MKT&IND REPORTS

GFMS: Copper surplus shrinks 80% in 2013 to 49,000 tonnes

Global copper surplus seriously fell in 2013 to 49,000 tonnes from 238,000 tonnes in 2012 mainly due to a shifting of a material to off-exchange locations within China over late 2013, GFMS said in its copper survey adding that it was a trend, which continued in early 2014.

Refined copper production increased 3.5% to 20.744 million tonnes in 2013, while copper consumption rose 4.5% to 20.695 million tonnes, representing the fastest growth rate since 2010.

The growth in Chinese copper demand was a key contributory factor behind the rise, as offtake rose there by 95 to over 700,000 tonnes. This reflected the ongoing strength in demand from the country’s power utilities sector, as well as a recovery in air conditioner output following the lethargic performance in 2012.

Meanwhile, the mature economies continued to underperform the global average last year, with the first quarter a particular period of weakness. Full-year copper demand in the U.S. and Canada both increased, with the former buoyed by the ongoing improvement in the housing and automotive sectors. The construction sector was also a key contributor to the 1% rise in Japanese offtake, although, in contrast, EU-28 demand remained under pressure, falling by just over 1%.

Outside China and the mature economies, demand grew by 3%. Increases were seen in the remaining BRICs (Brazil, India and Russia), in addition to a number of the ASEAN nations. Elsewhere, Mexico, Turkey and the UAE also recorded gains.

Global mine production increased by 8% to 17.8 million tonnes in 2013, boosted by higher productivity at major mines, commissioning of new projects and the continued ramp-ups at others. Over the last decade, global copper mine production has delivered an average annual growth rate of just over 3%. Over this period, the largest contributors were China, Chile, Congo, Zambia and Brazil.

Mine production in top producer Chile gathered momentum in 2013 to give a new country record of 5.8 million tonnes and a rise of 6% from 2012.

Top 10 copper producing countries:

Production in Peru, the region’s second producer, increased nu 5% in 2013 more or less matching the previous year’s rise, which was underpinned by expansions at Antamina and Cuajone. Last year, Glencore Xstrata’s Antapaccay mine made the most significant contribution to the country’s growth, after its start-up in the latter part of 2012came too late in that year to offset losses from the closure of the company’s Tintaya operation.

Freeport McMoRan is undertaking a major expansion at its Cerro Verde mine in Peru, but the benefits of this will not be felt until 2016. Production at the country’s second largest copper mine dipped by just over 6% last year, with output particularly weak in the first quarter. This may have been attributable to mining of lower ore grades, but level improved in subsequent quarters.

Looking ahead, GFMS expects Peruvian mine production to grow more strongly, underpinned by the recent start-up of the Toromocho mine, which is ramping up smoothly to its 250,000 tonnes per year capacity.

Production in Brazil, one of the smaller producers in Latin America, rose by around 24% last year, reflecting the continued ramp-up of Vale’s Salobo mine. The Salobo mine is expected to have its first full year operating at 100,000 tonnes per year in 2014 after reaching nominal capacity in December.

Top 10 copper mine producers:

In the U.S., mine production recorded a third consecutive year of growth, rising by over 8% in 2013. Rio Tinto’s Bingham Canyon operation had the greatest influence, but was closely followed by the Pinto Valley mine, which continued to ramp-up after restarting concentrate production in the final quarter of 2012. Pinto Valley was acquired by Capstone Mining from BHP Billiton in October.

In Mexico, mine output dipped by about 2% last year, but nevertheless remained well above the levels seen prior to 2011, when three-year strike action hobbled Buenavista operation through to mid-2010. The main reason behind last year’s decline was flooding at Buenavista caused by unusually heavy rains, but the company said that operations had turned to normal by the end of the third quarter. Southern Copper’s new SX-EW III plant at Buenavista is due to start up during the second quarter this year and produce about 50,000 tonnes of copper.

Mine production in Africa inevitably tends to be dominated by events in Congo and Zambia. A 54% surge in Congo output last year has seen it overtake Zambia as the region’s largest producer and helped Africa to close the gap on Europe. Furthermore, Africa is likely to cement its position above Europe in the next few years, as growth in the latter is likely to be minimal, although it is worth noting current concerns that a lack of power infrastructure in the east of Congo may rein back that country’s longer term growth potential.

Major copper projects:

End

16.04.2014 15:07