ICSG: World refined copper balance for 2016 indicates a deficit

Lisbon, Portugal — According to preliminary data of the International Copper Study Group (ICSG), in 2016 world mine production is estimated to have increased by around 5 percent, or 1 Mt (million tonnes), with concentrate production increasing by 7 percent and solvent extraction-electrowinning (SX-EW) declining by 2 percent. The world refined production is estimated to have increased by about 2.5 percent (530,000 t) in 2016 with primary production (Electrolytic and Electrowinning) increasing by 3 percent and secondary production (from scrap) declining by 2 percent. The world apparent refined usage is estimated to have increased by around 2 percent (430,000 t) in 2016. And World refined copper balance for 2016 indicates a deficit of around 50,000 t.

The increase in world mine production in 2016 was mainly due to a 38 percent (650,000 t Cu) rise in Peruvian concentrate output that benefitted from new and expanded capacity brought on stream in the last two years, and additionally a recovery in production levels in Canada, Indonesia and the United States, and expanded capacity in Mexico. The low frequency of supply disruptions was due to strikes, accidents or adverse weather conditions. However overall growth was partially offset by a 3.8 percent (220,000 t) decline in production in Chile, the world’s biggest copper mine producer, and a 4.5 percent decline in DRC where output is being constrained by temporary production cuts. On a regional basis, production rose by 6 percent in the Americas and 11.5 percent in Asia but declined by 3.5 percent in Africa while remaining essentially unchanged in Europe and Oceania.

The reasons of an increaded world refined production are as follows: Increased availability of concentrates allowed world primary electrolytic refined production to increase by 4.5 percent. The main contributor to growth in world refined production was China (increase of 6 percent, or 470,000t), followed by the United States and Japan where production increased by 7 percent and 5 percent respectively and by Mexico (16 percent) where expanded SX-EW capacity contributed to refined production growth. However, overall growth was partially offset by a 3 percent decline in Chile, the second world leading refined copper producer. Although primary electrolytic refined production increased by 4.5 percent, electrowinning production declined by 6.5 percent due to definitive/temporary closures of SX-EW mines. Production in the DRC and Zambia also declined by an aggregated 11 percent mainly due to the impact of temporary production cuts. On a regional basis, refined output is estimated to have increased in the Americas (1 percent) and Asia (6 percent) while declining in Africa (10 percent) and in Europe (including Russia) (2 percent) and remaining essentially unchanged in Oceania.

The growth in world apparent refined usage was mainly due to an increase in Chinese apparent demand as world usage excluding China is estimated to have increased by only 0.9 percent. Chinese apparent demand (excluding changes in unreported stocks) increased by around 2.5 percent based mainly on 6 percent growth in refined production as in fact net imports of refined copper declined by 7.5 percent. Usage in the United States and Japan, the second and third leading refined copper using countries, is down by 2 percent and 2.5 percent respectively. On a regional basis, usage is estimated to have increased by 3 percent in Asia (when excluding China, Asia usage increased by 3 percent) and by 2 percent in Europe (by 1.5 percent in the EU), while declining by 3 percent in the Americas.

The deficit in world refined copper balance for 2016 is mainly becaused by a 2.5 percent increase in Chinese apparent demand. In 2016, the world refined copper balance adjusted for changes in Chinese bonded stocks indicates a deficit of around 42,000 t. The refined copper market balance for the month of December 2016 showed a small surplus of around 20,000 t.

Regarding prices and stocks, China’s bonded stocks increased by around 15,000 t in 2016 from the year-end 2015 level, based on the average of stock estimates provided by independent consultants,. Bonded stocks decreased by around 100,000 t in 2015. The average LME cash price for February 2017 was US$5,941.55 per tonne, up from the January average of US$5,737.43 per tonne. The 2017 high and low copper prices through the end of February were US$6,145.00 (on 14th Feb) and US$5,500.50 per tonne (on 4th Jan), respectively, and the year average was US$5,837 per tonne (20 percent above 2016 annual average). As of the end of February, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 605,146 t, an increase of 66,073 t (12 percent) from stocks held at the end of December 2016. Compared with the December 2016 levels, stocks were down at the LME (-36 percent) and up at SHFE (98 percent) and COMEX (42 percent).

The March 2017 Copper Bulletin is available for sale. The ICSG website can be visited for further copper market related information.

Source: International Copper Study Group (ICSG)





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