ICSG: Refined copper market balance shows production surplus in January 2016

Altkupfer (Foto: Kroll / Recyclingportal.eu)

Lisbon, Portugal — According to preliminary data by International Copper Study Group (ICSG), the refined copper market balance for January 2016 showed an apparent production surplus of 56,000 metric tonnes (t). When making seasonal adjustments for world refined production and usage, January showed a production surplus of 50,000 t. This compares with a production surplus of 15,000 t (a seasonally adjusted surplus of 9,000 t) in January 2015.

In January 2016, world apparent usage is estimated to have increased by around 4.5 percent (90,000 t) compared with that in January 2015. Chinese apparent demand increased by 16 percent based on a 15.5 percent increase in net imports of refined copper. Excluding China, world usage declined by around 5 percent. On a regional basis, usage is estimated to have increased by 9 percent in Asia (when excluding China, Asia usage declined by 5 percent) and 1 percent in Oceania, while declining by 3 percent in Europe, 1.5 percent in Africa, and 7 percent in the Americas.

World mine production is estimated to have increased by around 2 percent (30,000 t) in January 2016 compared with production in January 2015. Concentrate production increased by 2.5 percent while solvent extraction-electrowinning (SX-EW) remained essentially unchanged. The increase in world mine production was mainly due to a recovery in production levels in Indonesia and in Peru while the latter also benefited from new production at mines that started last year. Production declined by 11 percent in Chile, the world biggest copper mine producer. On a regional basis, production in January rose by 11 percent in Asia, 1 percent in the Americas and 1.5 percent in Oceania but declined by 1.5 percent in Europe and 6 percent in Africa. The average world mine capacity utilization rate for January 2016 declined to 82 percent from 84 percent in January 2015.

World refined production is estimated to have increased by around 7 percent (130,000t) in January 2016 compared with refined production in the same month of 2015: primary production was up by 7 percent and secondary production (from scrap) was up by 6 percent. The main contributor to growth was China (+14 percent), followed by the United States where production increased by 30 percent. Output in Chile, the second leading refined copper producer, increased by 4.5 percent. On a regional basis, refined output in January is estimated to have increased in the Americas (10 percent), Asia (10 percent) and Oceania (20 percent) while declining in Africa (-12 percent) and remaining unchanged in Europe. The average world refinery capacity utilization rate for January 2016 increased to 85 percent from 81 percent in January 2015.

Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 15,000 t in January 2016 from the year-end 2015 level. Stocks increased by around 5,000 t in the same month of 2015. In January 2016, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production surplus of around 70,000 t compared to a surplus of around 15,000 t in January 2015.

The average LME cash price for March was US$4,947.55 per tonne, up from the February average of US$4,595.48 per tonne. The 2016 high and low copper prices through the end of March were US$5,103.00 (on 18th Mar) and US$4,310.50 per tonne (on 15th Jan), respectively, and the year-to-date average was US$4,671.91 per tonne (15 percent below 2015 annual average). As of the end of March, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 594,627 t, an increase of 112,759 t (23 percent) from stocks held at the end of December 2015. Compared with the December 2015 levels, stocks were up at the SHFE and COMEX and down at LME.

The April 2016 Copper Bulletin is available for sale upon request. Further copper market related information can be found on ICSG website www.icsg.org.

Source: International Copper Study Group (ICSG)