Credit: ICSG
Mine output in Chile, the world’s No.1 copper mine producer, increased by 2.4% for the six-month period, but remains 4.5% below the average first half production level of the last five years, ICSG’s data shows.
Indonesian output increased by 33%, recovering from operational constraints at the Grasberg and Batu Hijau mines caused by significant rainfall and landslides in the first quarter of 2023, while US output is assessed to have grown by 10%, principally due to a recovery from reduced production in H1 2023.
Output in the DRC grew by about 8.5%, owing to the expansion of the massive Kamoa mine together with new and/or expanded capacity at other smaller mines.
More copper
Accordingly, refined copper, the product of processing mined ores, also grew in output by 6.2% in the first half of the year. This, says ICSG, was mainly as a result of strong performances in China and the DRC due to expanded capacity. Both countries are said to account for about 53% of the world’s refined copper production, according to ICSG data.
Chinese refined production is estimated to have risen by about 7% due to the start-up andexpansion of a number of primary and secondary (from scrap) smelters and refineries, while production from DRC grew by 12% due to the continued ramp-up of new and expanded electrowinning plants (SX-EW).
Refined copper production also surged in other major markets like Japan and the US, which grew 3.7% and 15% respectively. The jump in US was primarily due to the reduction in May 2023 output caused by a maintenance shutdown at the Kennecott smelter.
Uneven demand
On the demand side, ICSG’s preliminary data suggests that the world’s apparent refined copper usage grew by about 3.3% in the first half of 2024, with uneven demand growth across regions.
Chinese apparent demand (excluding changes in bonded/unreported stocks) grew by around 3.5%. Its net refined copper imports increased by 9%, despite a strong increase of 74% in refined copper exports.
Ex-China, the global usage grew by about 3%, as weak demand in the EU, Japan and the US was offset by growth in a number of Asian countries.
Widening surplus
Given the supply recovery and modest demand growth in the first six months of 2024, the world’s refined copper balance, based on Chinese apparent usage, indicated a preliminary surplus of about 488,000 tonnes, which is significantly higher than the 115,000 tonnes calculated for H1 2023.
Adjusted for estimated changes in Chinese bonded stocks, for which data was provided by two consultants with expertise in the Chinese market, the market surplus would be even larger at about 573,000 tonnes, ICSG’s report shows. Again, this is much higher than the 150,000 tonnes for H1 2023.
Previous forecast
These preliminary data from the ICSG indicates that a lot has to change in the second half of the year to match the Group’s previous projections for 2024.
In April, the ICSG forecasted a surplus of about 162,000 tonnes for the calendar year, calculated from a projected growth of 2.8% in refined copper production and 2% in global copper usage.
The world’s mine production was also revised down to 0.5% from 3.7% previously due to slow ramp-up of a number of projects, delays in project commissioning, revised company production guidance and the closure of First Quantum’s 380,000-tonne-per-year capacity Cobre Panama mine.
This article was published by: Jackson Chen
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