London 30/08/2016 - The global copper market recorded a deficit of 65,000 tonnes in May, according to ICSG data. This pushed the year-to-date deficit to 222,000 tonnes, in sharp contrast with a surplus of 39,000 tonnes in the corresponding period of 2015.
The deficit in May was nevertheless smaller than that in April (revised upwardly to 144,000 tonnes from 119,000 tonnes) due to a 1.1 percent month-on-month increase in world refined production and a fall of 2.8 percent in world refined demand.
Still, the latest ICSG statistics are positive - they point to a tighter supply/demand balance.
While world refined production at 330,000 tonnes in the first five months of the year was up 3.5 percent from last year, principally due to a rise of seven percent in Chinese output, world refined demand increased around five percent to 510,000 tonnes over the same period, with the main contributor to growth also China at 12 percent.
While the ICSG expected at its March meeting a deficit of 57,000 tonnes for the whole of 2016, we believe the group is likely to revise its forecast higher due to stronger-than-expected tightness in the Chinese supply/demand balance in the first half.
Still, we do not think fundamental strength in the Chinese copper market is likely to last in the second half given the latest Chinese trade data and the recent dynamics in visible inventories.
The refined copper market recorded a deficit of 145,000 tonnes in 2015.
(Editing by Mark Shaw)