Money

China's copper demand may expand 12%, Wanxiang says

(Agencies)
Updated: 2010-05-25 14:02

Copper demand in China, the world's largest user of the metal used in pipes and wires, may gain as much as 12 percent this year and prices won't fall much further, according to Wanxiang Resources Co's chief analyst.

"Consumption is still strong," driven by continued economic growth, said Sheng Weimin from the unit of Wanxiang Group, the country's largest auto-parts maker. Demand, including refined and scrap copper, may climb to 8.96 million metric tons, said Sheng, who's studied metals markets for more than 15 years.

Related readings:  Copper prices climb on US, China expansion  Copper dips as joy over EU plan fades  Yunnan Copper to raise output  Copper drops to 7-week low on China tightening

Investor concern Europe's debt crisis may derail the global recovery and China's measures to prevent its economy from overheating have hurt commodity prices, pushing London copper 8.6 percent lower this month. Stocks, metals and oil fell today, with Asian shares set for the lowest close since July 30.

"Prices have tumbled not because of fundamentals but because of economic uncertainties that exist outside China," Sheng said yesterday by phone from Shanghai. "As it stands now, copper prices don't have much further to fall."

Three-month futures on the London Metal Exchange declined 1.7 percent to $6,794 a ton at 12:07 pm in Singapore. The metal, which is used in cars and appliances, dropped 0.8 percent to 54,810 yuan ($8,027) a ton on the Shanghai Futures Exchange, taking the decline this year to 9.1 percent.

"Demand from downstream consumers is very good, their order books are full, but they are buying hand-to-mouth because no one wants to hold too much inventory in these uncertain times," Sheng said, referring to car parts and appliance makers.

China's imports of refined copper were 1.06 million tons in the first four months of this year, according to customs data.