January to August 2014: World refined copper balance indicates production deficit

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Kupfermine (Foto: © Rainer Gräser / http://www.pixelio.de)

Lisbon, Portugal — According to preliminary data by the International Copper Study Group (ICSG) , the refined copper market balance for August 2014 showed an apparent production surplus of 83,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, August showed a production surplus of 64,000 t. The refined copper balance for the first eight months of 2014, including revisions to data previously presented, indicates a production deficit of 544,000 t (a seasonally adjusted deficit of 485,000 t). This compares with a production surplus of 42,000 t (a seasonally adjusted surplus of 116,000 t) in the same period of 2013.

In the first eight months of 2014, world usage is estimated to have increased by around 12 percent compared with that in the same period of 2013, supported by strong apparent demand in China and a shortage of high-grade scrap that led to the use of more cathode by semi-manufacturers. Chinese apparent demand increased by 21 percent based on a 27 percent increase in net imports of refined copper. Excluding China, world usage increased by 5.5 percent, supported mainly by apparent usage growth of 11 percent in the EU and 10 percent in Japan, as well as by growth of 8 percent in other Asian countries (excluding China and Japan) and 9 percent in the Middle East/North African region. Usage in the United States remained flat.

World mine production is estimated to have increased by around 3 percent in the first eight months of 2014 compared with mine production in the same period of 2013. Concentrate production increased by 3.5 percent while solvent extraction-electrowinning (SX-EW) increased by 1.7 percent. With the exception of Indonesia (-20 percent) (where production remained constrained by the ban on concentrates exports), Zambia (-10 percent) (where output was impacted by an operational failure at the Lumwana mine and lower production levels at other producers), and Australia (-4 percent) (where two mines closed temporarily), all of the other major copper-mine producing countries had greater output. Production increased by 1 percent in Chile, 5 percent in Peru, 11 percent in the United States (where production in the first half 2013 was impacted by the landslide at the Bingham Canyon Mine), 13 percent in the DRC, 8 percent in Mexico and 60 percent in Mongolia. The average world mine capacity utilization rate for the first eight months of 2014 fell to 83 percent from 84 percent in the same period of 2013.

World refined production is estimated to have increased by around 8 percent in the first eight months of 2014 compared with refined production in the same period of 2013: primary production was up by 7 percent (including 9 percent growth in production from concentrates and 1.7 percent from SX-EW) and secondary production (from scrap) was up by 10 percent. The main contributor to growth was China (19 percent, 787,000 t), followed by India, the Democratic Republic of Congo, the United States and Japan, where aggregated production increased by 16 percent (389,000 t). Output in Chile, the second leading world refined copper producer, declined by 2 percent owing to a 6 percent decline in electrowon production. On a regional basis, refined production is estimated to have increased in Africa (8 percent), North America (11 percent), Asia (13 percent), Europe (1.5 percent), and Oceania (12 percent) and to have declined in South America (-2 percent). The average world refinery capacity utilization rate for the first eight 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 35,000 t in the first eight months of 2014 from the yearend 2013 level. Stocks declined by around 380,000 t in the same period of 2013. In the first eight months of 2014, the world refined copper balance adjusted for Chinese bonded stock changes indicates a deficit of around 510,000 t compared to a deficit of around 340,000 t in the same period of 2013.

The average LME cash price for October 2014 was US$6,739.20 per tonne, down from the September 2014 average of US$6,872.23 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 year-to-date average was US$6,920.67 per tonne. As of the end of October, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 285,851 t, a decline of 220,653 from stocks held at the end of December 2013. Compared with the September 2014 levels, stocks were up at LME and SHFE and down at Comex.

Please visit the ICSG website icsg.org for the November 2014 Copper Bulletin and further copper market related information.

Source: International Copper Study Group (ICSG)