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International Copper Study Group forecasts deeper refined copper deficit in 2019

The International Copper Study Group revised its refined copper market forecast for 2019 and 2020, deepening a projected deficit this year and flipping its 2020 outlook from deficit to surplus.

Citing market developments since its last forecast, the group, or ICSG, increased its projection for a copper market deficit in 2019 to 320,000 tonnes from 190,000 tonnes. For 2020, the group shifted its estimate from a deficit of 250,000 tonnes to a surplus of 280,000 tonnes.

In the Oct. 23 update, the ICSG dampened its view of European demand while lifting its expectations for refined copper output in 2020.

"A rise of around 4% is expected in world refined production in 2020 based on capacity expansion in China, improvements in Africa and a return to full capacity of numerous smelters or refineries affected by operational issues this year," the ICSG said.

Earlier in the year, the group projected world refined production to increase by about 2.8% in 2019 and 1.2% in 2020. It now projects refined production growth of 0.5% for 2019.

Other forecasts for the refined copper market see a supply and demand picture that is closer to balance, however.

BMO Capital Markets analyst Colin Hamilton noted that the ICSG projections do not include certain stocks of copper such as Chinese bonded inventories. "We currently model a small deficit in 2019, rising slightly in 2020," Hamilton said in an Oct. 24 note.

S&P Global Market Intelligence also projects smaller deficits and surpluses. In an Oct. 4 report, Market Intelligence's commodity briefing service forecast a 2019 surplus of 12,000 tonnes and a deficit of 1,000 tonnes in 2020 in the refined copper market.