Xstrata relies on China to lift copper demand
Copper demand in China, the world's main consumer of the red metal, is expected to rebound in the second half of 2012, despite the uncertain outlook for Europe, the head of Xstrata PLC's copper division said.
During a mining conference in Sydney, Australia, Xstrata Copper chief executive, Charlie Sartain, added the company is going ahead with its plans to increase copper output by 60% the next three years, shrugging off warnings by its rivals of slowing growth projects, reports Business Live.
Recent figures indicate China’s economy is slowing down at a faster-than-expected pace, which prompted its premier, Wen Jiabao, to call on Sunday for new measures that would boost growth.
"We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth," Jiabao said on Sunday according to Reuters.
Jiabao said Beijing has approved several infrastructure projects and hinted in the direction of foreign direct investments being processed faster.
Spot copper prices were quoted at $3.53 in New York in late trade, up more than 6 cents on the day. On Friday copper fell to a 4-month low of $3.44 a pound in New York trading on mounting worries about the global macro-economic outlook and a slowdown in China.
The Washington Post warned that although the shift in policy "would mean more room for local governments to undertake large-scale investment projects and could mean more central government support," there was "no indication that Beijing would open the credit taps as it did in the wake of the financial crisis."
Xstrata (LON:XTA) sells 30 to 40% of its copper to China, its main buyer.
Learn more about the changing copper market here.
Image by Hung Chung Chih