Related News

Home » Business » Energy

China discards scheme to buy copper as firms still profitable

CHINA, the world's largest metal consumer, discarded a plan to buy copper to support domestic smelters because producers are still profitable and inventories aren't high, government and company officials said.

Copper smelters are still able to sell their products unlike aluminum makers, one of the officials said. The State Reserve is buying 290,000 metric tons of aluminum from domestic smelters, who have been losing money. It has also called for a meeting with zinc smelters in two days to discuss purchases of zinc, two officials said. Shanghai copper stockpiles were at 22,736 tons as of Friday, or about 2 days of Chinese consumption. Aluminum inventories reached 166,033 tons last week, or 5 days of consumption, according to the latest exchange data.

Copper smelters which own mines can break even at prices of about 22,000 yuan a ton, Qu Yi, an analyst at CBI China Co, said yesterday. "The key is the copper price."

The government also deemed it risky to buy the metal now from overseas as prices could fall, said the three officials who asked not to be identified because they weren't authorized to disclose the information. The officials are involved in the planning process.

Copper futures gained in London and Shanghai this year on speculation China's State Reserve Bureau will purchase the metal along with aluminum and zinc. The government said last month it plans to boost reserves of raw materials to help metal producers which have suffered as prices sank.

"Aluminum and zinc prices have fallen below production costs and domestic supply can meet local demand, while China still relies on imports to meet copper demand," Yang Changhua, analyst at Beijing Antaike Information Development Co, said. Chinese smelters don't have enough copper to help build state reserves, he said, according to Bloomberg News.

Copper futures in London dropped 2.5 percent to US$3,314 a ton at 10:05am, reversing gains of as much as 3.5 percent earlier in the day. The futures rose 7.7 percent this year, after plunging 54 percent last year.

Prices in Shanghai rose 18 percent this year, and closed at 28,140 yuan (US$4,116) a ton yesterday, after declining 59 percent in 2008.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend