China's copper concentrate consumption and supply both to slide

  • Thursday, November 06, 2008
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  • Keywords:copper concentrate consumption
Analysts predict that China's copper concentrate consumption and supply will both decline due to dipping operating rate in downstream copper industry and output cut of copper refineries.
According to market data, the operating rate of cable and copper rod companies dropped to 60 percent in October, and that of copper tube has kept at 50-60 percent since July.
The overall slide in operating rate will lead to output decline of copper products, a sign showing slumping copper consumption, says ananalyst with Jinrui Futures.
In the January-August period, China's copper consumption amounted to 3.3 million tons, up 3.2 percent year on year, comparing with a two-digit growth rate in the same period of 2007.
The experts present at the recent 2008 China International Copper Conference estimated that China's copper consumption would reach 4.9 million tons in 2008, up 7.45 percent year on year, as against 13.4 percent growth in the previous year, and reach 5.2 million tons in 2009, up 6.12 percent.
Affected by economic slowdown at home and abroad, China's copper consumption is predicted to sustain at around 5.2 million tons in 2009, up 6.12 percent on year, lower than the two-digit growth rate in the past several years.
The nosedive of copper price in October has forced most of China's refineries to cut output.
The Jinrui source said Yunnan Copper (000878.SZ) might slash its copper output by 14 percent to 380,000 tons this year. Tongling Nonferrous Metals (000630.SZ) will cut its copper output by 15 percent in 2008. Jiangxi Copper (600362.SH) plans to lower November output by nearly 10,000 tons to 55,000 tons.
With the processing charge rate at only 47.2 US dollars/ton this year, China's copper refineries lost 1,000-2,000 yuan to refine one ton of imported copper in the first three quarters.
The fall of sulfate price helps to speed up production restriction and closedown of copper refineries, said a senior engineer with China Non-ferrous Metals Information Center.
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