The Global Outlook for Copper

Mark Loveitt

President

International Wrought Copper Council (IWCC)

Legal Disclaimer

The purpose of this presentation is to guide programmes benefiting the

copper industry and to provide representatives of the copper industry with information to make independent

business decisions

Before the outlook for copper, a little bit of information about the IWCC…

Foundation & Membership

The IWCC:

• Founded in 1953

• Incorporated in the UK in 2013

• Is the representative trade association for the copper and copper alloy semis fabricating industry worldwide

Membership Geographic Coverage

More than 150 member companies Up to 80% of global output of semis

Country with IWCC Members

Aim of the IWCC

• To promote the interests of the fabricating industry by the encouragement of lawful co-operation within the fabricating industry and by the exchange of information

Back to business….

The outlook for copper

• Copper and copper alloy semis fabricators use either cathodes

• Copper and copper alloy semis fabricators use either cathodes or scrap

• Copper and copper alloy semis fabricators use either cathodes or scrap to manufacture semis, such as Wire Rod

• Copper and copper alloy semis fabricators use either cathodes or scrap to manufacture semis, such as Copper Tube

• Copper and copper alloy semis fabricators use either cathodes or scrap to manufacture semis, such as Brass Rod

• Copper and copper alloy semis fabricators use either cathodes or scrap to manufacture semis, such as Alloy rolled

• Copper and copper alloy semis fabricators use either cathodes or scrap to manufacture semis

Forecast Process

• Twice a year the IWCC prepares forecasts for copper supply and demand

• The spring 2014 forecasts concluded in mid-May (during the IWCC Joint Meeting)

• Forecasts prepared by the copper industry – both producers and fabricators – for use by the copper industry

• IWCC uniquely placed to provide input on demand

Supply Side Issues

• Global mine and refined production expected to increase in 2014 & 2015

• Scrap shortage Reduced feed for secondary refineries

Relatively low copper price Consequence of the economic downturn

– Reduced construction activity / demolition

• IWCC downward adjustment on refined production of 750kt in 2014 and a further 1,000kt in 2015

Source: IWCC

Demand Overview - 2014

Source: IWCC

4293

280

9700

911

3377

2378 651

Europe

Africa

China

Japan

Other Asia

NAFTA

South America

All Data: kt

Demand Overview

• Demand for refined copper improving Improved economic situation in most

regions Semis production should increase Reduced scrap – direct feed –

availability should further boost demand for cathode

All Data: kt 2012 2013 2014F 2015F

Demand 19,752 20,724 21,590 22,423

% change (0.1) 4.9 4.2 3.9

Source: IWCC

Europe

• Southern countries (Greece, Italy & Spain) continue to be in a poor state but may be some signs of upward progress

• Northern countries continuing to do well – for example the auto industry Improved European demand Might be weaker demand for autos from

China

• Downside risk Ukraine crisis

Source: IWCC

0

500

1,000

1,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Durable goods (billion, US$ of 2009)

0

500

1,000

1,500

2,000

2,500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Non Residential (billion, US$ of 2009)

480

500

520

540

560

580

600

620

640

660

680

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Government Investment (billion, US$ of 2009)

0

100

200

300

400

500

600

700

800

900

1,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Residential (billion, US$ of 2009)

USA copper intensive sectors

Source: IWCC / Codelco - Chile

NAFTA Refined Copper Demand

0

500

1,000

1,500

2,000

2,500

2012 2013 2014F 2015F

Canada

Mexico

USA

USA Demand up 2.2% (2014) & 3.2% (2015) All Data: kt

Source: IWCC

Japan – GDP Trends

1.8

-3.7

-2.0

3.4

0.3 0.6

2.2

0.7 1.3

-5

-4

-3

-2

-1

0

1

2

3

4

2007 2008 2009 2010 2011 2012 2013 2014F 2015F

％

Japan – Wire and Cable Demand

Fiscal 2013

• 4% Increase By sector:

Increase: Construction, Automobile, Electricity & Machinery

Decrease: Electric Power & Communications

Fiscal 2014 • No increase forecast

By sector Increase: Construction Decrease: Automobile, Electric Power &

Communications

Source: The Japanese Electric Wire & Cable Maker’s Association

Japan – Wire and Cable (Shipments)

856

759

663 683 685 687 713 713

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014

Source: The Japanese Electric Wire & Cable Maker’s Association Data for fiscal years

All Data: kt

Japan – Brass Mill Demand

Fiscal 2013 Demand • 5% increase By semis type:

Sheet & Plate – Increase Copper Tube – no change

Brass Rod – Increase Fiscal 2014 Demand • Small increase anticipated By semis type:

Sheet & Plate – Small Increase Copper Tube – Small Decrease Brass Rod – Increase

Source: Japan Copper and Brass Association

Japan – Brass Mill Production

998

807 754

864 806

759 795 801

0

200

400

600

800

1,000

1,200

2007 2008 2009 2010 2011 2012 2013 2014

Source: Japan Copper and Brass Association Data for the Fiscal year

All Data: kt

China Macro Economic Data

2013 Q1-14 2014 March

2014 target

GDP 7.7% 7.4% - 7.5%

Fixed asset investment

19.6% 17.6% 17.3% 17.5%

Industrial Production

9.7% 8.7% 8.8% 9.5%

Foreign trade 7.6% -3.7% -11.5% 7.5%

Import 7.3% -1.2% -13.8% -

Export 7.9% -6.1% -9.2% -

Retail sales 13.1% 12.0% 12.2% 14.5%

Source: IWCC / BGRIMM

China

• Upside Continual strong investment in the power

sector Power grid, Solar PV industry

Continual strong investment for 4G network construction, subsidy for IC and LED industry

Continual tight scrap supply Expected improved exports with the

depreciation of RMB

• Downside Risks Cooling down of housing industry Slow down of auto and home electrical

appliance production in H2-14 No restocking impetus from industry chain

with tight monetary supply

Source: IWCC / BGRIMM

Forecasts – Summary

All Data: kt 2012 2013 2014F 2015F

Mine Production (1) 16,635 17,940 18,586 19,912

% change 3.5 7.8 3.6 7.1

Refined Production (1) 20,049 20,729 21,613 22,538

% change 2.3 3.4 4.3 4.3

Demand 19,752 20,724 21,590 22,423

% change (0.1) 4.9 4.2 3.9

Statistical Surplus 297 5 23 115

1 – After downward adjustments for 2014 & 2015

Source: IWCC

Thank You!