January-May 2014: Refined copper balance indicates production deficit of 466,000 t

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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 balance for May 2014 (excluding the adjustment for changes in China’s bonded stocks) showed an apparent production deficit of 69,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, May showed a similar production deficit. The refined copper balance for the first five months of 2014, including revisions to data previously presented, indicates a production deficit of 466,000 t (a seasonally adjusted deficit of 450,000 t). This compares with a production surplus of 251,000 t (a seasonally adjusted surplus of 277,000 t) in the same period of 2013.

In the first five months of 2014, world usage is estimated to have increased by around 15.5% compared with that in the same period of 2013, supported by strong apparent demand in China. Chinese apparent demand increased by 29% (995,000 t) based on a 65% increase in net imports of refined copper from the low net import level in the first five months of 2013 and consequent lower apparent usage. Excluding China, world usage increased by around 6%, supported mainly by apparent usage growth of 18% in the EU and 13% in Japan. However, it should be noted that comparative usage in the first five months of 2013 was 8% lower in the EU and 5% lower in Japan than in the first five months of 2012.

World mine production is estimated to have increased by around 5% (352,000 t) in the first five months of 2014 compared with mine production in the same period of 2013. Concentrate production increased by 6% while solvent extraction-electrowinning (SX-EW) increased by 1%. With the exception of Indonesia (-10%) where production remained constrained by the ban on concentrates exports, all of the other major copper-mine producing countries had greater output. Production in Chile, Peru and the United States increased by an aggregated 6% (200,000t). On a regional basis, production in the first five months of 2014 rose by 12% in Africa, 4% in South America and 12% in North America and remained essentially unchanged in Asia, Europe and Oceania.  The average world mine capacity utilization rate for the first five months of 2014 remained practically unchanged compared with that in the same period of 2013.

World refined production is estimated to have increased by 7% (570,000 t) in the first five months of 2014 compared with refined production in the same period of 2013: primary production was up by 6.5% and secondary production (from scrap) was up by 7%. The main contributor to growth was China (+15.5%, 390,000 t), followed by India, the Democratic Republic of Congo, the United States and Japan, where aggregated production increased by 14% (215,000 t). Output in Chile, the second biggest world refined copper producer, declined by 4%.   On a regional basis, refined production is estimated to have increased in Africa (13%), North America (8%), Asia (11%), Europe (2%) and Oceania (4%) and to have declined in South America (-2%). The average world refinery capacity utilization rate for the first five months of 2014 was higher than that in the same period of 2013.

Based on the average of stock estimates provided by independent consultants, Chinese bonded stocks increased by around 160,000 t in the first five months of 2014 from the yearend 2013 level. Stocks declined by around 315,000 t in the same period of 2013.  In the first five months of 2014, the world refined copper balance adjusted for Chinese bonded stock changes indicates a deficit of around 305,000 t compared to a deficit of around 65,000 t in the first five months of 2013.

The average LME cash price for July 2014 was US$7,104.50 per tonne, up from the June 2014 average of US$6,806.10 per tonne. The 2014 high and low copper prices through the end of July were US$7,439.50 (on 2nd Jan) and US$6,434.50 per tonne (on 20th Mar), respectively, and the annual average was US$6,945.45 per tonne. As of the end of July, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 270,038 t, a decline of 236,466 t from stocks held at the end of December 2013. Compared with the June 2014 levels, stocks were down at the LME and up at COMEX and SHFE.

The August 2014 Copper Bulletin is available for sale upon request. Further copper market related information can be found under www.icsg.org too.

Source: International Copper Study Group (ICSG)