Chinese producer is bullish on home-market growth
Staff -- Purchasing, 8/10/2005 2:00:00 AM
Chinese copper consumption is expected to rise 9% and reach 3.5 million metric tons this year and keep rising at the same annual rate for the next several years, forecasts He Changming, general manager of Jiangxi Copper, the country’s largest red-metal producer.
Copper cathode consumption in China was 3.2 million tons in 2004. It now is expected to reach 3.8 million tons in 2006 and exceed 4.1 million tons in 2007. “Even though the government is trying to implement measures to cool the economy, I’m sure it will try to keep gross domestic product growth at 8% or 9% per year,” He tells the Shenzhen Daily newspaper, adding that strong domestic economic growth would continue to support copper-consumption growth. The executive believes the nation’s copper consumption will see rapid growth in the next few years. That’s why he is bullish on copper prices in the second half of the year. “Maybe three-month-delivery London Metal Exchange copper could hit $1.81/lb later this year,” he says in the article, noting the mid-July three-month price was $1.53. “Nothing is impossible in the global market,” He reckons. Jiangxi Copper plans to expand annual smelting capacity to 700,000 metric tons in five years from the current 400,000 tons “through technical upgrades,” says He. By that time, the company will be sourcing more than 250,000 tons of metal in copper concentrate from its own mines at the Fujiawu pit of the Dexing copper mine, China’s largest. While that still would require the import of another million tons of copper concentrate, there is no cause for concern on the raw-material supply front. “We have quite a few stable copper concentrate suppliers in South America, Europe and Japan,” He says. “We have a very good relationship with them and have signed long-term buying contracts with these firms.” Moreover, Jiangxi Copper is considering buying copper mines in Africa, South America and Asia, adds He. Meanwhile, the copper maker also plans to expand its copper foil plant’s capacity to 400,000 tons per year in two to three years from the current 150,000 tons through adding new production lines. Among other plans is a proposal to establish a new rolled-copper plant with foreign partnership as part of a plan to expand its rolled-copper production capacity to 500,000 tons from the current 200,000 tons in five years.
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