ICSG: Refined copper market balance for July shows apparent production surplus

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Kupferschrott (Foto: Aurubis AG)

Lisboa, Portugal — According to preliminary DATA of the International Copper Study Group (ICSG) in its October 2014 Copper Bulletin, the refined copper market balance for July 2014 showed an apparent production surplus of 77,000 metric tonnes (t), after 6 months of consecutive deficits. When making seasonal adjustments for world refined production and usage, July showed a production surplus of 60,000 t. The refined copper balance for the first seven months of 2014, including revisions to data previously presented, indicates a production deficit of 589,000 t (a seasonally adjusted deficit of 512,000 t). This compares with a production surplus of 22,000 t (a seasonally adjusted surplus of 114,000 t) in the same period of 2013.

In the first seven months of 2014, world usage is estimated to have increased by around 12% compared with that in the same period of 2013, supported by strong apparent demand in China. Chinese apparent demand increased by 21% based on a 34% increase in net imports of refined copper from the low net import level in the first half of 2013. Excluding China, world usage increased by around 5%, supported mainly by apparent usage growth of 11% in the EU and 10% in Japan. However, it should be noted that comparative usage in the first seven months of 2013 was 3% lower in the EU and in Japan, respectively, than in the first seven month of 2012.

World mine production is estimated to have increased by around 3% in the first seven months of 2014 compared with mine production in the same period of 2013. Concentrate production increased by 4% 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, Zambia (-13%) where output was impacted by an operational failure at the Lumwana mine and lower production levels at other producers, and Australia (-4%) where two mines closed temporarily, all of the other major copper-mine producing countries had greater output.  Production increased by 2% in Chile, 7% in Peru, 12% in the United States (where production in the first half 2013 was impacted by the landslide at Bingham Canyon mine), 13% in the Democratic Republic of Congo (DRC), 8% in Mexico and 50% in Mongolia. The average world mine capacity utilization rate for the first seven months of 2014 was around 83%.

World refined production is estimated to have increased by around 7% in the first seven months of 2014 compared with refined production in the same period of 2013: primary production was up by 7% and secondary production (from scrap) was up by 8%.  The main contributor to growth was China (+17%, 615,000 t), followed by India, the DRC, the United States and Japan, where aggregated production increased by 16% (330,000 t). Output in Chile, the second biggest world refined copper producer, declined by 3% owing to an 7.5% decline in electrowon production.  On a regional basis, refined production is estimated to have increased in Africa (9%), North America (10%), Asia (11%), Europe (1.5%) and Oceania (10%) and to have declined in South America (-2.5%). The average world refinery capacity utilization rate for the first seven 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 120,000 t in the first seven months of 2014 from the yearend 2013 level. Stocks declined by around 390,000 t in the same period of 2013.  In the first seven months of 2014, the world refined copper balance adjusted for Chinese bonded stock changes indicates a deficit of around 470,000 t compared to a deficit of 365,000 t in the first half of 2013.

The average LME cash price for September 2014 was US$6,872.23 per tonne, down from the August 2014 average of US$7,000.55 per tonne. The 2014 high and low copper prices through the end of September 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$6,942.75 per tonne. As of the end of September, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 264,820 t, a decline of 241,684t from stocks held at the end of December 2013. Compared with the August 2014 levels, stocks were up at all exchanges.

The October 2014 Copper Bulletin is available for sale upon request. Please visit the ICSG website www.icsg.org for further copper market related information.

Source: International Copper Study Group (ICSG)