output. On a regional basis, production in the first two months of 2014 rose by 12 percent in Africa and 6 percent in the Americas and remained essentially unchanged in Asia, Europe and Oceania.  The average world mine capacity utilization rate for the first two months of 2014 was slightly lower than that in the same period of 2013.

World refined production is estimated to have increased by almost 5 percent in the first two months of 2014 compared with refined production in the same period of 2013: primary production was up by 4.6 percent and secondary production (from scrap) was up by 5.2 percent. The main contributor to growth was China (+13 percent), followed by the United Sates and the Democratic Republic of Congo.  Output in Chile, the second biggest world refined copper producer, declined by 3.5 percent.  On a regional basis, refined production is estimated to have increased in Africa (12 percent), in the Americas (3 percent) and in Asia (6 percent) and remained essentially unchanged in Europe and Oceania. The average world refinery capacity utilization rate for the first two months of 2014 remained unchanged as compared to the same period of 2013.

Based on the average of stock estimates provided by consultants, Chinese bonded stocks increased by around 85,000 t in the first two months of 2014 from the yearend 2013 level. Stocks increased by 16,000 t in the same period of 2013.  In the first two months of 2014, the refined copper balance adjusted for Chinese bonded stock changes indicates a deficit of around 40,000 t compared to a surplus of around 120,000 t in the first two months of 2013.

The average LME cash price for April 2014 was US$6,670.83 per tonne, up from the March 2014 average of US$6,667.83 per tonne. The 2014 high and low copper prices through the end of April were US$7,439.50 (on 2nd Jan) and US$6,434.50 per tonne (on 20st Mar), respectively, and the annual average was US$6,951.46 per tonne. As of the end of April, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 247,594 t, a decline of 258,910 t from stocks held at the end of December 2013. Compared with the March 2014 levels, stocks were down at all three exchanges.

Please visit the ICSG website for further copper market related information and the May 2014 Copper Bulletin. The Bulletin is available for sale upon request.

Source: International Copper Study Group (ICSG)