login_img.jpg
Login ID:
Password:
Partner Login
Contact Us : 7066511911

China's Demand Surge and Global Supply Boom Trigger 2024 Surplus Shockwave

9 Oct 2023 10:02 am
 Comments 0 Comments  |  Comments Post Comment  |  Font Size A A A 

Mumbai, 9 Oct (Commoditiescontrol): The copper market is poised for a notable transition, shifting from a balanced supply-demand scenario in 2023 to a substantial supply surplus in 2024, as reported by the International Copper Study Group (ICSG) following their recent meeting in Lisbon.

Projections indicate that in 2024, copper production will exceed consumption by a significant 467,000 metric tons. This forecast marks a considerable upward revision from the previous estimate of a 297,000-metric ton surplus made during the ICSG's April meeting.

While the ICSG still anticipates a market deficit for the current year, they have revised their April forecast of a 114,000-metric ton deficit down to a marginal 27,000 metric tons. In the context of a global market with an annual output of 26 million metric tons, this is a relatively minor figure.

It's important to note that the ICSG's statisticians emphasize that these forecasts are momentary snapshots, subject to deviations due to unforeseen developments in the market.

Two significant trends stand out from the latest data: the weakening demand in Western markets and the robust production in China.

When the ICSG last convened in April, they anticipated demand outside of China to grow by 1.6% in the current year, following a sluggish 0.4% growth rate in 2022. However, the current prognosis is less optimistic, with copper usage outside of China expected to contract by 1.0% from the previous year, primarily due to declines in refined usage in European Union countries and North America.

Conversely, Chinese demand, or rather "apparent" usage, is forecasted to surge by 4.3% this year. It's worth noting that the ICSG relies on reported data, such as domestic production, net trade, and changes in visible stocks, to estimate Chinese market dynamics. Nevertheless, their assessment aligns with a broader consensus that Chinese demand has exceeded expectations this year. Copper's application in green transition sectors, such as power and electric vehicles, has seemingly shielded it from the broader manufacturing downturn experienced in the last six months.

With recent purchasing manager indices signaling a resurgence in factory activity, China is expected to remain a key driver of global copper demand. In contrast, high interest rates are expected to hamper manufacturing activity in Europe and the United States.

While the ICSG acknowledges that the global economic outlook is challenging, they maintain an optimistic outlook for the following year. Their 2024 global usage growth forecast has been only slightly adjusted, from 2.8% to 2.7%, citing expected improvements in manufacturing activity, the ongoing energy transition, and the development of new semi-manufactured product capacity worldwide.

Looking ahead, next year's projected growth in copper usage is expected to be outpaced by a 4.6% increase in global refined copper production. This production surge has already commenced, with the ICSG revising its 2023 refined output growth forecast upward from 2.6% (April estimate) to 3.8%.

China is the driving force behind this increase, as it continues to expand its smelting and refining capacity. In contrast, operating constraints and smelter maintenance outages in Chile, Indonesia, Sweden, and the United States are expected to limit copper production outside of China this year.

However, China's smelters are aggressively ramping up production, with national output increasing by 11.5% year-on-year in the first eight months of 2023, according to Shanghai Metal Market data. Further impetus is expected next year through new smelters and capacity expansions in Indonesia, India, and the United States.

Another contributing factor to increased copper supply is the expected growth in production from recyclable materials in both the current year and the next, thanks to investments in new secondary smelters and refineries.

The size of the anticipated supply surplus in 2024 has surprised the market. Most analysts anticipate surpluses for both 2023 and 2024. Notably, the ICSG's recent monthly bulletin indicates a substantial production surplus of 215,000 metric tons in the global copper market during the first seven months of 2023.

The challenge lies in the timing of these developments. If Western demand remains weak throughout the year, it's unclear how the production overhang from the first part of the year will dissipate to generate the ICSG's expected small deficit for the entire year.

In conclusion, while there is a consensus on copper's promising future in the energy transition, current market concerns revolve around the immediate balance between supply and demand. This uncertainty is exerting downward pressure on copper prices, which have recently dipped below the $8,000-per-metric-ton level for the first time since May, currently trading at $7,940.

(By Commoditiescontrol Bureau: 09820130172)


       
  Rate this story 1 out of 52 out of 53 out of 54 out of 55 out of 5 Rated
0.0

   Post comment
Comment :

Note : This forum is moderated. We reserve the right to not publish and/or edit the comment on the site, if the comment is offensive, contains inappropriate data or violates our editorial policy.
Name :  
Email :  
   

Post Comment  

Latest Special Reports
China's Dominance in Copper Supply Chain Crucial to Glo...
Copper Hits Multi-Year Highs on Chinese Production Cuts...
London Metal Exchange Settlement - 06-Dec-2023
Emerging Markets to Fuel Copper Demand Surge by 2030, A...
Global Copper Smelting at 2-Year Low Due to Maintenanc...
more
Top 5 News
Weekly: Sugar Prices Decline Amid Weaker Brazilian Real...
Weekly: ICE Cotton Futures Log Second Weekly Gain on St...
EDIBLE OILS PORT STOCK AS ON : 29 Nov 2024
U.S. Cotton Sales Surge for 2024/2025 Marketing Year, L...
U.S. Soybean Export Sales Reach Marketing-Year High Ami...
Top 5 Market Commentary
Cotton Prices Stable in Karnataka Amid Spinning Mills L...
OIL SPOT PRICES : 05-Dec-2024
Branded Processed Pulses At Mumbai Apmc Market - 05 Dec...
Cotton Prices Stable in Maharashtra as Spinning Mills L...
Cotton Prices Decline in Andhra Pradesh and Telangana A...
Copyright © CC Commodity Info Services LLP. All rights reserved.