The Hindu Business Line : Copper may be in surplus during H2 of 2007

Mumbai, Dec. 23 Following a significant slowdown in demand growth rates, the copper market could be edging into surplus through the second half of 2007.

This is the inescapable inference from latest data released by International Copper Study Group (ICSG). Demand for copper across the developed world is contracting, particularly in the US, Europe and Japan.

Copper usage in the world ex-China is down 6 per cent year-on-year in September. It is only because of China that world copper usage is still positive, but slowing to 3 per cent year-on-year.

The impact of this demand slowdown has been to edge the refined copper market into small surplus. ICSG data show a surplus of 53,000 tonnes in August (a seasonally weak month for demand) and then 26,000 tonnes in September.

Large deficit

World copper usage during January-September 2007 was an estimated 13.797 million tonnes (mt), up from 12.882 mt during same period last year. China alone accounted for this increase, usage having risen to 3.660 mt (2.553 mt).

For the first nine months, ICSG showed a large deficit of 2.66 lakh tonnes, although some of the apparent deficit in the early part of the year reflected the strong upturn in demand in China, which was at least partly driven by non-reported inventory building.

Allowing for this and assuming that fourth quarter data shows a modest surplus (as appears inevitable from current weak market signals), there is reason to believe copper market will show a modest surplus for the full year 2007, asserted an analyst.