Global copper consumption growth to slow down, says Societe Generale

By  Paul Ploumis 14 Sep 2015  Last updated at  04:08:53 GMT

SEATTLE (Scrap Monster): The latest monthly commodities report published by Societe Generale predicts lower growth rate in global copper consumption during 2015. The apparent slowdown in China and other emerging markets may cut the consumption growth to 2.5% this year. This is upon comparison with the global consumption growth of 4.5% recorded during the previous year.

The report by Societe Generale states that risk to production has increased considerably during this year. Unlike last year, when supply growth was boosted by brownfield expansions, copper growth this year is seen heavily dependent on the output from new mines. The economic slowdown in China and other emerging countries has made it difficult to foresee significant expansion in copper supply. As a result, the global copper consumption levels are likely to fall considerably during 2015, the report said.

The copper mine supply is expected to increase by 4.6% in 2015, followed by 2.6% increase in 2016. This may lead to significantly higher production of refined copper over the forthcoming years. The copper production so far this year is estimated to have fallen by nearly 650,000 mt. The supply disruptions may lead to yearly production loss of approximately 1.15 million mt in 2015.

On the other hand, Chinese aluminum smelter capacities are expected to expand during the year. Consolidation of smelters in the region, introduction of latest technology at smelters and relocation of smelters to resource-rich areas will result in significant aluminum capacity additions in the country. The Chinese aluminum capacity is likely to touch 40 million mt per annum by 2016, significantly higher by over 50% when compared with the annual capacity of 26 million mt during 2012.

Further, Societe Generale expects global aluminum market to remain surplus during 2015 and 2016. LME Aluminum prices are likely to trend downwards to around $1,500 to $1,600 per mt over the coming quarters.