Preliminary data from an International Copper Study Group report indicates that world refined production remained essentially unchanged in the first four month of 2019 with primary production (electrolytic and electrowinning) declining by 0.2% and secondary production (from scrap) increasing by 0.5%.
Drivers of the fall in world refined production include fall in Chilean output by (33%), Indians disruptions that saw a (33%) decrease in production and effects of power deficits on Zambias refined output coupled with an autopsy of a new tax code.
CHILE: Production slid by 33% in Chilean electrolytic refined output due to temporary smelter shutdowns whilst undergoing upgrades to comply with new environmental regulations.
INDIA: The Asian producer suffered a 33% slump in production exacerbated by the shutdown of Vedanta’s Tuticorin smelter in April 2018.
ZAMBIA: Africa’s second largest producer, Zambias refined output slid by 23% due to power supply interruptions, smelter outages and the introduction of a new tax code (5% custom duty on copper concentrate imports).
Reduced output in major producing countries including Germany, Japan, Peru and the United States due to smelter maintenance shutdowns. However these reductions were offset by growth in Chinese output and by increases in other countries recovering from production constraints in 2018 such as Australia, Brazil, Iran and Poland.
On a regional basis, refined output is estimated to have increased in Asia (3%) and in Oceania (13%), declined in Africa (-5%) and the Americas (-9%) and remained flat in Europe.
Preliminary data indicates that world apparent refined usage increased by about 1% in the first four months of 2019 driven by appetite in China and India.
Chinese apparent usage grew by around 4%.
Among other major copper users, demand increased in India but declined in the EU and the United States whilst remaining essentially flat in Japan. World (ex-China) usage declined by around 2%.
GLOBAL DEFICIT WIDENED TO 150,000MT
Preliminary world refined copper balance in the first four month of 2019 indicates a deficit of about 150,000 metric tons. In the first four months of 2019, the world refined copper balance adjusted for changes in Chinese bonded stocks indicated a market deficit of around 15,000 metric tons.
COPPER PRICES AND WAREHOUSE STOCK
Based on the average of stock estimates provided by independent consultants, China’s bonded stocks are thought to have increased by 140,000 metric tons in the first four months of 2019 compared to the year-end 2018 level. Bonded stocks decreased by around 10,000 metric tons in the same period of 2018.
As of the end of June, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 417,660 metric tons, an increase of 67,164 metric tons (+19%) from stocks held at the end of December 2018. Stocks were up at the LME (+82%) and SHFE (+23%) and down at COMEX (-69%).
The average LME cash price for June 2019 was $5,868.43 a metric ton, down 2.7% from the May average of $6,028.31 a metric ton.