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Copper deficit expected in 2012: ICSG


World demand for refined copper is expected to exceed production of refined copper by about 240,000 metric tonnes this year, according to preliminary International Copper Study Group (ICSG) data.

This would mean 2012 will be the third consecutive year of production deficit, while in 2013 increased output could reverse the trend, the ICSG said.

“Based on initial projections, refined copper production could exceed demand by about 350,000 tonnes [in 2013],” the study group said.

“Though significant on a cumulative basis, the annual deficits and current projected surplus for 2013 are relatively small compared with the market size,” it added.

The ICSG has included in its projections factors such as a world economic slowdown, European sovereign debt issues, political unrest in the Middle East and North Africa, and production shortfalls owing to labour unrest.

“The possibility of utility and capital shortages, and technical factors creating significant uncertainty, and that the global market balances could vary from those projected,” it said.

Apparent copper usage in China, the largest consumer of copper globally, is based on reported data and does not look at changes in unreported stocks, the ICSG said.

Levels of unreported stocks may be significant during periods of stocking or de-stocking, and could have a major impact on projected supply-demand balances, it added.

Operational constraints, lower head grades, adverse weather conditions and labour unrest in 2011 hampered mine production in 2011, the study group said, and in 2012, it is projected to increase by about 5.1%, or 810,000 tonnes, to 16.9 million tonnes.

“Capacity utilisation rates are expected to improve from 79% in 2011 to an average of 81% in 2012. Growth in mine output will mainly be from restoration of production at existing operations rather than from new projects,” the ICSG said.

“While some expansions and start ups will occur in 2013 that will help boost mine production by 7.6% to 18.1 million tonnes, deferrals and delays in projects have postponed most of anticipated new supply to 2014 or later,” it added.

In 2012, refined copper production is expected to be affected by a shortage of concentrates, and is expected to increase by about 2.5%, to reach 20.15 million tonnes.

Future demand
In 2013, as concentrate availability improves, refined production is expected to grow by 6.9%, the ICSG said.

Electro-won copper production and secondary refined production are expected to grow by about 160,000 tonnes and 190,000 tonnes, respectively, in 2012, and by about 130,000 tonnes and 180,000 tonnes, respectively, the following year.

“ICSG expects world apparent refined usage in 2012 to grow by only 2.5% from that in 2011 to 20.4 million tonnes,” the study group said.

“Demand growth in China is anticipated to slow to 3.6%; a contraction in demand is expected for the EU; no growth is foreseen for usage in Japan; and US usage is expected to grow by 3.9%,” it added.

For 2013, better macroeconomic conditions are expected to generate copper demand growth of 3.9% on average. Chinese usage is projected to increase by 4.9%, and the rest of the world by 3.3%.

Claire Hack
Twitter: @clairehack_mb

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