BME sees 220,000t deficit on copper market in 2006
Source: Hoovers
metalsplace.com
The global refined copper market was in a 220,000-metric-ton deficit in 2006 but will reverse this to be in a surplus of 164,000 tons in 2007, according to a report released Thursday by independent consultancy Bloomsbury Minerals Economics, or BME.
By 2008, this surplus should slip to be 10,000 tons, but because there will be a rise in metal in transit, there will in fact be a small commercial deficit, BME said.
The surplus in copper emerged in October last year mainly due to a surge in secondary refined production and a double-digit decline in U.S. consumption as the housing market there slowed, BME added.
This was then compounded by continuing very weak refined consumption in China during the "closing phase of that country's de-stocking of copper and copper alloy semi-manufactures," BME said.
"The result was an above seasonally normal build-up of Chilean port stocks and to a lesser extent a build-up of exchange stocks," BME added.
In December, Chinese refined consumption began to dramatically recover as de-stocking of semis ended, although copper ran into the quiet holiday period.
Currently, exchange stock growth has slowed almost to a halt, and Chinese premiums have been "high for long enough to have begun to draw stocks from Chile."
"Thus we would guess that the most volatile elements in global cathode stocks turned collectively neutral or into tiny deficit in February and that March will see a clear stock drawdown," BME added.
Refined copper production in 2007 is seen at 18.16 million tons, with refined consumption of 18 million tons.
"Of the 160,000-ton difference, around 80,000 tons will go into increases in material in transit, around 20,000 tons into the normal growth of producers' essential working stocks," BME said.
"Provided prices stay around today's levels, we would expect a partial rebuilding of consumer stocks to absorb much of the remaining production-consumption difference rather painlessly," the report added. |
