August 17 (LTIT) –ink-tank the International Copper Study Group (ICSG) forecasts that global copper mine production will grow by around 3% in 2018 and then remain unchanged in 2019.

At a meeting in Lisbon, Portugal, in April, government delegates and industry advisers from most of the world’s leading copper producing and using countries met to discuss key issues affecting the global copper market. The ICSG view of the world balance of refined copper production and use was developed in the meeting of the Statistical Committee.

Despite world mine production decreasing by 1.5% in 2017 as a result of significant supply disruptions and a lack of significant output from new projects or expansions, part of the 2018 growth expected is owing to the recovery from constrained output last year, mainly in Chile and Indonesia.

Moreover, 2018 production is expected to benefit from the re-starting of temporarily closed capacity in the Democratic Republic of Congo (DRC) and Zambia and, to a lesser extent, additional output from new projects or expansions coming on stream.

Further, growth in concentrate and solvent extraction and electrowinning (SX-EW) will be similar, as concentrate will benefit from the recovery in production at a number of mines, including the Escondida copper mine, in Chile, and the Grasberg copper mine, in Indonesia, SX-EW will increase as a result of the restart of the Kamoto underground copper and cobalt mine, in the DRC, more than offsetting SX-EW declines elsewhere, mainly in Chile.

However, 2019 world mine production has been adjusted for disruptions and is expected to remain essentially unchanged as growth from new and expanded capacity will be partially offset by expected declines.

While world refined production is expected to increase by around 4% in 2018, a lower growth of about 1% is expected for 2019, the ICSG noted in a press release in April.

Decline in 2017

In 2017, a series of planned and unplanned shutdowns at major smelters and lower output at SX-EW plants significantly reduced primary refined production in major producing countries such as Chile, Japan and the US, leading to world growth of only 0.7%. This is despite the increased availability of scrap which aided world secondary refined production to grow by 5%.

The expected recovery from 2017 constrained electrolytic refined production, combined with the restart of temporarily closed or reduced SX-EW capacity, and adequate availability of concentrates, should support a 5.5% growth in primary refined production in 2018, ICSG claims. This will more than offset an anticipated 2% decline in secondary refined production from scrap, according to the ICSG.

Meanwhile, China will remain the biggest contributor to world refined production growth in 2018 and 2019, followed by the DRC. In 2019, world refined production growth is expected to be lower as growth in electrolytic refined production is likely to be constrained by tightness in the availability of concentrates, while world apparent refined usage is expected to increase by 3% in 2018 and 2.2% in 2019.

Copper Demand

Sustained growth in copper demand is expected to continue as copper is essential to economic activity. Infrastructure development in countries, such as China and India, as well as the global trend towards cleaner energy will continue to support growth in copper demand.

In addition, the strength of the world economy has improved with prospects for sustained growth this year and in 2019. Improved prospects for global and Chinese economies, compared with October’s forecast led to a small upward revision of 2018 and 2019 world refined usage growth, the ICSG maintained.

Moreover, China will remain the biggest contributor to world growth in copper usage, as apparent demand in China is expected to increase by around 3.5% this year and by 2.5% in 2019.

ICSG claims that the outlook for the European Union, Japan and the US remains positive. After a small growth of 0.5% in 2017, world usage, ex-China, is expected to grow by around 2.5% in 2018 and 1.9% in 2019.

However, current ICSG world refined copper balance projections are for a small surplus of about 40 000 t in 2018, compared with a deficit of about 100 000 t forecast at the October 2017 meeting. The switch to surplus is as a result of stronger than previously anticipated growth in refined copper production.

For 2019, ICSG expects the market to present a deficit of about 330 000 t, in line with their October 2017 forecast, with usage growth stronger than that of production.