Market indicators suggest a deficit of 75,000 mt in the global copper market in the first half of 2017, according to preliminary data the International Copper Study Group released Wednesday.
"This is mainly due to stagnant growth in world refined copper supply," the Lisbon-based research group said in a report. The market deficit in H1 2016 was estimated at 405,000 mt.
Adjusting for changes in Chinese bonded stocks, indicates a deficit of about 5,000 mt in H1 2017 compared with a deficit of 270,000 mt in H1 2016, the ICSG said.
ICSG analysts estimate that world mine production slid about 2% in H1 to 9.663 million mt, with concentrate production declining around 1.7% and solvent extraction-electrowinning (SX-EW) down about 3.5%.
The decline mainly came from a 9% (245,000 mt) drop in production in Chile, the world's biggest copper-producing country, which was affected by the strike at the Escondida mine and lower output from Codelco mines.
Additional factors included declines in Canadian and Mongolian concentrate production of 22% and 21%, respectively, mainly on lower ore grades, as well as a 9% decline in Indonesian concentrate production because of the the temporary ban on concentrate exports that started in January and ended in April.
Global mine output also was affected by a 10% drop in US production, mainly on lower ore grades, reduced mining rates and unfavorable weather at the beginning of the year, according to the ICSG.
But those output reductions were partially offset by a 9% and 7% rise in Mexican (concentrate and SX-EW) and Peruvian (concentrate) output, respectively, with both countries benefiting from new and expanded capacity that was not yet fully available in the same period last year.
Global production of refined copper is estimated to have remained essentially unchanged in the first half at 11.575 million mt, with primary production (electrolytic and electrowinning) declining 1.5% and secondary production (from scrap) jumping 12%.
Increased availability of scrap allowed world secondary refined production to increase, notably in China, the ICSG said.
The main contributor to growth in world refined production was China (7%) on increased scrap availability, followed by India (9%) and Mexico (10%), where expanded SX-EW capacity contributed to production growth.
But overall growth was partly offset by a 12% decline in Chile, the second-largest refined copper producer, where both primary electrolytic refined production and electrowinning production declined, according to the ICSG.
Production also declined in the third- and fourth-largest refined copper producers, namely, Japan (down 4%) and the US (down 10%).
ICSG analysts estimate that, on a regional basis, refined output increased in Asia (5%) and in Europe (including Russia) (3%), while declining in the Americas (10%) and in Oceania (6%) and remaining essentially unchanged in Africa.
Turning to demand, the ICSG estimates that apparent world refined usage declined about 2% in H1 2017 to 11.650 million mt from the year-ago period.
"Preliminary data indicates that world ex-China usage might have remained essentially unchanged. However, China apparent usage (currently representing almost 50% of the world refined usage) declined by 4%," ICSG analysts said.
"Chinese apparent usage (excluding changes in unreported stocks) declined by 4% because, although refined copper production increased by 7%, net imports of refined copper declined by 27%," they added.
Among other major copper using countries, usage increased in India, Japan and the US, but declined in Germany.
On a regional basis, usage is estimated to have declined in Africa by 3%, in Asia by 2% (when excluding China, Asia usage increased by 4%), and in Europe by 4%, while rising 1% in the Americas, according to ICSG data.
