Copper end use trends

"The move to acquire the assets would deal a blow to Anglo, which has invested $2.8bn in an expansion of the Los Bronces mine. The expansion, which will more than double output at the mine to about 490,000 tonnes per year, is due to start production in the last quarter of this year."

"The Kazakhstani project is designed to resolve power deficiencies caused by expansive urban and industrial development in Almaty, the capital city. LS Cable & System will provide products, such as 127km of 220kV level extra high-voltage transmission cables and joints, and technical consultation until August next year. In addition, 140km of OPGW (optical ground wire, see glossary) and 1,100km of 220kV level gap conductors (see glossary) will be supplied together with installation support by year end to San Lorenzo and Guarambare for national backbone power and communication network implementation in Paraguay. "

""What is happening now is not related to supply-demand in copper - it's more related to the economic crisis in Europe," Mr Hernández told the Financial Times in a video interview on the sidelines of LME week, the largest annual gathering of the metal and mining industry."

China's General Administration of Customs announced on 12th October that imports of copper rose by 11.8% m-o-m to 380,526t in September. This represents 3.3% y-o-y growth and the highest level of imports since May 2010. Nevertheless, many market insiders were disappointed by these figures, expecting higher levels of imports. China's tightening credit market and concerns over economic slowdown in Europe meant that Chinese copper demand did not grow as strongly as anticipated.

It was reported that China's Amer International expects to complete construction of its new 250,000t/y copper rod production line, located in its Chaohu City facility in Anhui Province, by year-end. The expansion project will bring Amer's production capacity to 500,000t/y and its total copper rod production is anticipated to reach 200,000t in 2011. A spokesperson for the company said that it will manufacture rod for both domestic and foreign export markets. In addition, Amer also intends to source copper cathode for rod-processing from within China and also overseas. Total investment for the project amounted to RMB2.5B.

Southwire, the US-based aluminium and copper cablemaker, has said that while the use of copper in most electrical applications is unlikely to change, some manufacturers are likely to move toward the use of aluminium wire. The auto industry is increasingly using aluminium wire for traditional copper applications. This is occurring most predominantly outside of the US, however domestic autos companies have also been using aluminium wire for battery cable and aluminium wire harnesses for lights. Southwire stated that for most electrical applications copper usage will remain dominant because of its overall reliability.

Guangzhou Jiangtong Copper products, a subsidiary of Jiangxi Copper, announced that it began trial production at its new 400,000t/y copper wirerod plant this week. The company expects to supply nearby consumers in southern China as well as those in foreign markets in Southeast Asia. Capital investment expenditure totalled RMB2.0B.

According to Aurubis, the largest producer of copper in Europe, copper prices will be supported by strong demand from China and Europe over the next year. The struggling mine supply of the metal will also help to sustain price levels. Aurubis believes that the recent drop in price was caused by a change in market sentiment rather than a physical fall in demand, although the company noted that some customers have become cautious when placing orders recently. Market insiders at the 2011 China International Mining Expo & Summit Forum supported the view of continuing robust demand. Some sources from the forum estimated Chinese demand for the metal to grow between 5% and 10% in 2012.

It was reported that Gree Electric Appliances, a state owned manufacturer of air-conditioners, recorded a 65%y-o-y increase in exports in Q3. Indonesia, Brazil, India and Africa were quoted as regions with great potential for exports. The company anticipates that the air-conditioning industry will witness a 20-30% y-o-y increase in exports in 2011. Nevertheless, Gree noted that the eurozone crisis is impacting negatively on business.

According to an industry body, Japan's copper wire and cable shipments declined by 1.6% y-o-y to 59,500t in September. The decline was the result of weaker demand fromthe telecommunications, power utilities and the electrical machinery sectors. Nonetheless, demand picked up 0.5% y-o-y from the automotive sector.

Thomson Reuters, the global news and information agency, conducted a survey of 10 analysts on their impressions of China's copper demand growth outlook. The survey revealed that on average analysts forecast growth of 6.3% y-o-y in 2012; a figure which excludes the purchasing of metal for stockpiling. Expectations of this real demand growth ranged between 4% and 8% y-o-y in 2012, while estimates of apparent demand growth, which includes restocking, ranged from 6% and 12% y-o-y in 2012. Analysts cited fears of weak exports of copper products to the US and Europe amidst their ongoing debt crises, as well as the tight credit environment in China which they expect to limit restocking potential. Previously, analysts had been anticipating growth in the coming year of 7-9% y-o-y.

A move which the industry claims would be devastating

Aurubis AG, the Germany based refined copper and copper products manufacturer, said that actual business operations do not reflect the pronounced negative mood indicated by the International Monetary Fund's (IMF)growth forecast reduction for developed countries. Citing the Eurozone's 5.3% y-o-y rise in industrial production in August, as well as strong recent performances in Germany's electrical and automotive industry, Aurubis surmises that there is no sign of a slump in orders as implied by the negative market sentiment.

It was reported that Xinxing Copper Co. successfully increased its production capacity of oxygen-free copper rod to 150,000t/y in October after the new casting and rolling line was formally opened for production in the month prior. The project is part of a RMB3.0B strategic cooperation agreement between the Fuyang municipal government and Xinxing Copper Co. to build operations capable of producing 150,000t/y of high grade semis and 300,000t/y of refined copper.

The EU announced a 'Connecting Europe Facility' initiative on 19th October, which has substantial potential to boost European wirerod demand. As part of the €50B (US$69.5B) investment initiative, the EU plans to invest €9.1B (US$12.7B) in energy infrastructure, including renewable energy generators, smart meters and smart grids, and €9.2B (US$12.8B) in telecommunications and ICT.

Nexans announced sales of EUR1.7B (US$2.4B) in Q3 2011, up 3.9% y-o-y. Sales increased by 6.8% y-o-y in the first three quarters of the year. In the energy sector, the company's sales increased by 2.8% in energy infrastructure, 9.6% in industry, and 7.4% in building. With regards to the telecoms sector, Q3 sales increased by 6.0% in telecom infrastructure and 2.9% in private networks (LAN). The consumption of copper cables especially accelerated in Europe and South America. Wire sales were down by 13.8% due to Nexans' decision to utilise more of the material in their own downstream production, resulting in less material being available for external sales.

Outokumpu, a leading stainless steel fabricator, announced on 1st November that it has sold its 50% shareholding in Nordic Brass Gusum, a brass rod mill located in Sweden, to the operative management. The brass rod mill has a production capacity of 40,000t/y, employs 150 workers and in 2010 achieved a turnover of EUR110M. Outokumpu still owns another brass mill in the Netherlands, Copper LDM B.V., which has a production capacity of around 30,000t/y.

General Cable announced that sales in terms of the volume of metals sold increased 6% y-o-y and 2% q-o-q, principally attributed to aluminium-based product shipments for use in aerial transmission projects in Brazil. Discounting the sales for Brazil's aerial transmission projects, growth in shipments to the country still increased by 9% q-o-q and 5% y-o-y. The company benefitted from Brazil and Venezuela's increased spending on electrical infrastructure, Chile's spending on construction and mining activities and also the release of industrial projects in Thailand. Volatility of metals prices contributed to some distributors and copper rod customers deferring purchases, particularly in Zambia and Chile. The company also reported stable demand from North America for electrical infrastructural projects, networking and OEM applications while Europe experienced a sequential rise in shipments of 4%, which was lower than expected due to difficult trading conditions in Southern Europe. However, European sales were buoyed by submarine and land based turnkey cable projects, which accounted for $600M.