Copper Market Deficit: What You Need to Know


Nov. 29 2017, Updated 9:05 a.m. ET

Copper market deficit

Last week, the ICSG (International Copper Study Group) released its August copper market commentary. In this part, we’ll take a deeper look at the report and discuss its implications for copper miners like Glencore (GLEN-L) and First Quantum Minerals (FM).

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Copper supply

According to the ICSG, global mined copper production fell 2.2% YoY (year-over-year) in the first eight months of the year. Lower mined copper production was mainly led by a 5% fall in Chilean copper production. We saw a labor problem at BHP Billiton’s (BHP) Escondida mine in 1Q17 that negatively impacted the global copper supply. The mine, which is situated in Chile, is the world’s largest copper mine (ANTO). ICSG also listed lower production in Indonesia as a driver of the lower copper supply. The Indonesian government changed its mining laws earlier this year. Freeport-McMoRan’s (FCX) Grasberg operations were impacted negatively. It was barred from exporting concentrates from Indonesia for almost three months after the new rules.

Copper demand

According to the ICSG, the global apparent demand didn’t change in the first eight months of 2017—compared to the same period last year. Apparent demand is the real demand plus changes in inventory. According to the ICSG’s latest monthly press release, “Preliminary data indicates that world ex-China usage might have increased by about 1%.” However, China’s apparent usage fell 1%.

Despite the falling mined copper supply, global copper markets were only in a slight deficit in the first eight months of the year. In the next part, we’ll discuss what’s helping the global copper supply this year.


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