The global refined copper market is expected to see a deficit in 2014, versus earlier projections of a surplus, on strong demand and lower operating rates at smelters in top producer China, the head of Japan's JX Nippon Mining & Metals Corp said. A fifth straight year of shortage in refined metal should give legs to a recovery in benchmark copper prices, which fell almost 10 percent in the first three months this year, driven by forecasts for an uptrend in supply from mines.
"I personally expect the global copper market to stay tight throughout this year. Supply will likely be slightly short," said Shigeru Oi, the president of JX Nippon Mining, Japan's top copper refiner and a unit of JX Holdings Inc. Oi, who forecast a slight delay in the ramp up of the firm's Caserones copper mine in Chile and sees metal prices rising this year by almost 11 percent from current levels, cited robust demand as a driver of the supply deficit.
"Despite the recent problem at China's Qingdao port, we've been constantly receiving enquiries from China for extra metal," Oi said in an interview, referring to a warehousing fraud investigation at Qingdao. Some investors fear the probe could prompt banks to cut credit for metals financing and curb demand. "We've been also getting orders for additional supply from Japanese buyers on strong construction and automobile demand." Delays in starting up new refining capacity in China and lower utilisation rate at the existing smelters in the country - the world's top consumer of the metal, are also leading to a supply crunch, Oi said.
Oi's call of a deficit this year adds to a growing number of similar forecasts, partly prompted by a disruption to copper concentrate supplies from Indonesia, where a dispute between the government and miners Freeport-McMoRan and Newmont over an export tax has dragged on for months.
Comments
Comments are closed.