Force majeure at large Chinese copper producer, supply cut by half
China’s third largest copper producer, Jinchuan Group, declared Thursday force majeure at one of its smelters, which is predicted to reduce its supply by half in the coming months.
The stoppage comes only a few weeks after outages at two large copper mines, Freeport-McMoRan Copper & Gold’s (NYSE: FCX) Grasberg in Indonesia and Rio Tinto’s (ASX, LON: RIO) Bingham Canyon in the US.
If the incident at Jinchuan Group's Gansu province plant results in lower output, analysts believe China will have to increase its copper imports. The Asian giant may also shore up international copper prices on the London Metal Exchange and push up physical premiums, the charges buyers pay suppliers to secure metal.
The force majeure may also help avoid a global copper surplus that experts had been expecting in 2013 due to new mine supply and softening demand in some regions.
Copper fell today in London from a two-week high, with benchmark copper was down 1.3% at $7,356 a tonne by 1006 GMT.
Yesterday the red metal touched $7,500 a tonne before closing flat but prices are still down about 7% so far this year.