Tuesday March 31, 6:25 pm Eastern Time
FOCUS-Copper industry sees no early price recovery
By Maja Wallengren
biz.yahoo.com
MEXICO CITY, March 31 (Reuters) - Leading copper industry players meeting in Mexico this week see little hope for any early recovery in four-and-a-half-year low global prices for the metal and expect the next few years to be tough.
Traders, producers and consumers said a world surplus in production and pressure on crisis-weary Asian economies would hurt the copper market for some time. ''It's a pretty depressing picture, I don't see any possibility for any significant recovery of prices in the next two to three years,'' a Canadian mining official said during Metal Bulletin's 11th International Copper Conference here. ''It's going to be a long, hard and cold winter for the copper industry. Prices are low, but I do believe prices can go even lower -- I am not bullish,'' the official, asking not to be named, told Reuters.
Most delegates attending the two-day conference, which ends Tuesday, declined to be identified. But the tone of virtual despair was carried through to the speeches. ''In short, the next years seem to be very hard for the copper industry,'' said Peter Lowick-Russell, consultant and Latin American program director for the International Copper Association. Mining analysts said the recovery could take up to five years, depending on how Asian economies fared. Many analysts had expected Asian consumers to buy up to 15 percent of total world copper supply this year. But with Asia's economic woes, several nations have been forced into devaluations, resulting in those forecasts being drastically scaled back.
An American copper trader said that even if many high-cost producers in countries such as the United States and Canada halted or slowed down production, increasing output from developing countries would still ensure surplus production. ''Some of the higher-cost operations have started falling out of operation. I don't see any hope for them to re-open, which is only going to make lower-cost producers stronger,'' the trader said.
Copper finished the London Metal Exchange's (LME) mid-session Tuesday $3 up on the day, at $1,779 a tonne, but off session highs.
Market players at the gathering in the Mexican capital said the industry's only hope would be if
China, which so far has been largely unaffected by the Asian economic crisis, entered the markets for large copper imports. But they also agreed that with little information from China about its demand and production situation it remained difficult to fully assess its needs. ''It's a mystery to everybody what China is importing, the unknowns about China are more known than the knowns,'' one smelter said. However, industry officials agreed that in the long-term consumption demand would have to pick up again in Asia.
''The demand for copper is going to start to pick up again because copper is used in so many products, but not until the Asian situation stabilizes,'' said one trader. |
