The International CopperStudy Group (ICSG) has revised its forecasts for copper. From earlier estimate of surplus supply in 2016, it has now estimated a deficit for the bellwether base metal, despite slowdown in Chinese demand. In April this year, the industry body had projected surplus in 2015 and slightly lower surplus in 2016, too. The forecasts came after discussions with government delegates and industry advisors from leading copper producing and using countries.
“Projections for 2015 indicate the market should remain balanced, while in 2016 a small deficit of around 130,000 tonnes is likely as demand growth outpaces production growth. This compares with a surplus of 360,000 tonnes and 230,000 tonnes for 2015 and 2016, respectively, forecast at our April 2015 meeting. The revisions reflect substantial changes in market conditions since April 2015. Although a downward revision has been made to global usage in view of lower than anticipated growth in China, larger downward adjustments have been made to production as a result of recent announcements of production cuts,” ICSGsaid in a release.
Last month, a few major players including Glencore had announced production cuts in copper mines as prices were trading at six-year low levels following depreciation in Chinese currencies. Chinaaccounts for 45 per cent of copper demand.
In the past six months, copper prices of London Metal Exchange was above $6,400 a tonne, which is now around $5,200 — a significant fall.
“World mine production after adjusting for historical disruption factors is expected to increase 1.2 per cent in 2015 (a similar growth to 2014) to reach 18.8 million tonnes. Despite announced production cuts, higher growth of four per cent is expected in 2016 as additional supply is expected to arise from expansions at existing operations, ramp-up in production from mines that have recently come on stream and output from a few new mine projects,” said ICSG.
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