ICSG data shows copper market surplus in 2009

The following is a condensed and edited version of the International Copper Study Group’s preliminary data for 2009 from its March 2010 copper bulletin. The data is available online for purchase at www.icsg.org.

The International Copper Study Group’s latest release looks at preliminary data for 2009 world copper supply and demand in its March 2010 bulletin.

According to the release, the refined copper market balance for 2009 showed a market surplus of 365,000 tonnes, an increase of 140,000 tonnes from the surplus in 2008. A deficit of about 140,000 tonnes in the first half of the year, which resulted from high apparent usage from China and reduced world refined production, was offset by a surplus of around 500,000 tonnes in the second half of the year. The latter surplus resulted from of a 7% increase in world refined production and a 5.5% decline in demand from China.

In 2009, world copper usage stayed at 18 million tonnes, unchanged from 2008’s usage. China, which accounted for 40% of world usage in 2009, grew by 38% to 2 million tonnes and this offset a 16% decline in the rest of the world.

Usage in the European Union countries, Japan, and the United States, which accounted for about 29% of total world usage, decreased by 20%, 26% and 19%, respectively. On a regional basis, usage climbed in Africa by 1.7% and Asia (including China) by 17%, but decreased in the Americas, Europe and Oceania by 18%, 21% and 13%, respectively.

World mine production in 2009 increased by roughly 205,000 tonnes or 1.3% to 15.7 million tonnes; concentrate production sprouted a dismal 0.3% to 12.47 million tonnes, while solvent extraction-electrowinning (SX-EW) rose by 172,000 tonnes or 5.6% to 3.26 million tonnes.

Operational failures, labour unrest, lower ore grades, and intentional reductions in response to lower prices and anticipated over supply resulted in production growth that did not keep up with the growth of capacity.

As a result, based on ICSG production capacity data, the average global mine capacity utilization rate fell to 80.6% in 2009, the lowest level since 1988. Copper mine production was up in Africa by 9%, Asia by 11.5% and Europe by 0.7% and down in the Americas by 2.2% and Oceania by 1.7%.

Total world refined production jumped by 0.65% to 120,000 tonnes in 2009 compared with refined production in 2008: primary production climbed 0.4% and secondary production (from scrap) was up by 1.8%.

Refined production increases of 7% in Chile and 8.6% in China were mostly offset by cuts of 3.5% in Europe, 11% in North America and 0.7% in Asia (excluding China). Refined production capacity utilization fell to 78% compared with an average rate of 81% in 2008.

The average LME cash price for February 2010 was US$6,848.18 per tonne, up from the January 2009 average of US$7,386.25 per tonne. The 2010 high and low copper prices through the end of February were US$7,685 and US$6,242 per tonne, respectively, and the average was US$7,117.21 per tonne. At the end of February 2010, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totaled 794,354 tonnes, an increase of 106,663 tonnes from stocks held at the end of December 2009. Compared to the December levels, stocks were up at the LME and SHFE warehouses and down at COMEX.