The Globe and Mail reports Chile’s state-owned copper giant Codelco which dwarfs other global producers of the metal has not seen the effects of a slowdown in China on its copper exports nor the prices it receives.
China is responsible for more than 40% of the global consumption of copper – the bellwether for the metals industry – and more than half of Chile’s exports end up in the country.
Chile’s deputy mining minister, Pablo Wagner, told the paper that exports should rise 5% – 6% in 2012 over last year and that “signs of demand, shipments and inventories, continue to be solid”:
Mr. Wagner predicted on Monday that prices will end, on average, between $3.50 (U.S.) per pound and $3.70 per pound this year, still well above the cost of production – ranging between $2 per pound and $3 per pound for higher-cost producers.
After Thursday’s bloodbath, copper futures were trending higher on Monday building on Friday’s modest gains with front-month contracts trading at $3.31 a pound.
The commodity which is and copper is now down more than 18% over the past year. The red metal hit historic highs at the end of July last year of a shade under $4.50 a pound (more than $10,000 a tonne).
Copper has found support from a surprise rate cut in China in early June – the first since the global financial crisis.
The world’s metal miners have become increasingly dependent on Chinese economic growth to keep profits and revenues flowing. In March, the Chinese government set a target of 7.5% growth for 2012, the lowest since 2004, but official figures showed first quarter 2012 numbers topping that at 8.1%.