Freeport Says China Copper Stocks May Weaken Demand (Update3)

April 21 (Bloomberg) -- Freeport-McMoRan Copper & Gold Inc. Chief Executive Officer Richard Adkerson said there's speculation that copper inventories may increase in China and damp demand for the metal later this year. "The copper market is strongly supported by China," Adkerson said today on a conference call after releasing first- quarter earnings. "Speculation is that some of those imports are going into warehouses and that might affect imports later in the year."

Stockpiles monitored by the Shanghai Futures Exchange have surged 95 percent in 2010, raising concern that exports of the industrial metal to China may slow. Shipments into China, the world's largest consumer of the metal, jumped 53 percent in March from February, data showed today. "There's a lot of questions about this relationship between imports and internal consumption," said Adkerson, CEO of the world's largest publicly traded copper producer. "Longer-range we're very optimistic about China."

Freeport, based in Phoenix, dropped $2.39, or 3 percent, to $78.41 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 93 percent in the last 12 months.

The share "sell-off is probably related to more macro concerns that some observers have related to China and also the strengthening U.S. dollar," Anthony Rizzuto, a New York-based analyst with Dahlman Rose & Co., said in a telephone interview.

Buying Opportunity

"We're telling our sales force and investors that this is a very good buying opportunity" because economic recoveries in the U.S. and Europe may offset any slowdown in China's copper imports, Rizzuto said.

Freeport said today first-quarter profit surged as global demand boosted metal prices. The company has benefited from copper prices that almost doubled in the 12 months through March as Chinese demand climbed for the metal used in pipes and wires.

First-quarter net income increased to $897 million, or $2 a share, from $43 million, or 11 cents, a year earlier, Freeport said in a statement. Sales climbed 68 percent to $4.36 billion.

The company reiterated its 2010 copper sales forecast of about 3.8 billion pounds, down from 4.1 billion in 2009 and 4.07 billion in 2008.

Copper futures for July delivery rose 2.2 cents, or 0.6 percent, to $3.5575 a pound on the Comex in New York. Yesterday, the price climbed 0.5 percent.