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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: mcbeanburger who wrote (1852)	10/9/2007 6:39:14 PM
From: Stephen O	Respond to of 2131

China Copper Smelters Mostly Unprofitable, Daye Says 2007-10-09 09:55 (New York) By Xiao Yu Oct. 9 (Bloomberg) -- Copper smelting in China, the world's largest user of the metal, is mostly unprofitable because of a drop in processing fees, said Daye Non-Ferrous Metals Co., the nation's fifth-biggest processor. Smelting fees paid to smelters for annual contracts starting Jan. 1 may decline by as much as 17 percent to $50 for each metric ton of metal extracted, Shu Yishan, manager of Daye's trading company, said in an interview today. Refining fees may fall by as much as 17 percent to 5 cents a pound, Shu said. Below that, all Chinese smelters would be unprofitable, he said. ``Smelters are having a very difficult time,'' Shu said in London. ``Some have been forced to delay the start of new capacity or close plants.'' Copper smelters derive income from so-called treatment and refining charges paid by mining companies. The fees have dropped this year because there hasn't been a sufficient supply of concentrates, the raw material shipped from mines, to fill smelting capacity. BHP Billiton Ltd., the world's largest miner, is among companies to have demanded lower fees. China's copper producers, led by Tongling Nonferrous Metal Co., are meeting miners in London this week for preliminary talks for full-year fees. Negotiations will last until November, Wang Chiwei, executive director and vice president of Jiangxi Copper Co., said in July. Officials from nine smelters met in July to discuss output cuts of between 10 and 15 percent, according to executives from two of the companies who asked not to be identified because the talks were confidential. Smelter Consensus ``It's only a matter of time before we see larger scale cuts,'' Shu said. ``The government should intervene to help reach a consensus among smelters.'' Bigger producers such as Jiangxi Copper Co. may be reluctant to cut output, while smaller ones support it, Shu said. State-owned Daye, based in Huangshi, central Hubei province, is China's oldest copper producer and a member of China's Copper Smelters' Purchase Team, which represents the country's biggest producers. Daye plans to increase production 23 percent this year to 250,000 tons of refined copper. It will keep output unchanged in 2008, Shu said. The company's clients include Melbourne-based BHP Billiton. --Editor: Casey (msh/ttt).