Copper Plunge Continues Despite Chinese Stimulus

Since China unleashed its latest (and greatest since 2008) RRR cut, stock prices have surged amid the liquidity hype. However, perhaps more indicative of the underlying reality of just what good an RRR cut will do to a debt-saturated economy full of weak credits thanks to tumbling asset prices, copper prices have now plunged over 6% in the last 2 days...

But still BTFATH in Chinese stocks...

Charts: Bloomberg

Copper contango returns for 1st time since July as mood darkens

 (Reuters) - The contango in the copper market returned for the first time in nine months on Tuesday, as traders braced for another slug of metal to enter warehouses amid increasing gloom about weak demand from China, the world's top consumer.

The cash price on the London Metal Exchange was at a discount of $2 per tonne to three-month on Tuesday, the first cash-to-three-month contango since July last year, according to Thomson Reuters data.

In January, the backwardation with cash prices at a premium to the forward prices was as high as $84 per tonne.

That premium has lured metal into warehouses, easing the perception of tightness even as one investor has kept a tight grip on the lion's share of available metal even as prices sank.

LME-registered stocks have risen for nine straight months to just under 340,000 tonnes, more than doubling in size since the backwardation first emerged last summer.

Now traders are braced for another slug of metal to enter the system in the next month as spot physical demand deteriorates

It's not clear on Tuesday if that dominant position was still in tact.

The most up-to-date LME-dominant position report shows one holder of cash warrant positions equivalent to between 50 percent and 80 percent of open tonnage. That data relates to Friday's positioning.

With the exception of the cash to May spread, the whole forward curve was in contango on Tuesday for the first time in a year, according to traders.

Swings in spreads further forward were particularly violent as investors who were lending out metal closed out positions as the backwardation disappeared.

"Some borrowed positions were washed out today," said Tai Wong, director of metals trading at BMO Capital Markets in New York.

Lending out metal to buy back at a future date is a profitable bet when the market is in backwardation.

The spread between three-month and the average price for 2018 settled in a contango of $71 on Tuesday, compared with a backwardation of $2 on Monday, he said.

Still, the spreads aren't yet wide enough for merchants to start building stocks, like those seen in aluminum over the past five years or more recently in oil during the market's worst crisis in years.

The cost of financing inventory is about 50 cents a day, which means the cash to three contango would need to flare out to $15 per tonne before it would cover costs.

Copper’s top 10 – Countries and Companies

Thomson Reuters GFMS today released its Annual Copper survey – Copper 2015 – in which it predicts a continuing copper surplus and a 12% fall in average copper price for the year to $5975/tonne compared with 2014.  The findings and more data from the 88-page report will be covered in more detail in a following article, but here we will just take a brief look at the top 10 producing nations – which between them accounted for 80% of global copper supply last year, and the top 10 producing companies.

Top 10 copper producing nations 2014

Rank 2014	Country	Production (000t)
1.	Chile	5,745
2.	China	1,614
3.	USA	1,368
4.	Peru	1,339
5.	Australia	961
6.	DR Congo	905
7.	Russia	753
8.	Zambia	725
9.	Canada	688
10.	Mexico	522
	Global Total	18,270

Source:  Thomson Reuters, GFMS

As can be seen from the table, Chile remains far and away the world’s largest producer.  In comparison with 2013, the U.S. claimed the No. 3 spot with an 8.5% increase in output, thus moving ahead of Peru where estimated production also rose, but only by 1.4%.  The only other changes in the top 10 were that Russia moved up a place at the expense of Zambia and Mexico moved into 10th spot, replacing Indonesia where output fell due to export restrictions and some labour problems largely at the country’s largest mine – Freeport’s Grasberg.

Top 10 Copper producing companies 2014

Rank 2014	Company	Production  (000t)
1.	Codelco	1,841
2.	Freeport McMoran	1,470
3.	Glencore	1,296
4.	BHP Billiton	1,203
5.	Southern Copper	665
6.	Rio Tinto	636
7.	KGHM Polska Miedsz	506
8.	Anglo American	504
9.	Antofagasta	455
10.	First Quantum	380

Attributable Production.    Source:  Thomson Reuters, GFMS

There was no change in the ranking order of the top 10 copper producing companies with production losses at some operations largely offset with new project production elsewhere.  Overall global new mined production rose around a modest 1.5% with some significant new big operations coming on stream, or ramping up – Codelco’s Hales, Turquoise Hill (51% owned by Rio Tinto)’s Oyu Tolgoi and Chinalco’s Toro Mocho mine in Peru being among the largest.  All of these are still ramping up to full production so should see further significant rises in output again this year.

But the production rises were mostly offset by declining grades at a number of aging copper mining operations, and some closures.  With the copper price likely to remain disappointing this year due to an anticipated continuing production surplus, the incentive for new project development remains muted, apart from those operations already in the pipeline while greenfields exploration activity will also tend to be depressed.  There are a couple of major new projects due on stream this year though – Southern Copper’s Buena Vista mine in Mexico and First Quantum’s Sentinel project in Zambia being the biggest.

A copy of the full 88-page Copper 2015 report, and other GFMS publications, may be requested by clicking on this link.

Sourced: Lawrence Williams of mineweb.com

10 Top Copper Producing Countries

While demand for copper dropped slightly in 2014 compared to 2013, global production of the metal increased by 400 million tonnes to hit 18,700 million tonnes, according to a report from the US Geological Survey (USGS).

Here’s a look at the top copper-producing countries for 2014, as reported by the USGS. Chile took the top spot again last year, although other producers, including China and Peru, recorded increases in output.

1. Chile

Mine production: 5,800 million tonnes

Chile took the lead by a long shot, producing 5,800 million tonnes of copper last year; that’s a slight increase over 2013′s 5,780 million tonnes. According to a Reuters article from June 2014, Chile’s copper production has been increasing for the past decade. However, technical and regulatory issues could cause roadblocks for the country’s plans to keep ramping up production going forward.

2. China

Mine production: 1,620 million tonnes

China also upped its copper production in 2014, putting out 1,620 million tonnes of the metal, a climb from 2013′s 1,600 million tonnes. In particular, Reuters notes that the country’s production increased during the second half of the year, in large part due to the restart of a 100,000-tonne-a-year smelter in the country’s northeastern Liaoning province in November after five years of being idle.

3. Peru

Mine production: 1,400 million tonnes

Peru saw gains in copper production from 2013 to 2014, producing 1,400 million tonnes last year compared to 1,380 million tonnes in 2013. The country is aiming to double its production by 2016 to replace China as the second-largest producer of the metal in the world. Five major projects are on schedule to begin that year, with one in particular, Cerro Verde, to begin initial production in the second half of 2015.

4. United States

Mine production: 1,370 million tonnes

The US produced 1,370 million tonnes of copper in 2014, a 10-percent increase from 2013′s 1,250 million tonnes. Growth has been mainly credited to production increases in Arizona, New Mexico and Utah. The USGS notes that those three states, as well as Nevada and Montana, accounted for 99 percent of the county’s production.

5. The Democratic Republic of the Congo

Mine production: 1,100 million tonnes

The Democratic Republic of the Congo saw its copper production increase from 970,000 tonnes in 2013 to 1,100 million tonnes in 2014. Similar to other countries on this list, copper output from the country has been steadily on the rise the past few years as new projects have come into play. The mining industry in the Congo also plays a significant role in driving economic growth, and was responsible for an 8.5-percent push in 2013 and an 8.7-percent increase last year.

6. Australia

Mine production: 1,000 million tonnes

Copper production in Australia broke into the millions in 2014, reaching 1,000 million tonnes, a step forward from 2013′s total of 990,000 tonnes. According to domestic government resource Geoscience Australia, most of the country’s copper comes from underground mines. The traditional method of recovery involves a flotation process that separates the ore mineral grains from waste material.

7. Russia

Mine production: 850,000 tonnes

Russia’s copper production saw mild gains in 2014, with output hitting 850,000 tonnes compared to 833,000 in 2013. However, though production increased over the course of the year, some Russian companies hinted at slowing production in early 2015 when the rouble​ dropped and demand for the metal fell. Specifically, the industry doesn’t want to repeat the situation that occurred during the 2008 financial crisis, in which high production led to large inventories.

8. Zambia

Mine production: 730,000 tonnes

Zambia is the only country on this list that recorded a drop in production from 2013 to 2014. In 2013, the country produced 760,000 tonnes of copper, but production dropped off to 730,000 tonnes last year. The country’s government stepped up efforts to establish a stronger relationship with the mining industry in 2014, but disputes occurred over the country’s move to increase royalties from 6 percent to 20 percent for open-pit mining operations. That led companies such as Glencore (LSE:GLEN) and First Quantum Minerals (TSX:FM) to put expansion objects on hold. Recently, the country reversed its decision on the royalty increase, and sources now say the royalty will only rise to 20 percent.

9. Canada

Mine production: 680,000 tonnes

Canada saw mild production gains in 2014, reaching output of 680,000 tonnes compared to 632,000 in 2013. This growth is expected to continue going forward. Last December, Seabridge Gold (TSX:SEA,NYSE:SA) received approval to move forward with its massive KSM project from Canada’s minister of environment. The KSM project is the world’s largest undeveloped gold -copper project by reserves, and the deposit is estimated to contain 9.9 billion pounds of copper.

10. Mexico

Mine production: 520,000 tonnes

Mexican copper production reached 520,000 tonnes for 2014, an increase from 480,000 in 2013. Still, the Mexican copper industry saw its fair share of issues last year, with a September toxic spill at Grupo Mexico’s Buenavista copper mine contaminating water supply for about 800,000 people.

_________________________________________________________________________________________

(June 16 2014)

2013 Top 10 Copper-producing Countries

In terms of copper production, it’s Chile that accounts for the lion’s share of world output. However, there are still several other countries with significant operations, including neighboring Peru, as well as China, the United States and Russia.

The US Geological Survey has released its most recent set of data on copper-producing countries, and Copper Investing News took a look to see which made the top 10. Below is a list of those countries, along with a little background information on each nation.

1. Chile

Mine production: 5,700,000 tons

Up first is Chile, which produced a whopping 5,700,000 tons of copper in 2013. That’s up from 5,430,000 tons in 2012. As The Economist reports, the red metal provides 20 percent of the country’s gross domestic product and accounts for 60 percent of its exports. The publication also notes that thanks to copper, Chile’s economy is expanding by 6 percent annually; it also credits the industry with the country’s low rates of inflation and unemployment.

2. China

Mine production: 1,650,000 tons

China is the closest second, producing less than half of what was put out by Chile. It recorded 1,650,000 tons of copper production in 2013, an increase from the 1,630,000 tons produced in 2012. China, the world’s largest single consumer of copper, hit record rates of production for the red metal in November 2013, according to Reuters. New production sites continued to come online through 2013 in China, increasing production at a steady rate. Additionally, importing raw copper concentrate to China is costly, causing domestic smelting operations to begin to rise.

3. Peru

Mine production: 1,300,000 tons

Peru produced 1,300,000 tons of copper in 2013, not moving much from its 2012 production level. Peru This Week reported that the country’s mine production could rise by as much as 10 percent in 2014, and Peru’s energy and mines minister, Jorge Merino, has projected a 17-percent increase in copper production alone as the result of several new projects set to open in the year ahead. The country also expects more foreign investment into its mining sector as a result of these projects.

4. United States

Mine production: 1,220,000 tons

The US saw 1,220,000 tons of copper production for 2013, up slightly from its figure of 1,170,000 tons in 2012. MINING.com notes that this increase came despite a catastrophic landslide at Utah’s Bingham Canyon mine in early 2013; the incident caused it to cease production for an extended period of time. The total copper production in the US is worth more than $1 billion.

5. Australia

Mine production: 990,000 tons

In 2013, 990,000 tons of copper were produced in Australia, marking an increase from 958,000 tons in 2012. Geoscience Australia, a government agency, notes that most of the copper resources in the country are located in Queensland and South Australia, though there are resources in each state and in the Northern Territory as well. Most of the country’s production is centered in the Mount Isa region in Queensland and the Olympic Dam mine in South Australia.

6. Russia

Mine production: 930,000 tons

Russia ranks sixth, having produced 930,000 tons of copper in 2013. That level is up from the 883,000 tons it produced in 2012. NASDAQ reported that Russia has about 10 percent of the world’s copper reserves, and that these deposits are located primarily in Siberia and the Urals. The vast majority of Russian copper projects are in remote regions, away from population and infrastructure, which makes mining operations relatively difficult. Additionally, the country has laws restricting the amount of foreign investment in its mineral reserves.

7. The Democratic Republic of the Congo

Mine production: 900,000 tons

The Democratic Republic of the Congo produced 900,000 tons of copper in 2013, a significant rise from the 600,000 tons produced in the country in 2012. The International Monetary Fund believes this level of production may spur the country’s economic growth to the tune of 8.7 percent in 2014, according to Bloomberg. In 2012, the mining industry comprised more than 15 percent of the Congo’s gross domestic product, the news outlet notes.

8. Zambia

Mine production: 830,000 tons

In Zambia, 830,000 tons of copper were produced in 2013, marking an increase from 2012′s 690,000 tons. 2013 saw several new copper projects begin in Zambia, boosting production by 21 percent in the first 11 months of the year, according to The Wall Street Journal.

"We are at a level where most copper projects that have been in the pipeline a few years back are coming on stream,” Fredrick Bantubonse, an independent metals analyst based in Zambia, told the Journal.

9. Canada

Mine production: 630,000 tons

Canada just made it into the top 10 with 630,000 tons of copper production in 2013, up from 579,000 tons in 2012. Natural Resources Canada notes that copper volume and value both increased despite decreases in the metal’s price throughout the year. The organization attributes this rise to new mine openings by Glencore Xstrata (LSE:GLEN) and Hudbay Minerals (TSX:HBM).

10. Mexico

Mine production: 480,000 tons

Coming in at number 10 is Mexico, which produced 480,000 tons of copper in 2013, clocking an increase from the 440,000 tons it produced in 2012. Like other countries on this list, Mexico forecasts increases in copper production over the next two years, as per Bloomberg. However, the publication notes that copper prices will need to remain steady in order for that to occur.

World’s largest copper producer Chile slashes 2015 output forecast

Chile, the world’s largest copper producer and exporter, will mine this year less of the red metal than previously anticipated, with estimations dropping from 6.0 million to 5.94 million tonnes, the state copper commission Cochilco said.

While the recent floods weighted on the forecast changes, they were mostly triggered by a lower estimate from projects run by Anglo American and at the Zaldivar mine, operated by Barrick Gold

In its annual global trends report released Tuesday, the authority said that while the recent floods weighted on the forecast changes, they were mostly triggered by a lower estimate from projects run by Anglo American and at the Zaldivar mine, operated by Barrick Gold, El Mercurio reports (in Spanish).

"There is an effect, albeit of low significance, from operations temporarily halted (mostly Codelco's Salvador and JX Nippon's Caserones) due to the heavy rains," the commission noted.

In terms of prices, Cochilco said it sees the red metal averaging $2.85 a pound this year, losing a bit in 2016 to settle at $2.80.

Global copper production has been affected by several unforeseen events in the last few weeks. Before Chile’s torrential rains and floods workers in Indonesia blocked roads over a pay dispute, forcing the world’s second largest copper mine to halt production for five days.

London-listed Antofagasta Plc (LON:ANTO) had to slash its copper-output forecast for Los Pelambres copper mine, its biggest operation in Chile, by around 5,000 tonnes last month. The announcement was followed by a court decision to force the company destroy a giant dam it constructed for the same mine.

Meanwhile, BHP Billiton recently revised down its 2015 forecasts for output from Escondida, the world’s largest copper mine, due to decreasing ore quality.

Will Copper Prices Rally in Q2 on Favorable Policies and Arrival of Peak Season

Copper prices extended gains in March helped by stimulus measures rolled out by Chinese government. Prices on Shanghai Futures Exchange registered a 1.98% growth and three-month copper on London Metal Exchange climbed 1.7%.

Will copper consumption pick up significantly in the second quarter – a peak demand season? Are copper prices set for further gains in April?

A majority of futures analysts interviewed by SMM are optimistic about copper prices in this month.

“Output of Chinese copper smelters remains limited, and the low SHFE/LME copper price ratio will leave fewer opportunities for copper importation, so we expect no large oversupply pressure in copper market this month,” analyst from Ever bright Futures said, “besides, the favourable macro conditions will help restore market confidence.”

Analyst from Galaxy Futures agreed with the opinion and told SMM that more pro-growth measures from China and a potential delay of the Fed’s interest rate may lend support to copper prices. In addition, operations at world’s large copper mines have frequently been disrupted lately, leading market to expect real copper supply to fall short of forecast.

“That plus the improving consumption in April, means copper prices will grow further this month, and we expect LME copper to hit $6,600 per tonne and SHFE copper to climb to 46,000 Yuan,” the analyst said.

An analyst from Western Futures added that China’s accelerating investment in infrastructure projects will contribute to stronger copper demand as well, in turn boosting copper prices.

Several analysts, however, are more cautious.

An analyst from Baocheng Futures expressed concerns over China’s growth and a slower recovery in copper consumption.

“Demand for finance-driven copper is still weak,” the analyst explained. “Furthermore, although China set high goals for power investment this year, whether the plan will be materialized remains unknown, and this will add to uncertainty over real copper consumption in power sector.”

Another analyst worried that the continuous growth in copper inventories may block the increase in copper prices.

Morgan Stanley Copper Price Outlook

The copper price has started to bounce back from its drastic fall at the start of the year, climbing more than 6 percent over the past month. However, Morgan Stanley (NYSE:MS) has cut its 2015 price forecast for the metal by roughly 16 percent, to $5,945 per tonne, on the back of lackluster demand from China.

The firm remains convinced that base metals will outperform bulk commodities such as coal, but in a report it expresses concern that seasonal demand from China has failed to pick up as expected. In the report, analysts Tom Price and Joel Crane state that far from expanding trade in response to “a growing list of government approved property and infrastructure projects,” the metals processing industry in China “remains dormant” and is “actually sidelining capacity.”

"With only months left before the mid-year peak in sales of commodity-intensive goods, time is running out for China to support commodity prices in 2015,” the note reads. Certainly, Morgan Stanley isn’t alone in making that observation — the Financial Times8 pointed to an absence of increased demand earlier this month, and also noted that imports fell to their lowest since 2011 for February.

Still, Morgan Stanley also notes that the red metal is slowly recovering after recording the biggest fall of all the base metals during the last quarter of 2014. It chalks up copper’s fall to a reaction to collapsing crude oil10 prices, and also to “aggressive China-based hedge fund selling.”

"Once the oil price discovered a floor in late-Jan, copper’s largely unchanged tight mining fundamentals supported a price rally,” the firm states. Furthermore, it notes that while global exchange inventories have risen about 11 percent over the past three months, there are indications that “copper’s short-term fundamentals have actually improved a little.”

Supply/demand predictions

That said, the firm stresses in the note that the market will have to wait and see what happens in terms of Chinese demand when it comes to predicting an outcome for the copper price. So far, the meter could move either way.

Bloomberg notes that China’s Purchasing Managers’ Index fell to an 11-month low of 49.2 for March, indicating a contraction in manufacturing activity, while Morgan Stanley states that key power grid investment data came in at a two-year low for the first two months of the year. That said, Morgan Stanley points out that China’s state grid chairman recently announced that investment may by increased by 21 percent year-over-year, upping expectations for increased spending.

Taking a look at the supply side of things, Morgan Stanley believes that it will “expect ongoing supply disappointments, simply because it is a feature of the industry.” For instance, Indonesian exports remain at risk politically — especially in the wake of Freeport-McMoRan’s (NYSE:FCX) production halt at Grasberg — and Rio Tinto (NYSE:RIO) has cut Kennecott’s supply outlook. Still, the firm is also watching other projects that could drive mine supply growth, such as MMG’s (HKEX:1208) Las Bambas and Chinalco’s Toromocho, both in Peru, and First Quantum Minerals’ (TSX:FM) Sentinel mine development in Zambia.

All in all, copper investors have plenty to keep an eye on going forward when it comes to tracking drivers for the red metal’s price. At close of day on Tuesday, spot copper was up just barely by 0.14 percent, trading at $2.79 per pound.

China's Copper Imports May Climb above 300,000 T in Mar. after Decline in Feb.

China’s refined copper imports posted a 24.23% fall on the year in February this year, to 211,609 tonnes, Customs data indicate.

The noticeable decline in import volumes was mainly due to the Chinese New Year.

However, SMM expects the import numbers to bounce back to more than 300,000 tonnes this month

Blockade lifted, normal operations resume at Freeport Grasberg mine

According to latest newspaper reports, the five-day unofficial blockade of access road at the Grasberg mine in Indonesia has been lifted. The company spokeswoman stated that normal operations have resumed at the mine effective this Friday.

The he unofficial strike by workers at the Grasberg, Papua, Indonesia mine run by Freeport had lasted for five days, halting copper production works at the world’s second largest copper mine in the world. The strike action was initiated by a group of employees, who held a demonstration on Monday blocking the access road at MP 72. This was the only access to the Grasberg mine, underground mining areas and processing facilities.

According to union spokesman, the strike was not backed by them. They further stated that the cause of the strike was unknown. Meantime, the company spokeswoman had clarified that the company was willing to attend to the concerns of the striking employees and had expressed the hope that copper production at the facility was not affected.

Reports indicate that as many as hundred workers were involved in the strike action, demanding bonuses as an incentive for not taking part in a work stoppage last year. The workers agreed to stop the blockade upon request by union officials. The company is yet to reach an agreement with the workers on their demand.

Freeport-McMoRan Copper & Gold Inc., (FMCG) is one of the world's largest producers of copper and gold. Its headquarters are located in the Freeport-McMoRan Center in downtown Phoenix, Arizona. Freeport is the largest publicly traded copper and molybdenum producer in the world. It mines and mills ores containing copper, gold, molybdenum and silver.

The Grasberg Mine is the second largest copper mine in the world and is located in the province of Papua in Indonesia near Puncak Jaya, the highest mountain in Papua.

Copper up, FCX down as workers halt production at Grasberg

The copper price recovered from a one-month low on Wednesday to gain 3 percent on Thursday, as the metal markets reacted to a dovish Fed statement and news out of Indonesia that production has stopped at the Grasberg copper and gold mine.

Workers blocked an access road to Grasberg – the world's second largest copper mine by capacity – for the fourth day, Thursday, leading to speculation that the shutdown will have a material affect on prices, The Australian reported. A statement by the US Federal Reserve the same day signalling that the central bank is less likely to raise interest rates than expected, was also supportive of copper.

Three-month copper on the London Metal Exchanged leapt 3.2 percent to close at $US 5,850 a tonne, the biggest one-day percentage gain since February 3 and well above Wednesday's one-month low of $US5,621.50, the Australian said.

Bloomberg reported that the blockade was not organized by the union, but about 50 workers from seven tribes in Papua who are seeking promotion for not participating in a labor dispute last year. Output was suspended starting Monday but shipments from old stockpiles continue, according to a union spokesman quoted by Bloomberg.

Nevertheless, Freeport-McMoRan Copper & Gold’s (NYSE:FCX) investors saw the labor dispute as good reason to dump the stock. Trading on heavier-than-normal volumes, FCX slipped 5.32 percent to $17.26 a share on Thursday in New York, just under a dollar above the 52-week low of $16.43.

Work stoppages at Grasberg are fairly common. Last October open-pit operations were suspended as protesters demanded management review safety conditions following an accident involving a truck that killed four workers. The previous year workers set a tent on a mine access road following a landslide in Big Gossan that killed 28 employees.

Vale Reports Annual Production Records in Copper, Gold, and Highest In Nickel Output

Vale S.A. (Vale) achieved several production records, and also reduced capital expenditures by another $2.254 billion in 2014, the company said in its performance report. 

In 2014, its output of iron ore , copper and gold was 331.6 million tonnes, 379,700 tonnes and 321,000 oz, respectively, all annual production records. 

Over the year, the company also reported the highest annual production in nickel since 2008, producing 275,000 tonnes, according to its report.  

The company also registered record sales volumes of iron ore and pellets (313.6 million tonnes) and gold (351,000 oz), and the highest sales volume of nickel (272,000 tonnes) since 2008, it noted. 

In 2014, the company also completed eight capital projects, negotiated a key partnership for our coal operation in Mozambique and still paid $ 4.2 billion in dividends while preserving a healthy capital structure.

Chile copper production surged 13% in January

The copper output by Chile rose significantly during the month of January this year. This is when compared with the same month a year ago. According to latest statistics released by the National Statistics Institute (INE), the country’s copper production during the month totaled 524,296 mt. This is 13% higher when compared with the output of 463,321 mt in the same month last year. When compared with Dec ’14, the copper production levels during Jan ’14 held steady.

 

The country’s industrial production registered a growth of 5.8% during the month, on account of robust 10.1% yearly growth in mining. The mining sector growth was led by 13% rise in copper output during the month.

 

According to the government, the higher copper output is mainly on account of increased output from a major mine which had operated below capacities in 2014. In addition, a number of processing plants had undergone temporary maintenance shutdowns during January last year, which led to rise in output during January this year. The higher ore grade output at another key mine also contributed to rise in copper production during the month.

 

The output from large mines was up by 12.2% year-on-year. The medium-sized mines boosted their output by 55.5% during the month. On the other hand, production from small mines continued to struggle, falling by 7.4% over the year.

 

Rising electricity costs and extreme drought conditions are feared to impact copper production by Chile, which accounts for over one-third of the global copper output.

UBS wealth management raises 12-month copper forecast on mine supply challenges

(Reuters) - The wealth management arm of Swiss investment bank UBS has boosted its 12-month copper forecast to $6,700 a tonne from $5,500 on growing challenges to mine supply.

 

"Mine supply challenges from various directions are likely to reverse the copper price decline in recent months. We raise our 12-month forecast to $6,700/mt from $5,500/mt," it said in a note dated Feb. 27.

 

UBS Wealth management is an independent unit of the bank, which creates its own forecasts. UBS cut its copper price target for 2015 to $2.65 a pound ($5,842 a tonne) in mid February due to a deterioration in short-term fundamentals. 

ICSG releases Copper Bulletin-February 2015

The International Copper Study Group (ICSG) has released preliminary data for the month of November last year in its recently released February 2015 Copper Bulletin. According to preliminary ICSG data, the refined copper market balance for Nov ’14 showed an apparent production deficit of nearly 40,000 metric tonnes.

World refined production increased by nearly 8% during the first eleven months of 2014. Primary production was up 9%, whereas the secondary production increased by 3%. The global refined copper production during the month of November showed a surplus of 61,000 t. The balance for the initial eleven months of 2014 indicates a production deficit of 640,000 t. This is in comparison with a production deficit of 278,000 t during the corresponding eleven-month period in 2013.

The world copper mine production has increased by around 1.5% during the first eleven months of 2014. Concentrate production was up 1% during the period. The mine output from Chile remained almost unchanged. However, other major copper producing countries recorded increased production. The production increased by 1.5% in Peru, 8% in the US and 9% in the Democratic Republic of Congo. The other nations to report higher output were Mexico (+7%), Canada (+11%) and Mongolia (+35%).

On the other hand, ban on exports of copper concentrates constrained the output from Indonesia by 25% year-on-year. The temporary shutdown at Lumwana mine and reduced output levels from other mines resulted in 7% drop in Zambia’s production. The output from Australian mines during the eleven-month period was down 3%, whereas those from Papua New Guinea were down by 26% on account of mine landslide and heavy rains.

Meantime, global usage of the metal is estimated to have increased by over 10%, boosted by robust demand in China. The Chinese apparent demand increased by 17%. The usage by world countries excluding China has increased by 4%. The EU region, other Asian countries including Japan and Middle East/ North African region countries witnessed growth in apparent usage. The copper usage by the US has declined by 1.5%.