Release of copper concentrate hidden inventories increase supply

As of October 28, 2022, Mysteel monthly average copper concentrate spot TC was $87.2 /dry metric tonne. Spot demand for copper concentrate from smelters was weak.

In recent 10 years, the highest record of copper concentrate long agreement benchmark is 107/10.7 in 2015. The global copper concentrate surplus in 2015 was nearly 120,000 metal tonnes. China's smelters believe the 2023 Benchmark will be close to where in 2015. The oversupply pattern and high hidden inventories of copper concentrate have boosted trading confidence among China's smelters. The Benchmark in 2023 will be higher than 100/10 if the regression analysis is conducted between the copper concentrate Benchmark and the global copper concentrate balance since 2015 based on the current forecast of global copper concentrate surplus in 2023.

                    Data Source: Mysteel

                    Data Source: Mysteel

China's copper concentrate inventory increased significantly year on year in 2022, which includes transportation inventory, port inventory, domestic mine inventory, and smelters in-plant inventory.

Transportation inventory

Mysteel tracks global seaborne dry bulk shipments to China and the transportation inventory for copper concentrate to extend the track chain of copper concentrate supplies as they are about to be converted into port inventory or in-plant inventory. Only the transportation inventory of copper concentrate since the end of the second quarter is shown due to the short data tracking period. As can be seen from the figure, the transportation inventory of copper concentrate showed an overall upward trend in the third and fourth quarters, despite the interference of weather, strike, and epidemic (The inventory backlog in Africa has not been considered because copper concentrate from Africa is mostly shipped in containers).

                    Data Source: Mysteel

Port inventory 

China's port inventories in 2022 were generally higher than last year. In the past two years, the trend of copper concentrate inventory at mainstream ports in China in the fourth quarter has been consistent that inventories fell sharply in October and continued to accumulate in November/December. However, port inventories fell less and remained high this October compared with last year. At the end of October 2022, mainstream ports' inventory of copper concentrate increased by 47.7% year on year.

                  Data Source: Mysteel

Domestic mine inventory 

China's copper mines rarely set up copper concentrate inventory generally in order to avoid the uncertainty caused by the sharp fluctuation of copper prices. Shipments of copper concentrate from China's copper mines have been disrupted intermittently this year because of the epidemic, leading to the inventory backlog in China's mines, particularly in Tibet (Nearly 250,000 tonnes of Tibet copper concentrate inventory are expected to resume normal transportation in November).

In-plant inventory

In-plant inventories at China's smelters were also higher in 2022 than last year. At the end of October, copper concentrate inventory days in smelters increased by 13.2% year on year.

                   Data Source: Mysteel

For queries and more information/data/reports access, please contact Paula Xu at xuzhongping@mysteel.com