LONDON, Aug 13, 2010 (Dow Jones Commodities News via Comtex) –
Unexpectedly strong economic growth in Germany and robust growth in China should underpin demand for copper and more than offset the U.S.'s faltering recovery, Europe's biggest copper producer, Aurubis SA (AIAGY), said Friday.
Germany's better-than-expected second-quarter gross domestic data Friday indicate demand for copper products is strong in the automotive, machining and electrical engineering industries, Aurubis said in its monthly report.
While China's economy is slowing to a single-digit growth rate, the growth is from a bigger base and so is comparable to the expansion in the economy in 2008. Usage of copper in power infrastructure projects has been higher than expected, it said. Demand should rise once the three-year investment program to expand power supplies in China's western region and other rural regions begins in 2011.
"Copper should therefore remain in demand and the renewed concern about the economic trend in the U.S. and news about a downturn in economic activity in China should basically not affect this," it said.
Aurubis said declining copper inventories on the London Metal Exchange reflect the strong demand in recent weeks. Premiums in the European spot copper market are above the annual premium, suggesting the market is tight.
"If the fundamental situation proves to be stable, the cathode premium should remain firm for the rest of this year," it said.
Aurubis said miners and smelters may have settled annual treatment and refining charges for copper concentrates at $40 a metric ton and 4 cents a pound. It also said scrap supplies of copper in Europe is good for this time of the year.