VANCOUVER (miningweekly.com) – The latest data out from the Lisbon-based International Copper Study Group (ICSG) shows a copper production deficit of 84 000 t for the first nine months this year, wider than the deficit of around 28 000 t in the comparable period of 2015.
The ICSG’s preliminary data for September world copper supply and demand showed sa refined copper apparent production deficit of around 15 000 t. When making seasonal adjustments for world refined production and usage, September showed a production surplus of about 25 000 t.
In the first nine months of 2016, world apparent refined usage is estimated to have increased by around 3% to 565 000 t, compared with that in the same period of 2015 mainly owing to Chinese apparent demand as world usage excluding China remained essentially unchanged.
According to the report, Chinese apparent demand increased by about 7% in the first nine months based on a 2% increase in net imports of refined copper and 7% growth in refined production. However, net refined copper imports have been on a declining trend in 2016, with the monthly average in the third quarter 40% below that of the first half.
Monthly average Chinese apparent demand in the third quarter is 5% below that in the first half. In the first nine months of 2016 combined usage in the EU, Japan and the US is down by 0.6%. On a regional basis, usage is estimated to have increased by 1% in Europe and 5% in Asia (when excluding China, Asia usage increased by 2%), while declining by 11.5% and 4% in Africa and in the Americas respectively and remaining essentially unchanged in Oceania.
The ICSG estimated world mine output to have increased by about 6%, or 820 000 t in the first nine months, cover he prior-year period.
Concentrate production increased 7.5% and solvent extraction-electrowinning (SX-EW) declined by 0.5%. The increase in world mine production was mainly owing to a 44%, or 530 000 t rise in Peruvian output that is benefitting from new and expanded capacity brought on stream in the last two years, the analysts said.
A recovery in production levels in Canada, Indonesia and the US, and expanded capacity in Mexico, also contributed to world growth. However overall growth was partially offset by a 4% decline in production in Chile, the world’s biggest copper mine producer, and a 7% decline in Democratic Republic of Congo (DRC), where output is being constrained by temporary production cuts.
On a regional basis, production rose by 7% in the Americas, 9% in Asia and 7% in Oceania but declined by 4% in Africa while remaining essentially unchanged in Europe. The average world mine capacity utilisation rate for the first nine months of 2016 increased to 86% from 85% in the same period of 2015, according to the ICSG.
Meanwhile, world refined production is estimated to have increased by about 3%, to 510 000 t in the first nine months, while primary output was up by 2.5% and secondary production (from scrap) was up by 5.5%.
The main contributor to growth was China (7%), followed by the US, where production increased by 13% and Mexico (19%), where expanded SX-EW capacity is contributing to refined production growth.
The ICSG noted increased production in Chile and Japan, the second and third leading refined copper producers, rising by between 1% and 3%, respectively. Refined output in the DRC and Zambia declined on the back of to the impact of temporary production cuts. On a regional basis, refined output is estimated to have increased in the Americas (5%), Asia (6%) and Oceania (8%), with Africa seeing a 13% decline and Europe down 3.5%.
The average world refinery capacity use rate for the first nine months remains practically unchanged from that in the same period of 2015 at around 83.5%.
Based on the average of stock estimates provided by independent consultants, China’s bonded stocks increased by around 70 000 t in the first nine months from the year-end 2015 level. Stocks decreased by about 130 000 t in the same period of 2015. In the first nine months of 2016, the world refined copper balance adjusted for the change in Chinese bonded stocks indicates a production deficit of around 16 000 t compared to a deficit of about 155 000 t in the same period of 2015.
The average LME cash price for November was $5 443.25/t, up from the October average of $4 732.14/t.
The 2016 high and low copper prices through the end of November were $5 935.50 (on November 28) and $4 310.50/t on January 15, respectively, and the year-to-date average was $4 793.60/t, some 13% below 2015 average, according the ICSG data.
As of the end of November, copper stocks held at the major metal exchanges (LME, Comex, SHFE) totalled 451 780 t, a decline of 30 088 t, or 6%, from stocks held at the end of December 2015. Compared with the December 2015 levels, stocks were down at SHFE and up at the LME and Comex.