ICSG: Copper surplus coming in 2017

The following is an edited summary of a release by the International Copper Study Group (ICSG) after its meeting in Lisbon, Portugal in late October, where government delegates and industry advisors from most of the world’s major copper producing and consuming nations met to discuss the global copper market. In a meeting of the Statistical Committee, the ICSG developed its view of the world balance of refined copper production and use. For more information, please visit www.icsg.org.

ICSG projections for 2016 indicate that the global copper market should stay balanced, while in 2017 ICSG forecasts a surplus of 160,000 tonnes. This compares with a 55,000-tonne deficit and a 20,000-tonne surplus for 2016 and 2017, forecast at a March 2016 meeting.

Production and usage have been revised for better-than-expected actual growth this year. In developing its projections, ICSG recognizes that global market balances can vary from those projected owing to factors that could alter projections for both production and usage. In this context it can be noted that actual market balance outcomes have deviated from ICSG market balance forecasts due to unforeseen developments.

World mine production after adjusting for historical disruption factors should increase 4% in 2016 (to reach 19.9 million tonnes from new and expanded capacity brought on-stream in the last two years. While concentrate production could grow 6%, growth will be partly offset by a 3% decline in solvent-extraction and electrowinning (SX-EW) production, due to price-related production cuts in the Democratic Republic of the Congo and closures in Chile.

In 2017, world mine production should stay practically the same — with output from operating mines improving, but an anticipated 6% decline in SX-EW production offsetting growth, along with a lack of major mine projects.

Peru and Mexico are the main contributors to growth this year, with Chile expected to contribute more in 2017.

World refined copper production in 2016 should increase 2% year-on-year to 23.4 million tonnes.

Although electrolytic production is expected to increase 3%, growth will be partly offset by a projected 3% decline in SX-EW output.

For 2017, world refined production could keep a similar 2% growth, with the anticipated decline in SX-EW output still limiting overall growth. In both years China will be the biggest contributor to world growth, while total output in Chile would be constrained by declining SX-EW production.

ICSG expects world apparent refined use in 2016 will increase 1.5%. This is because apparent demand in China could increase 1.5%, although underlying “real” demand growth in China is an estimated 4%. Use in the rest of the world in 2016 is also expected to increase 1.5%. For 2017, the growth in world apparent refined usage is expected at 1%.