International. The International Copper Study Group (ICSG) met to discuss key issues affecting the global copper market. At the meeting of the Statistical Committee, the ICSG's vision of the global balance of refined copper production and use was developed.
After three years of remaining essentially unchanged, global production of copper mines, adjusted for historical disruption factors, is expected to increase by approximately 2.1% in 2021 and 3.9% in 2022:
* Growth for 2021 has been revised downwards to 2.1% from the 3.5% forecast in the Group's estimate for April 2021.
* Despite the increase in new capacity, global mining production in 2021 is constrained by a slower-than-expected recovery in Peruvian production, the reduction of SX-EW production in Chile, the temporary closure of SX-EW mines in Myanmar, as well as operational problems in some mines.
* Production in 2022 is expected to increase by 3.9% as it continues to recover to pre-pandemic levels in several countries, especially in Peru. It will also be supported by the commissioning of the mines and extensions recently put into service, as well as the planned start-up of some major projects.
* After a four-year period in which only two major copper mines were put into service, the portfolio of copper mine projects is improving. Major projects starting in 2021/2022 include Kamoa Kakula in the Democratic Republic of Congo, Quellaveco in Peru, Spence-SGO and Quebrada Blanca QB2 in Chile and Udokan in Russia. A number of medium and small projects are also planned.
* Most projects are producing concentrates, which should result in sustained growth in global concentrate production. SX-EW production is expected to recover in 2022 from this year's constraints and growth should be supported by expansions and new projects in the D.R. Congo
- After increasing by 2% in 2020, global refined copper production is expected to increase by approximately 1.7% in 2021 and by 3.9% in 2022:
* 2021 growth has been revised down from 3% to 2% mainly due to reduced SX-EW production in Chile and Myanmar, operational issues in Japan, Australia and Russia, power rationing in China and some unexpected maintenance.
Nonetheless, a decline of around 0.5% in global refined production outside China is expected to be more than offset by growth of around 5% in China.
* After two consecutive years of decline, global secondary refined production (from scrap) is expected to grow by 6.5%, supported by the end of China's scrap import quotas and the continuous improvement of scrap availability globally.
* Global production of primary refined (concentrates and SX-EW) is forecast to increase by a moderate 0.8% in 2021, as a 5% decrease in SX-EW production will partially offset the 2% growth in primary electrolytic refined (concentrate) production.
* In 2022, higher concentrate availability, a recovery in SX-EW production, and a further increase in secondary refined production are expected to result in an overall increase in global refined production of 4%.
Apparent global use of refined copper is expected to remain essentially unchanged in 2021 and grow by about 2.4% in 2022:
* The global lockdown in 2020 led to a temporary reduction in the use of refined copper, particularly outside of China. However, sustained growth in copper demand is expected to resume, as copper is essential for economic activity and modern technological society. In addition, infrastructure developments in major countries and the global trend towards cleaner energy and electric cars will continue to support long-term copper demand.
Global use of refined copper outside China declined by 9.5% in 2020, but is expected to recover by 6.5% in 2021, mainly due to an overall improvement in global economic conditions and manufacturing activity.
By contrast, Chinese apparent use increased considerably in 2020 due to a notable increase in refined copper imports and is forecast to fall by 5% this year, as the amount of imported refined copper is likely to be significantly lower. According to estimates by several consultants, the actual use of China may grow by 3%.
By 2022, an expected continued recovery in the global economy will benefit the copper end-use sectors and should help sustain global growth of around 2.5%.
- Global refined copper balance projections indicate a balanced market for 2021 and a surplus of around 328,000t by 2022:
* The ICSG recognizes that global market balances may vary from those projected due to numerous factors that could alter projections for both production and use. In this context, it can be observed that the actual results of the market equilibrium have deviated on recent occasions from the ICSG market equilibrium forecasts due to unforeseen events.
* In developing its global market balance, ICSG uses an apparent demand calculation for China that does not take into account changes in undeclared stocks (State Reserve Bureau (SRB), producer, consumer, trader/trader, consolidated) that can be significant during periods of storage or shortages and that can significantly alter global supply and demand balances. The apparent demand for copper for China is based solely on the reported data (production + net trade +/- changes in SHFE stocks).
ICSG expects a somewhat balanced market for 2021 and continues to forecast a surplus for 2022.
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