Chinese datas props up zinc, copper prices Lower supply growth, increasing concumption in Asia

Print this page Posted on : 04-26-2007 by recycleinme.com

The copper market was in surplus of 40,000 tonnes in January 2007, considerably down from 204,000 tonnes surplus in December tones surplus in December 2006 and 1,40,000 tonnes surplus in January 2006, according to latest data related by the International Copper study Group (CSG).

Consumption

The world refined copper output in January this year stood at 1547 million tones (mt), while the use amounted to 1.507 mt, ICSG data showed.

World refined copper use was estimated to have risen six per cent year-on-year from January 2006.

The rise is attributed to growth, primarily in Asia.

Chinese apparent usage rose by2 7 per cent and use in Indian and Japan was up by 17 percent and nine per cent respectively, analysts said.

SUPPLY SITUATION

On the supply side, data indicated that world mine production in January this year grew by nine per cent.

However, it was 4.5 percenet below the average monthly production for the fourth quarter of 2006 and seven per cent lower on a month-on-month basis from December 2006 production.

Total world refined production in January this year rose eight per cent year-on-year.

Copper prices have gained support from Chinese metals data released earlier this week and are trading above $8,000 a tonne.

There was continued growth in China’s refined copper imports in March 2007, with refined copper net imports coming in at very close to 200,000 tonnes, posting an all-time high and eigth straight month of growth.

In Bulls Grip

The zinc market is already under a bull grip, following release of Chinese trade data. The metal was trading above $3,800 a tonne.

Cina’s zinc concentrate import growth picked up pace in March. Imports increased by 148 per cent year-on-year during the first quarter.

This has helped to fuel growth of 26 percent in refined metals production, while domestic zinc in concentrate output fell by about three percent.

Despite sustained strong growth in refined etal output during the first three months of the year, China’s net exports fell sharply in March. Experts attribute this to possible de-stocking during the end of 2006 and beginning of this year – in line with period when next exports increased.

However, de-stocking may be coming to an end and restocking may begin.

Lower volume

Together with sustained robust domestic demand, the volume of refined zinc leaving China could be lower over the coming months, said analysts.

There are reports of a proposed VAT rebate cut to special high-grade zinc and possible five percent export tax on refined metal. If this materializes, the incentive to export will be significantly reduced.

LME copper steady after sharp fall

Copper steadied on Wednesday after slipping almost 2.5 per cent in the previous session but prices were underpinned by a possible supply disruption looming in Peru.

Copper for delivery in three months on London Metal Exchange firmed as high as $7,880 a tonne, before easing back to $7,805 / 7,815, $15 softer from Tuesday.

Copper’s failure to match last week’s seven-month high of $8,100 resulted in a decline of 2.5 per cent on Tuesday.

Copper stocks having already weakened by 23 percent since early February, market is very sensitive to any news coming from the supply side.

NICKEL STOCKS UP

India’s top aluminium and copper maker, Hindalco Industries Ltd., hopes to raise its annual aluminium output by over six percenet to 475,000 tonnes in the financial year to March 2008.

LME nickel fell 1.4 per cent after hitting a fresh record of $50,200 on Tuesday.

Nickel stocks have fallen more than 27 per cent since the start of the year, with available stocks of nickel currently stands at 3,438 up 480 tonnes from Tuesday but still slightly below a day’s global consumption.

Zinc was $15 softer at $3,705 / 3,175 a tonne after hitting a three-month high of $3,830 on Tuesday, while aluminium edged down by $10 to $2,830 / 2,835.

Source : Business Line