Copper
Large rise in exchange stocks over the March quarter
April 2018
A small refined copper market surplus of 112kt is forecast in 2018 on demand growth of 3.0% to 24.37Mt and production growth of 4.0% as output returns to more normal levels after supply disruptions in 2017.

Potential for disruptions is an upside risk to the price and market balance forecasts. Labour negotiations have resumed at Escondida and at Grasberg, Freeport and the Indonesian Government are supposed to reach agreement on Freeport’s majority interest divestment by the middle of the year.

The month-average copper price fell 3.0% in March 2018 to US$6,794/t (US$3.08/lb). This followed a 0.8% decline in February. Exchange refined copper stocks rose sharply through the March Quarter. Exchange inventories of 901kt at the end of March were up 19% month on month and increased by 66% or 358kt from the end of December 2017. Over the March Quarter, LME stocks increased by 181kt to 383kt, Shanghai Futures Exchange deliverable stocks increased by 156kt to 306kt and COMEX stocks were up by 20kt to 212kt.

AME has completed its quarterly supply and demand review. The 2017 refined copper demand estimate is reduced 270kt to 23.67Mt from the previous figure of 23.94Mt. The 2018 demand forecast is lowered by 192kt to 24.73Mt. Demand growth in 2017 was only 0.7% compared to the former estimate of 2.0% partly due to lower demand in China, down from 11.86Mt and 1.6% growth to 11.79Mt and 0.8% growth. AME forecasts global refined copper demand growth of 3.0% in 2018, comprising 3.2% growth in China, a 1.8% increase in Europe, +2.2% for the US and +1.4% for Japan.

AME regards a strike at BHP’s Escondida mine in Chile as the most significant near-term disruption risk to copper supply. At full output, the mine is expected to produce 1.25Mt of copper in 2018. Escondida was affected by a 43-day strike in 2017 over negotiations for a new collective labour agreement that were not resolved. Minera Escondida and Union No.1 have started talks for an agreement well ahead of the end of the current agreement on the 31st of July 2018.