The global copper market is experiencing a significant shift, with the surplus of refined copper quadrupling in the first half of 2024 compared to the same period last year. This surge follows a robust recovery in mine output and an increase in production across key regions, according to preliminary data from the International Copper Study Group (ICSG).
Global Copper Production Rebounds in Key Markets
The ICSG’s August 2024 bulletin paints a picture of recovery and expansion. Global mine production increased by 3.1% in the first six months of the year, rebounding from earlier constraints, particularly in Chile, Indonesia, and the United States. This recovery has been further bolstered by new production from the Democratic Republic of the Congo (DRC), which saw an 8.5% increase in output.
Chile, the world’s largest copper producer, posted a 2.4% growth in mine output during this period. However, it remains 4.5% below the average production levels seen over the past five years, reflecting the lingering effects of earlier disruptions. Meanwhile, Indonesia’s output surged by 33%, recovering from severe operational constraints caused by extreme weather events at the Grasberg and Batu Hijau mines in early 2023. The U.S. also saw a 10% increase, driven by a recovery from reduced production in the first half of 2023.
Refined Copper Production in 2024 Outpaces Demand
Refined copper production also saw a significant uptick, rising by 6.2% in the first half of 2024. This growth was driven largely by expansions in China and the DRC, which together account for more than half of the world’s refined copper output. Chinese refined production increased by approximately 7%, thanks to the start-up of new smelters and refineries. In the DRC, refined production grew by 12%, fueled by the ramp-up of new electrowinning plants.
Credit: ICSG
Other major markets, including Japan and the U.S., also contributed to the global increase. Japan’s refined copper production rose by 3.7%, while the U.S. saw a substantial 15% jump, largely due to the resumption of operations at the Kennecott smelter following a maintenance shutdown in May 2023.
Uneven Demand Growth Across Regions
On the demand side, the ICSG’s preliminary data reveals a more nuanced picture. Global apparent refined copper usage grew by 3.3% in the first half of the year, but this growth was uneven across regions. China, the world’s largest copper consumer, saw a 3.5% increase in apparent demand, despite a sharp 74% rise in its refined copper exports. Excluding China, global copper usage grew by around 3%, with weaker demand in the European Union, Japan, and the U.S. being offset by stronger growth in other Asian markets.
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Surplus Widens Amid Modest Demand
The combination of strong production and modest demand growth has led to a significant surplus in the refined copper market. The ICSG’s preliminary data indicates a surplus of approximately 488,000 tonnes for the first half of 2024, a substantial increase from the 115,000 tonnes recorded in the same period last year. When adjusted for estimated changes in Chinese bonded stocks, the surplus balloons to around 573,000 tonnes.
Challenges Ahead for Copper Market Stabilization
These developments suggest that the copper market could be heading for a challenging period in the second half of 2024. In April, the ICSG forecasted a modest surplus of 162,000 tonnes for the full year, based on expectations of a 2.8% increase in refined copper production and a 2% rise in global usage. However, with mine production outpacing earlier projections, the full-year surplus could far exceed these expectations.
The market’s response to this growing surplus remains uncertain. With demand showing only modest growth and significant increases in production, the copper industry could face downward pressure on prices. Analysts will be closely watching developments in the second half of the year, particularly in China, which remains the key driver of global copper demand.
Conclusion: A Market in Flux
The copper market is in a state of flux, with production outpacing demand and a surplus that could continue to grow. As the industry navigates these challenges, stakeholders will need to carefully monitor supply and demand dynamics, particularly in China and other key markets. The second half of 2024 will be critical in determining the direction of the global copper market, with significant implications for producers, consumers, and investors alike.
