The global refined copper market saw a surplus of around 165,000 mt in the first quarter of 2017, according to preliminary data released Tuesday by the International Copper Study Group.
"This is mainly due to [a] decline in Chinese apparent demand," analysts with the Lisbon-based research firm said in a report. China currently represents 47% of the world copper refined usage.
Factoring in changes to private, unreported copper stocks in China, the first-quarter surplus rose to about 310,000 mt, it said.
World mine production is estimated to have declined by around 3.5% year on year in the first quarter to 4.63 million mt, with concentrate production declining by around 3% and solvent extraction-electrowinning (SX-EW) declining by 6%, ICSG analysts said.
The decline was mainly related to a 14% year-on-year decline in Chilean production, which was affected by a strike at the Escondida mine, as well as lower output from state-owned Codelco, the ICSG said.
Q1 mine output was also negatively affected by declines in Canadian and Mongolian concentrate production of 18% and 23%, respectively, as a result of lower ore grades.
A 10% decline in Indonesian concentrate production related to a temporary cut in concentrate exports from January-April also affected global output.
The overall decline was partially offset by 17% and 9% year-on-year increases in Mexican and Peruvian concentrate output, respectively, with both countries benefitting from new and expanded capacity that was not fully available a year ago, ICSG analysts said.
On a regional basis, production rose by 5% in Europe including Russia and 9% in Oceania, while declining by 7% in the Americas and 5% in Africa, and remaining essentially unchanged in Asia.
Global refined production remained essentially unchanged in Q1 at 5.76 million mt, with primary production (electrolytic and electrowinning) declining 2% and secondary production from scrap increasing 13%.
The increased availability of scrap allowed world secondary refined production to increase, notably in China, the ICSG said. Chinese refined production grew 7%, while Mexican refined production grew 12%.
But overall growth was partially offset by an 18% decline in Chilean output, the second largest refined copper producer, where both primary electrolytic refined production and electrowinning production declined, the ICSG analysts said.
Production also declined in the world's third and fourth leading refined copper producers: Japan in electrolytic production from concentrate and in the US, mainly in electrowinning production.
On a regional basis, refined output is estimated to have increased in Asia by 5%, in Africa by 2% and Europe including Russia by 2%, while declining in the Americas by 12% and in Oceania by 5%.
World apparent refined usage is estimated to have declined by around 3% year on year in Q1 to 5.6 million mt, according to the ICSG.
"Preliminary data indicates that although world ex-China usage might have grown by around 1%, growth was more than offset by a 6.5% decline in Chinese apparent demand," ICSG analysts said.
"Chinese apparent demand (excluding changes in unreported stocks) declined by 6.5% because although refined copper production increased by 7%, net imports of refined copper declined by 35%," they said.
Refined usage increased in India, Japan and Taiwan, but declined in the US and Germany.
On a regional basis, usage is estimated to have declined in Africa by 1%, in Asia by 3%, in the Americas by 1% and in Europe by 5%. However, excluding China, Asian usage increased by 7% in Q1, according to the ICSG.
