By Paul Ploumis
SEATTLE (Scrap Monster): The International Copper Study Group (ICSG) Statistical Committee, which met in Lisbon, Portugal on 24-25th October, has released its latest Copper Market Forecast for 2016 and 2017. The meeting was attended by government delegates and industry advisors from leading copper producing and consuming nations.
According to ICSG, the world refined copper market balance is expected to remain essentially balanced during the current year. This is when compared with a deficit of 55,000 metric tonnes forecast during the March 2016 meeting. Also, the market is likely to record surplus of nearly 160,000 metric tonnes in 2017, as compared with the earlier forecast of 20,000 metric tonnes surplus. The group has made upward revisions for both production and usage of copper, on account of better-than-expected growth during the initial nine-month period of the current year.
The above forecasts are based on an apparent demand calculation for China. ICSG takes into account only reported stock which includes production data, net trade and SHFE inventory changes. The projected global supply-demand balances can vary because the forecast doesn’t take into account unreported stocks, which can be significant during periods of stocking and de-stocking. Various other factors related to production and usage of the metal could lead to alterations in forecast. For instance, ICSG’s copper market forecast has deviated significantly from the actual market balance on several occasions, due to unforeseen developments.
The ICSG Statistical Committee predicts 4% jump in world mine production during 2016, after adjusting for historical disruption factors. The mine production is expected to touch 19.9 million tonnes, aided by new and expanded capacities brought online over the past two years. The copper concentrate production is expected to grow by 6% during the year. However, this high growth will be partially offset by 3% decline in SX-EW production, mainly due to production cuts in Democratic Republic of Congo and mine closures in Chile. The Committee expects Peru and Mexico to contribute mainly to the forecast rise in copper production.
In 2017, the world copper mine production is expected to remain flat. The output from the currently operating mines will improve during the year. However, the production growth will be offset by 6% decline in SX-EW production. The key contributor to mine production growth in 2017 will be Chile, says ICSG.
The world refined copper output is expected to increase by nearly 2% in 2016 to total 23.4 million tonnes. Electrolytic production is likely to report 3% growth, which will be partially offset by 3% decline in SX-EW output. In 2017, world mine production may grow by another 2%, with SX-EW output projected to decline further. China is expected to be the biggest contributor to world copper mine production during 2016 and 2017. Chile is likely to report huge decline in SX-EW production during these two years.
The anticipated 1.5% growth in apparent Chinese demand may result in 1.5% overall growth in world apparent refined copper usage during 2016. The usage in the rest of the world is expected to increase by 1.5%. The usage is expected to increase by 1% in 2017.