The International Copper Study Group (ICSG) has released preliminary data for December 2013 world copper supply and demand in its March 2014 Copper Bulletin. In 2013 world apparent use is estimated to have increased by 4% (805,000 t) to 21.2 Mt. World mine production is estimated to have increased by 8% (1.3 Mt) to 18 Mt. World refined production is estimated to have increased by around 4.5% (879,000 t) to 21 Mt. According to preliminary ICSG data, the refined copper market balance for December 2013 showed an apparent production surplus of 34,000 t as, despite strong Chinese apparent demand, refined usage was weak in major consuming regions during the yearend holiday period.

When making seasonal adjustments for world refined production and usage, December showed a production deficit of 57,000 t. The refined copper balance for the full-year 2013, including revisions to data previously presented (including a major revision to India’s refined usage series), indicates a production deficit of 193,000 t (a seasonally adjusted deficit of 337,000 t). This compares with a production deficit of 266,000 t (a seasonally adjusted deficit of 419,000 t) in the same period of 2012.

In 2013 world apparent usage is estimated to have increased by 4% (805,000 t) to 21.2 Mt compared with that in 2012. Chinese apparent demand increased by 7% from that in 2012: a decline in net imports of refined copper of 216,000 t (that occurred mainly in the first half of the year) was more than offset by an increase in refined production of around 675,000 t. Actual demand in China in 2013 may have exceeded apparent demand as the lower net imports level was accompanied by a decline in unreported inventories held in bonded warehouses in China. Withdrawn stocks may have been all or partially directed to domestic industrial use. Excluding China, year-on-year world usage increased by 1.4% (160,000 t), with growth in the USA (3.6%), Brazil (3%) and Russia (3%) offsetting declines in South Korea (5%) and the European Union (1%). Japanese and Indian usage remained unchanged. On a regional basis, usage is estimated to have increased by around 5.5% in Asia, 1.5% in Asia Ex-China, 3% in Africa, 3% in the Americas, and 0.5% in Europe and to have declined by around 14% in Oceania.

World mine production is estimated to have increased by 8% (1.3 Mt) to 18 Mt in 2013 compared with that in 2012, mainly owing to a recovery in production levels from constrained output in 2012 (three major world copper mines recovered from production constraints during 2012, accounting for 28% of the world increase in 2013) and, to a lesser extent, to the ramp-up of new mine capacity. Concentrate production increased by 9% (1.2 Mt) and SX-EW by 3.5% (130,000 t). Mine production increased by 6% in Chile (342,000 t), the world’s leading producer, and accounted for 32% of world mine production in 2013. Production also increased in Peru (6%), the USA (5%), Indonesia (28%), Mongolia (61%), the DRC (50%) and Zambia (7%). These seven countries combined contributed an additional 1 Mt of copper mine supply. On a regional basis, production rose by around 26% in Africa, 6% in the Americas, 10% in Asia, 2.5% in Europe, and 5% in Oceania. The average world mine capacity utilization rate for 2013 increased to around 85% from around 82% in 2012.

In developing its global market balance, ICSG uses an apparent demand calculation for China, the leading global consumer of copper, accounting for about 40% of world demand. Apparent copper demand for China is based only on reported data (production + net trade +/- SHFE stock changes) 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 supply-demand balances.

Historically, ICSG has only accounted for reported stock data in its statistics. In recent years anecdotal evidence has suggested that there have been substantial fluctuations in Chinese bonded stock levels, and apparent consumption based on trade, production, and changes in exchange inventories may not adequately reflect industrial use in a given time period. ICSG acknowledges the distortion that these unreported stock movements can cause in the calculation of the world refined copper balance and,  therefore, beginning with the January 2014 data release, has included an additional line item – Refined World Balance Adjusted for Chinese Bonded Stock Changes. As there is no officially reported data for Chinese bonded stocks, ICSG uses an average of stock estimates provided by three consultants — based on their ongoing research and analysis of the Chinese copper market — to estimate the unreported inventory changes.

World refined production is estimated to have increased by around 4.5% (879,000 t) to 21 Mt in 2013 compared with refined production in 2012: primary production was up by around 4% (638,000 t), and secondary production (from scrap) increased by 6.5% (241,000 t). The main contributor to growth was China, where production increased by 11.5% (675,000 t). Production also increased in Brazil (38%), the DRC (40%), and Zambia (10%). However, due to smelter maintenance and other temporary shutdowns, refined production declined by 5% in Chile, the world’s second largest refined copper producer, 11% in India, 3% in Japan, and 4% in Scandinavia. On a regional basis, refined production is estimated to have increased in Africa (24%), Asia (6.5%), Oceania (2.5%), and the Americas (1%) and to have declined in Europe (2%). The average world refinery capacity utilisation rate for 2013 declined slightly to 78.5% from 79.2% in 2012.

Based on the average of stock estimates referred to above, Chinese bonded stocks declined by around 260,000 t in 2013 compared to an increase of around 570,000t in 2012. In 2013, the refined copper balance adjusted for Chinese bonded stock changes indicates a deficit of around 450,000 t compared to a surplus of around 300,000 t in 2012.

The average LME cash price for February 2014 was $7,152.15/t, down from the January 2014 average of $7,294.89/t. The 2014 high and low copper prices through the end of February were $7,439.50/t (on 2 Jan) and $7,091/t (on 31 Jan), respectively, and the annual average was $7,226.92/t. As of the end of February, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 484,339 t, a decline of 22,165 t from stocks held at the end of December 2013.