The International Copper Study Group (ICSG) released preliminary data for August 2020 world copper supply and demand in its November 2020 Copper Bulletin. The Bulletin and ICSG online statistical database provide detailed data, on a country basis, for copper mine, smelter, refined and semis production, copper refined usage, trade, stocks and prices.
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Preliminary data indicates that world copper mine production fall by 0.8% in the first eight months of 2020, with both concentrate production and solvent extraction-electrowinning (SX-EW) declining by 0.8%:
- World mine production is estimated to have decreased by 4% in April-May as these two months were the most affected by the Covid-19 related global lockdown that resulted in temporary mine shutdowns/reduced production levels. However, world mine production started to recover in May as lockdown measures eased and the copper industry adapted to the strict health protocols.
- In Peru, stoppages resulting from the Covid-19 pandemic combined with operational issues/adverse weather that affected a few major mines, resulted in a 16.5% decline in mine output over the first eight months of 2020 including a significant decline of 38% in April-May compared to the same period of 2019. However, as the Peruvian mining industry started to recover the extent of the reduction narrowed to 6% in July-August, compared to the same period of 2019.
- Covid-19 related constraints and other operational issues also resulted in declines in production in other major copper mine producing countries, most notably Australia, Mexico and the United States.
- In Chile, the world’s biggest copper mine producing country, output increased by 0.5%, recovering from production constraints in early 2019 (production was down by 5% in 1st quarter 2019 and by 0.5% in the first eight months of 2019).
- Production in the Democratic Republic of Congo (DRC) and Panama increased significantly mainly due to the ramp-up of new mines or expansions. In Indonesia, production grew by 23% as output levels improved following the transition of the country’s major two copper mines to different ore zones in 2019.
Preliminary data indicates that world refined copper production increased by 1.2% during the first eight months of 2020 with primary production (electrolytic and electrowinning) up by 2.5% and secondary production (from scrap) down by 5%.
- Chilean electrolytic refined output increased by 36% as in the comparative period of 2019 production was negatively affected by temporary smelter shutdowns as a result of upgrades to comply with new environmental regulations. Total Chilean refined copper production (including Electrowinning) increased by 7%.
- Chinese refined production growth was negatively impacted by temporary shutdowns related to Covid-19 restrictions, tight scrap supply and constraints associated with concentrate imports and oversupply in the sulphuric acid market.
- In Africa, refined production was up 6% in the DRC, due to the ramp-up of new or expanded SX-EW plants and by 15% in Zambia, where output has been recovering from smelters’ operational issues and temporary shutdowns in 2019.
- Indian refined output decreased by 21% primarily as a consequence of the temporary suspension of Birla Copper’s operations in
- March-May following a nationwide lockdown due to Covid-19.
- Japanese refined production rose by 3% mainly as a consequence of a recovery from a number of maintenance shutdowns over the same period of 2019.
- In the United States, temporary shutdowns and a long strike at Asarco’s operations led to a 13% decline in refined output.
- Globally, constrained scrap supply due to the Covid-19 lockdown and lower copper prices during the first half of the year have negatively impacted world secondary refined production.
Preliminary data indicates that world apparent refined copper usage increased by 1% over the first eight months of 2020:
- The Covid-19 related global lockdown has had a significant negative impact on the world economy and subsequently on key copper end-use sectors in all regions.
- World ex-China refined copper usage was significantly impacted and is estimated to have declined by about 10%: among the biggest copper using regions, refined usage fall by 17% in Japan, 11% in the EU, 5% in the United States and by about 13% in Asia (Ex-China).
- However, due to a 48% (940,000 t) increase in net refined copper imports, Chinese apparent usage increased by 12.5% offsetting the declines in other regions of the world. Real Chinese industrial usage was negatively impacted by the Covid-19 related production suspensions at semis fabricators early in the year and weaker external demand and should present much lower growth than apparent usage.
Preliminary world refined copper balance in the first eight months of 2020 indicates an apparent deficit of about 293,000 t:
- 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 attached table 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.
- Over the first eight months of 2020, the world refined copper balance, based on Chinese apparent usage (excluding unreported/bonded stocks), indicated a deficit of about 293,000 t. The world refined copper balance adjusted for changes in Chinese bonded stocks indicated a market deficit of about 296,000 t.
Copper Prices and Stocks
Based on the average of estimates provided by independent consultants, China’s bonded stocks are thought to have declined by about 3,000 t over the first eight months of 2020 compared to the year-end 2019 level. As of the end of October, copper stocks held at the major metal exchanges (LME, Comex, SHFE) totalled 381,782 t, an increase of 79,395 t (26%) from stocks held at the end of December 2019. Stocks were up at the LME (17%), at Comex (+113%) and SHFE (+13%). The average LME cash price for October 2020 was US$ 6,702,77 /t, down 0.14% from the September average of US$ 6,712,41/t. The 2020 high and low copper prices through the end of October were US$ 6,953 /t (on 21st Oct) and US$ 4,617.50 /t (on 23rd Mar), respectively, and the year average was US$ 5,937,20 /t (1% below the 2019 annual average).
Please visit the ICSG website for further copper market related information.
Source: International Copper Study Group (ICSG)