Copper prices to remain stable until next year, predicts MMG mining chief
MMG mining chief's prediction comes as world supplies of metal expected to stay unchanged
The price of copper is likely to remain relatively flat until the middle of next year as difficulties in increasing supply from Indonesia and Mongolia and the covering of missing stock related to a metals-backed financing scandal on the mainland offset new supplies from elsewhere, according to the chief of MMG.
Andrew Michelmore, chief executive of the Hong Kong-listed overseas mining unit of state-owned China Minmetals Nonferrous Metals, said prices would probably rise in the second half of next year, helped by demand from the United States, the world's second-largest copper consumer.
"The US is definitely starting to pick up … I sit on a board of a company [there] and we are definitely seeing signs the US is coming out of the bottom of the cycle," he said after an MMG shareholders' meeting.
The Qingdao port warehouse scandal on the mainland, where the same 55,000 tonnes of copper was found to have been illicitly used as collateral eight times to raise loans from various lenders, led to worries that demand for the metal would drop as such financing deals were tightened, but Michelmore sees a silver lining.
"On the good side, it means that stock [supposedly backing 450,000 tonnes of copper-backed loans] was not there," he said. "Everyone has been thinking there was excess stock sitting in China, but it was not there. That will drive the price up, because people need to cover that stock."
Fifty-five per cent of MMG's revenue was derived from copper last year, and 30 per cent from zinc.
Michelmore said the price of copper was expected to stay near the US$7,000 a tonne mark until the middle of next year despite the economic slowdown on the mainland, which accounts for about 40 per cent of global copper demand.
He said Indonesia's ban on the export of some unprocessed minerals and taxation of others, and hiccups in the ramping up of production at Mongolia's giant Oyu Tolgoi mine due to disputes between the Mongolian government and project leader Rio Tinto, had held back additions to supply.
Shareholders also yesterday approved MMG's US$5.85 billion acquisition of Glencore Xstrata's Las Bambas copper mining project in Peru.