Copper marketplace tight, demand weak:Freeport CEO
Wed Jun 10, 2009 4:36pm EDT
reuters.com
NEW YORK, June 10 (Reuters) - Global copper inventories are still low and although metal prices are rising, there is not yet enough demand to increase production, the chief executive of Freeport-McMoRan Copper & Gold (FCX.N) said on Wednesday.
"Even though we have gone through a worldwide recession, copper inventories globally are very low," Richard Adkerson told the RBC Capital Markets mining conference in Toronto.
"The anomaly is that there has been a dramatic drop in prices, but still there is a tight physical marketplace. That is positive for copper," he said in comments monitored via a webcast in New York.
Phoenix, Arizona-based Freeport is the world's largest publicly traded copper producer and operates the huge Grasberg copper and gold mine in Indonesia as well as mines in North and South America and Africa.
Adkerson noted copper prices plummeted in the economic downturn from over $4 per pound last year to well below $1.
Freeport, he said, took the strategic decision to preserve its liquidity by eliminating its dividend to shareholders, cutting costs and raising $750 million in a public share offering. It also cut production at many of its mines.
Since the start of the year, copper prices have risen and on Wednesday were just under an eight-month high around $2.36.
Asked at what copper price Freeport would begin to restore production it had cut back, Adkerson said price was only one factor in that decision.
"Demand in North America, Europe and Japan continues to be weak and events in China will be what drives the copper price in the near term," he said.
"It's more complicated than just a price point ... because energy prices are up too and how do prices compare to costs.
"To ramp back up would be a big operation without recovery of demand in North America and there is always a risk that China will stop buying.
"We need to see more robust demand," said Adkerson, (Reporting by Steve James; Editing by Christian Wiessner) |
