China Slowdown to Spark 540,000T Copper Surplus in 2010: ICSG

NEW YORK, Oct. 12 -- Slower Chinese demand will drive a 540,000-tonne refined copper surplus in 2010, according to forecasts from the International Copper Study Group (ICSG).

    The association expects world refined copper usage to drop 1.6 percent to 17.7 million mt in 2009, with an average decline of 17 percent in the United States, European Union and Japan - three of copper's major markets. The declines will be partially offset by growth of 26 percent in China's apparent usage, but the market will still have a surplus of approximately 370,000 mt.

    "Most of China's apparent demand growth is attributed to an estimated 83-percent increase in net refined imports, a significant portion of which was believed to have added to unreported government stock and commercial inventories," the ICSG said.

    In 2010, China will partially draw down these unreported inventories and, coupled with lower industrial demand, will thus contribute to a 0.7-percent drop in global refined copper usage, the Lisbon, Portugal-based group said. "A decline in production will not be sufficient to overcome weakness in refined copper demand. For 2010, a larger surplus of around 540,000 mt is expected to develop as lower copper demand will encounter an increase in copper supply."

    Copper mining production is seen rising by 2.9 percent to 15.8 million mt YoY in 2009, with the figure forecast to grow 6.7 percent to about 16.9 million mt in 2010.

    World refined copper production is forecast to decrease 0.8 percent to 18.1 million mt in 2009, but is seen increasing 0.7 percent in 2010 to approximately 18.2 million mt. Growth will be restrained by concentrate shortages, the ICSG said.

    Looking further ahead, the group expects the world refined copper market to move closer into balance in 2011 due to a recovery in end-use markets and stabilized growth in refined copper production.

    (Source: Metal Bulletin)