Lisbon, Portugal — World mine production is estimated to have declined by around 2.2 percent in the first eight months of 2017, with concentrate production declining by around 1.5 percent and solvent extraction-electrowinning (SX-EW) declining by around 5 percent, according to preliminary data released by The International Copper Study Group (ICSG).
The decline in world mine production was mainly due to:
- a 5 percent decline in production in Chile, the world’s biggest copper mine producing country, negatively affected by the strike at the Escondida mine and lower output from Codelco mines.
- a decline in Argentina, Canada and Mongolia concentrates production of 50 percent, 19 percent and 18 percent, respectively, mainly due to lower grades in planned mining sequencing and Argentina’s Alumbrera mine approaching end of life.
- a 15 percent decline in Indonesian concentrate production as output was constrained by a temporary ban on concentrate exports that started in January and ended in April.
- A 11 percent decline in production in the United States mainly due to lower ore grades, reduced mining rates and unfavourable weather conditions at the beginning of the year.
However these reductions in output were partially offset by 35 percent and 5 percent increases in Kazakhstan and Peruvian concentrate output, respectively, with both countries benefitting from new and expanded capacity that was not yet fully available in the same period of last year. Mexico, Myanmar, Spain and Sweden also contributed to world growth.
On a regional basis, mine production is estimated to have declined in Africa by 1.5 percent, in the Americas by 4 percent and in Oceania by 2 percent while increasing in Asia by 1 percent and in Europe (including Russia) by 2 percent.
World refined production is estimated to have remained essentially unchanged in the first eight months of 2017 with primary production (electrolytic and electrowinning) declining by 1.5 percent and secondary production (from scrap) increasing by 10 percent:
- Increased availability of scrap allowed world secondary refined production to increase, notably in China.
- The main contributor to growth in world refined production was China (increase of 6 percent), followed by India (8 percent) and some EUcountries recovering from maintenances shutdowns in 2016.
- However, overall growth was offset by an 10 percent decline in Chile, the second largest refined copper producer, where both primary electrolytic refined production and electrowinning production declined.
- Production also declined in the third and fourth world leading refined copper producers, namely, Japan (-3.5 percent) and the United States (-9 percent).
- On a regional basis, refined output is estimated to have increased in Asia (4.5 percent) and in Europe (4 percent) while declining in Africa (2 percent), in the Americas (9 percent) and in Oceania (8 percent).
World apparent refined usage is estimated to have remained essentially unchanged in the first eight months of 2017:
- Improved scrap supply is constraining world refined copper usage growth globally in 2017.
- Preliminary data indicates that world ex-China usage might have increased by about 1 percent, however China apparent usage (currently representing almost 50 percent of world refined usage) declined by 1 percent.
- Chinese apparent usage (excluding changes in unreported stocks) declined by 1 percent because, although refined copper production increased by 6 percent, net imports of refined copper declined by 16 percent.
- Among other major copper using countries, usage increased in India and Japan but declined in the United States, Germany and South Korea.
World refined copper balance for the first eight months of 2017 indicates a deficit of about 50,000 t (including revisions to data previously presented):
- This is mainly due to stagnant growth in world refined copper supply.
- August shows a seasonal-driven surplus which usually occurs every year in that month due to the summer holiday period.
- In developing its global market balance, ICSG uses an apparent demand calculation for China that does not take into account changes in unreported stocks [State Reserve Bureau (SRB), producer, consumer, merchant/trader, bonded]. To facilitate global market analysis, however, an additional line item – Refined World Balance Adjusted for Chinese Bonded Stock Changes – is included in the table below that adjusts the world refined copper balance based on an average estimate of changes in unreported inventories provided by three consultants with expertise in China’s copper market.
- In the first eight months of 2017, the world refined copper balance adjusted for changes in Chinese bonded stocks indicates a small deficit of around 5,000 t.
Copper Prices and Stocks:
- Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 50,000 t in the first eight months of 2017 from the year-end 2016 level. Bonded stocks increased by around 110,000 t in the same period of last year.
- As of the end of October, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 568,421 t, an increase of 29,348 t (5 percent) from stocks held at the end of December 2016. Compared with the December 2016 levels, stocks were down at the LME (-12 percent) and SHFE (-26 percent) and up at COMEX (132 percent).
- The average LME cash price for October 2017 was US-$ 6,797.39 per tonne, up from the September average of US-$ 6,583.19 per tonne.
- The 2017 high and low copper prices through the end of October were US-$ 7,073.50. (on 24th Oct) and US-$ 5,466 per tonne (on 8th May), respectively, and the year average was US-$ 6,040 per tonne (24 percent above 2016 annual average).
The November 2017 Copper Bulletin is available for sale (single issues €100/€150, annual subscription €500/€750 for orders originating from/outside institutions based in ICSG member countries). For further copper market related information the ICSG website under icsg.org can be visited.
Source: The International Copper Study Group (ICSG)