Copper body sees surplus this year

Global refined copper market is expected to have a surplus of 2,40,000 tonne in 2006, which is expected to fall to 1,80,000 tonne in 2007, the International Copper Study Group said Monday.

This is a major change from the 1,00,000-tonne deficit of the red metal in the global market in 2005.

Steady copper production and limited rise in usage are the main reasons for the surplus, the report said.

With new refining units expected to start producing in 2008, there are indications that there may be further growth in surplus copper stocks, the group said.

In 2006, global copper mine production is estimated at 15.17 million tonne, up by 2,90,000 tonne, or 1.9 per cent, from 2005.

The estimate for 2007, is a 6.8 per cent increase to 16.20 million tonne.

Global refined copper output is projected to increase by 8,80,000 tonne, or 5.4 per cent to 17.40 million tonne in 2006, while in 2007, refined copper output is seen at 18.06 million tonne, up 3.8 per cent.

However, the copper body said that steady erosion of inventories of copper concentrates in 2006 will restrain the growth of refined production. Total world copper use in 2007 was forecast at 17.88 million tonne, up 4.2 per cent, or 7,25,000 million tonne.

Although world-refined copper usage fell 0.7 per cent at 16.61 million tonne in 2005, increased demand from the European Union is expected to lead to a 3.3 per cent rise in usage to 17.16 million tonne in 2006.

Fall in demand from China is cited as the reason for the small rise in usage but the group clarified that with no available data on China's State Reserve Bureau copper stocks, it is difficult to determine the exact usage in China.