Global Refined Copper Surplus Widens as Production Outpaces Consumption

The global production of refined copper increased by 6.2% year-on-year to 13.86 million tonnes in the first half of 2024, outpacing the 3.4% rise in consumption, which reached 11.16 million tonnes, according to a report by the International Copper Study Group (ICSG) released on Tuesday. This disparity led to a significant widening of the copper surplus to 488,000 tonnes in January-June, up from 115,000 tonnes in the same period last year.

In June, the copper market saw its deficit widen to 95,000 tonnes, compared to 63,000 tonnes in May, as global refined production fell by 2.6% month-on-month to 2.31 million tonnes, while consumption slipped by over 4% to 2.21 million tonnes.

China, the world's largest producer of refined copper, recorded a 7% year-on-year increase in production during January-June, driven by the commissioning and expansion of primary and secondary smelters and refineries. In the Democratic Republic of Congo, production surged by 12% due to the continued ramp-up of new or expanded electrowinning plants. Together, China and Congo account for approximately 53% of global refined copper production.

However, production in Chile remained flat, as a decline in primary electrolytic production was balanced by an increase in electrowinning output. Japan's refined copper production rose by 3.7% year-on-year, while global secondary production from scrap increased by 5.8% to 2.32 million tonnes in the first half of the year.

Demand for copper outside China grew by an estimated 3% year-on-year, with weak demand in the European Union, Japan, and the US offset by growth in other Asian countries. China's demand for copper increased by 3.5%, according to the ICSG.

Despite the increase in production, the average monthly global copper mine capacity grew only slightly to 2.38 million tonnes from 2.29 million tonnes a year ago, with the mine utilization rate slipping to 78% from 78.5%.

Copper stocks at major exchanges soared by 162%, or 346,134 tonnes, to 559,984 tonnes in June compared to the end of December. On the London Metal Exchange (LME), the average cash price for copper fell by 2.6% to $9,393.57 per tonne in July from $9,641.60 per tonne in June. As of 1700 IST, the most-active three-month copper contract on the LME was trading at $9,181.50 per tonne, down 0.8% from the previous close.