The Hindu Business Line : Copper demand-supply finely balanced

REFINED copper market was in deficit by 1,14,000 tonnes in the first eight months of the year, the International Copper Study Group (ICSG) said in its latest supply and demand estimate.

Mine production during January-August was 9.676 million tonnes (8 mt same period in 2004), while refined production was 10.809 mt (10.397 mt).

Data suggested that the copper market slipped into surplus in August; but on a seasonally adjusted basis, the market was estimated to be basically balanced. August is a seasonally weak month for demand and exchange stocks did increase that time.

Despite the increased availability of copper concentrates this year, it is estimated that refinery capacity utilization was just a little over 80 per cent in the first eight months - actually lower than in the same period last year. Utilisation rates were estimated to be below 80 per cent in July and August. This highlights the extent to which smelters/refinery outages have restricted refined copper production growth in the current year, experts pointed out.

Data also suggest a continuing weakness in copper demand. Refined usage in the first eights was an estimated 10.923 mt versus 11.162 mt during same period in 2004. World demand (ex-China) is estimated to have been down 5.4 per cent year-on-year in the first eight months, and down 4.7 per cent year-on-year in August alone.

Even allowing for a 10.7 per cent year-on-year increase in Chinese demand, ICSG estimates that global demand was down by 2.1 per cent year-on-year in the first eight months.

A substantial amount of this weakness has been driven by the lack of physical copper availability which has constrained demand. Prices have had to move up to a level at which demand is cut off either by de-stocking, or by actual demand losses.

The positive impact from this is that there is a large amount of latent demand that will reappear when more supply becomes available. This could become a supportive factor for copper in 2006, experts asserted.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page