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Thursday, December 4, 2008

China to consume 5.1 million tonnes copper in 2009

By Pav Jordan

SANTIAGO, Dec 4 (Reuters) - A global economic crisis is tempering China's ravenous hunger for copper as exports suffer amid slumping demand abroad, a top China analyst said Thursday.

Shiela Ju, deputy manager for the international department of China's state-owned Antaike research group, said copper consumption would be about 4.85 million tonnes this year, and would grow to only 5.1 million tonnes in 2009.

"The export products will be impacted seriously this year and next year," she told copper market players in the Chilean capital Santiago.

Ju said at the copper industry event that China would consume 5.4 million tonnes of the metal in 2010.

The rate of consumption growth would slow over the next two years to between 5 and 6 percent, also because of a high base of comparison with previous years, she projected.

Ju said demand has been hit in areas like production of air conditioners and refrigerators, but was still growing in the power infrastructure sector.

"The power sector is still a beacon light," for demand, Ju said. "Copper uses in manufacturing have been declining."

She said that since October, when copper prices were chopped in half as global panic spread over a U.S. credit crisis, Chinese smelters have reduced production on soft demand.

CHILE AND GLOBAL COPPER SOURCING

China is the world's largest copper consumer and Chile is the world's largest producer of the red metal and the two countries are trying to extend business and cultural ties in the name of more copper trade.

"Chile is rich in copper resources, but so far the Chinese copper companies have not moved much in copper mining in Chile," Ju told Reuters on the sidelines of the event hosted by Chile's state copper commission Cochilco.

China recently relinquished its right to buy a large stake in a major, state-owned Chilean copper mine amid protests from Codelco unions, but the market expects a compensation deal soon.

"I guess one of the reasons is that the Chinese companies are not familiar with the policies here, but now Antaike, my company, is trying to help Chinese companies to know more," said Ju.

China consumes about 25 percent of the world's copper, and a third of that comes from Chile. (Reporting by Pav Jordan; Editing by John Picinich)

http://www.reuters.com/article/bondsNews/idUSN0439584620081204

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