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Copper surplus reaches 154 000 t in August on weaker Chinese demand, seasonality

Copper surplus reaches 154 000 t in August on weaker Chinese demand, seasonality

Photo by Bloomberg

23rd November 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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VANCOUVER (miningweekly.com) – New analysis by the International Copper Study Group (ICSG) has shown an apparent production surplus of around 154 000 metric tonnes in August, mainly owing to weaker Chinese demand and seasonally weak use in other regions.

The Lisbon, Portugal headquartered think tank said in a statement Monday that when making seasonal adjustments for world refined production and use, August showed a production surplus of about 56 000 t.

During the eight-month period since the start of the year, data suggests a production deficit of about 91 000 t, and a seasonally adjusted deficit of about 93 000 t, the ICSG stated.

That compares with a production surplus of about 10 000 t (a seasonally adjusted surplus of about 19 000 t) for the same period in 2015.

In the same eight-month period, world apparent refined use is estimated to have increased by about 3.8% (570 000 t), compared with the same period in 2015, mainly owing to increases in China.

Chinese apparent demand increased by around 7.5%, compared with the same period in 2015, based on an 8% increase in net imports of refined copper. However, July and August net refined copper imports of 176 000 t and 175 000 t, respectively, were the lowest since April 2013 and compare with a net monthly import average of 312 000 t in the first half of 2016, noted ICSG analysts.

Combined use in the European Union, Japan and the US remained essentially unchanged over the eight-month period.

On a regional basis, use is estimated to have increased by 2.5% in Europe and 6% in Asia (excluding China, use in Asia increased by 1.5%), while declining by 11% and 4.5% in Africa and in the Americas, respectively, and remaining essentially unchanged in Oceania.

World mine production is estimated to have increased by around 5.8% (730 000 t) in the first eight months of 2016 compared with production in the same period of 2015, according to the ICSG.

Concentrate output rose by 7.5%, and solvent extraction and electrowinning (SX-EW) declined by 0.5%.

“The increase in world mine production was mainly due to a 45% rise in Peruvian output, which is benefiting from new and expanded capacity brought on stream in the last two years. A recovery in production levels in Canada and the US, expanded capacity in Mexico and a ramp-up in production in Mongolia, also contributed to world growth, the ICSG stated.

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 the Democratic Republic of Congo (DRC), where output was constrained by temporary production cuts, the ICSG advised.

On a regional basis, output 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 eight-month period in 2016 increased to 85% from 84% in the same period of 2015.

World refined output is estimated to have increased by about 3.1% (470 000 t) in the first eight months of 2016, compared with refined production in the same period of 2015: primary production was up by 2.5% and secondary production (from scrap) was up by 5.5%, the ICSG said.

The main contributor to production growth was China (+7%), followed by the US (+14%) and Mexico (+19%), where expanded SX-EW capacity contributed to refined production growth.

Output in Chile and Japan, the second- and third-leading refined copper producers, increased by around 2% and 3% during the period, respectively. Refined production in the DRC and Zambia declined because of 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 (10%), while declining in Africa (-13%) and in Europe (-3%).

The average world refinery capacity use rate of 83% for the first eight months of 2016 remains practically unchanged from the capacity use rate in the same period of 2015, according to the ICSG.

According to the ICSG, as at the end of October, copper stocks held at the major metal exchanges totalled 487 305 t, an increase of 5 437 t (+1%) from stocks held at the end of December 2015.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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