The world’s surplus of refined copper quadrupled in the first half of 2024 compared to a year ago following a growth in production and recovery in mine output, preliminary data from the International Copper Study Group (ICSG) shows.
According to the group’s August 2024 bulletin, global mine production grew 3.1% during the January-June period, benefiting a recovery from constrained output, mainly in Chile, Indonesia and the U.S., as well as additional production from mine projects in the Democratic Republic of the Congo.
Output in Chile, the world’s No. 1 copper miner, rose by 2.4% for the 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 U.S. output grew by 10%, as production bounced back from lower levels in last year’s first half.
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 and
expansion 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 U.S., which grew 3.7% and 15%, respectively. The jump in U.S. was primarily due to the reduction in May 2023 output caused by a maintenance shutdown at Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) 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.
Excluding China, global usage grew by about 3%, as weak demand in the EU, Japan and the U.S. 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, indicates a surplus of about 488,000 tonnes. That’s significantly higher than the 115,000-tonne surplus estimated for the first half of 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 the same period of 2023.
Previous forecast
These preliminary data indicate that a lot has to change in the second half of the year to match the ICSG’s previous projections for 2024.
In April, the group 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 mined 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 Minerals’ (TSX: FM) 380,000-tonne-per-year capacity Cobre Panama mine.
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