By Paul Ploumis (ScrapMonster Author)

May 31, 2016 07:54:59 AM

SPOKANE (Scrap Monster): The International Copper Study Group (ICSG) has released preliminary data for the month of February this year in its May 2016 Copper Bulletin. According to preliminary ICSG data, copper production and usage data points to an apparent production surplus of nearly 24,000 metric tonnes.

The forecast report predicts that the market will be very close to supply-demand balance in 2016 and 2017. The global production of refined copper is expected to register marginal growth of 0.5% to 23 million tons in 2016. ICSG predicts further growth of 2.3% in the following year. The revision in usage and production outlook has forced the agency to review its earlier forecast which had projected deficit of 127,000 tons in 2016 and surplus of 175,000 tons in 2017.

Refined Copper

The refined copper market balance for the month of February ‘16 showed an apparent production surplus of nearly 24,000 metric tonnes. After making seasonal adjustments for global refined copper production and usage, the metal balance showed production deficit of 23,000 metric tonnes. The refined copper balance for the initial two-month period of the year ended in production surplus of around 56,000 metric tonnes as compared with a surplus of around 76,000 tonnes.

World refined production increased by nearly 4% (nearly 135,000 t) during Jan-Feb ‘16 in comparison with the corresponding two-month period last year. Primary production was up 4%, whereas the secondary production was up by 2%. The refined copper production during the month witnessed significant growth of 6% in China. The production by the US witnessed an increase of 25%. The other regions to report rise in refined output were Asia (+5%) and Oceania (+16%). On the other hand, the refined copper output by African region declined by 16% whereas those by Europe dropped marginally by 2.5%.

Mine production

The world copper mine production has increased by around 3% (nearly 100,000 t) during the first two months of 2016. Concentrate production was up 4% during the period, whereas SX-EW production remained flat. The mine output from Peru, Mongolia and Indonesia recovered during this period. The production declined by 6% in Chile during the two-month period. Region-wise, Asia recorded 1.5% rise in production. Also Americas recorded 6.5% jump in mine output. On the other hand, Europe and African region recorded production decline of 0.5% and 4% respectively. Temporary production cuts led to sharp 13% decline in mine output by DRC.

Meantime, global usage of the metal is estimated to have increased by around 5% during January to February 2016 in comparison with the year before. The Chinese apparent demand increased sharply by 15%. The usage by world countries excluding China has dropped by 2.5%. The African demand declined by 8%. The apparent demand by Americas too declined considerably by 4%. Also, copper usage remained essentially flat in Europe and Oceania regions.

April Inventory and Price

The combined metal stocks held at LME, COMEX and SHFE as of end-April this year increased sharply by 23% from 2015 closing levels. The copper inventory at major metal exchanges totaled 525,681 tonnes at the end of April this year. When matched with Dec ’15 levels, the stocks at SHFE went higher, whereas those at LME and COMEX declined.

The average LME cash price for copper dropped from US$4,947.55 per tonne in March to US$4,851.12 per tonne in April this year.

Chinese copper output

As per the latest statistics released by the Chinese National Bureau of Statistics, the country’s copper output totaled 694,000 tonnes, rising sharply by nearly 15% year-on-year. The cumulative copper output during initial four months of the year was up by 11% to 2.715 million tonnes.