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ICSG copper market forecast 2012-2013

London, 30 April 2012

According to preliminary ICSG data for 2012, world demand for refined copper is expected to exceed production of refined copper by about 240,000 metric tonnes (t), as supply will continue to lag behind the growth in demand. This would be the third consecutive year of production deficit. In 2013, however, increased output from new and existing mines could reverse the 3-year trend, and, based on initial projections, refined copper production could exceed demand by about 350,000 t.

Though significant on a cumulative basis, the annual deficits and current projected surplus for 2013 are relatively small compared with the market size. Thus, in developing its projections, the ICSG recognized that numerous factors including a world economic slow down, European Union sovereign debt issues, political disturbances in the Middle East and North Africa, and production shortfalls owing to labor unrest, utility and capital shortages, and technical factors create significant uncertainty, and that the global market balances could vary from those projected.

Aparent copper usage for China, the leading global consumer of copper accounting for about 40% of world demand, is based only on reported data (production + net trade +/- SHFE stock changes+/-industry stock changes, if reported) and does not take into account changes in unreported stocks [State Reserve Bureau (SRB), producer, consumer and merchant/trader], which may be significant during periods of stocking or de-stocking and which could significantly alter projected supply-demand balances.

After being hampered by operational constraints, lower head grades, adverse weather conditions and labor unrest in 2011, world copper mine production in 2012 (adjusted for unanticipated disruptions) is projected to increase by around 5.1% (810,000 t) to 16.9 million metric tonnes (Mt). Capacity utilization 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.

While some expansions and startups will occur in 2013 that will help boost mine production by 7.6% to 18.1 Mt, deferrals and delays in projects have postponed most of anticipated new supply to 2014 or later.

Downlaod Copper Market Forecast 2012-2013

In 2012, world refined copper production is expected to remain constrained by a shortage of concentrates and is projected to increase by only about 2.5% to reach 20.15 Mt. In 2013, with improved concentrate availability, refined copper production is expected to grow by 6.9%, Electrowon copper production and secondary refined production are expected to grow by about 160,000 t and 190,000 t, respectively, in 2012, and by about 130,000 t and 180,000 t, respectively, in 2013.

ICSG expects world apparent refined usage in 2012 to grow by only 2.5% from that in 2011 to 20.4 Mt. 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 U.S. usage is expected to grow by 3.9%. For 2013, improved macro-economic conditions are expected to generate copper demand growth of 3.9%: Chinese usage is foreseen to increase by 4.9% and the rest of the world by 3.3%.

Ends --

The International Copper Study Group  met in Lisbon, Portugal on 26-27 April 2012. Government delegates and industry advisors from most of the world’s leading copper producing and using countries met to discuss key issues affecting the global copper market. In its meeting of the Statistical Committee, the ICSG view of the world balance of refined copper production and use was developed.


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