Good news. As suggested by Glencore's copper chief earlier this year, confirmed by ICSG - copper deficit in 2016
The International Copper Study Group (ICSG) has revised its forecast for copper and also from earlier estimate of surplus supply in 2016, it has now estimated a deficit for the bellwether base metal, despite slowdown in Chinese demand. In April this year the industry body had projected surplus in 2015 and slightly lower surplus in 2016 also. The forecast came after discussions with government delegates and industry advisors from most of the world's leading copper producing and using countries.
ICSG said in a press note: "These projections for 2015 indicate that the market should essentially remain balanced, while in 2016 a small deficit of around 130,000 metric tonnes (t) is likely as demand growth outpaces production growth. This compares with a surplus of 360,000 metric tonnes and 230,000 metric tonnes for 2015 and 2016, respectively, forecast at our April 2015 meeting. The revisions reflect substantial changes in market conditions since April 2015. Although a downward revision has been made to global usage in view of lower than anticipated growth in China, larger downward adjustments have been made to production as a result of recent announcements of production cuts."
Late last month a few major players including Glencore had announced production cuts in copper mines as prices were trading at a six-and-half year low levels following depreciation in Chinese currencies and slowdown in economy. China accounts for 45 per cent of copper demand.
In last six months copper prices on London Metal Exchange were trading above $6,400 per tonne and are now currently trading at $5,200 per tonne, a significant fall. While at lower prices producers are tempted to cut capacities, consumption is likely to go up.
"World mine production after adjusting for historical disruption factors is expected to increase by around 1.2% in 2015 (a similar growth to 2014) to reach 18.8 million tonnes. Despite announced production cuts, higher growth of around 4% is expected in 2016 as additional supply is expected to arise from expansions at existing operations, ramp-up in production from mines that have recently come on stream and output from a few new mine projects. Growth in 2015 and 2016 is expected to be in the form of copper in concentrate," said ICSG.
