Copper may dip as Chinese plan to curb purchases
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China Minmetals Nonferrous metals Co, the country’s biggest copper importer, expects the price of the commodity to decline by mid year as manufactures curtail purchases the company president has said.
Cut in Margins:
Demand in China, the world’s biggest user of copper, has fuelled a 13 percent rally in the price last month. The increase has cut profit margins for manufactures a may deter them from buying more said Mr Zhang shoulian president of state owned China Minmetals Nonferrous Metals.
Prices can be maintained for some months, maximum midyear,” Mr Zhang had said said in an interview in Santiago. Manufactures can’t last very long.
The price of copper has tripled in three years as China’s economy grew more than 10 percent annually, increasing demand for wire and pipe. The rally has lasted longer than some companies predicted. Codelco, the world’s biggest copper producer, said on April 12 that it expected copper to fall. The price rallied 18 percent in the next five days.
Freeport-McMoRan Copper & Gold Inc, the worlds second-biggest copper producer, had said rising demand and restraints on mine production will bolster the price of the metal.
Chile Forecast:
Chile the world’s biggest copper supplier also said that copper will decline. Prices will average $2.80 a pound in 2007, down from $3.05 a pound in 2006, according to the Chilean Copper commission, a state-run research group.
A further jump in prices would reduce copper imports in China, where manufactures have stockpiles large enough to supply themselves for four or five months, Mr Zhang said. The government doesn’t plan to tap its stock piles, he said.
The price probably will remain between $5000 a tonne and $8000 a tonne for the next two or three years, Mr. Zhang said. His company accounts for 20 percent of China’s copper imports.
China’s economy will grow at a rate higher than 10 percent for a long time because of the expansion of cities and infrastructure, including transmission lines, he said.
Copper Imports:
That growth will keep copper imports rising, Mr. Sergio Fuentes, an analyst at Standard and Poor’s in Buenos Aires said by telephone. China’s copper imports more than doubled in March to 2, 08,014 tonnes from a year earlier as builders increased purchases. Copper demand in China will rise 5.3 percent to 4 million tonnes(mt) in 2007, from 3.8 mt a year earlier, Mr. Zhang said.
China’s growth has sparked a surge in other commodities prices, including oil, nickel, zinc and tin. Tin which has jump 43 percent in the past year and reached a record this month, will maintain current levels, Mr. Zhang said.
To supply its growing demand, Minmetals is searching for copper deposits, at home in neighboring countries and in Latin America.
The company plans to exercise an option to buy a stake in a Chilean copper mine being developed by Codelco, the world’s largest copper producer, Mr. Zhang said. The mine called Gabby, will begin producing 1, 50,000 tonnes of the metal next year.
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Source : Business Line |
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