Editor’s note: SMM brings special report on experts and industry players’ discussions on copper and aluminum prices during the late Seventh China Cu & Al Summit.
◆ How will the world economy develop in 2012?
China Economy May Bottom in 2Q
Ba Shusong, Vice President of the Financial Research Institute under the Development Research Center of the State Council, expects the Chinese economy to bottom in the first half as it continues to trim growth starting from 2011. He also expects a moderate recovery from 3Q or 4Q this year.
US Dollar Likely to Strengthen
Both the US dollar and the euro had been weakening during the past three years. With moderate recovery in track, which currency is stronger will depend on their market fundamentals. The US trade deficit has already dropped by half from 2006, this, excluding impact from crude prices, has pressed US fiscal deficit to 0.9% of its GDP, a rarely seen improvement during the past ten years.
Above taken, more and more research agencies have agreed on strengthening of the US dollar, which will inevitably impact non-ferrous metals denominated in US dollars.
Metals Demand Remains Strong
Su Aik Lim, Fitch Ratings Director, said during the summit that metals demand remains strong this year, which will offset the negative impact of weak economy.
◆ Copper and Aluminum Prices in 2012
Financing Demand Strong, Copper Stocks near 600,000 Mt in Bonded Zones
Judy Zhu from Standard Chartered said copper is not likely to return to historical highs or even USD 9,000/mt this year. She expects copper price to find its low at USD 8,000/mt, though, on account of support from strong financing demand.
Aluminum Price to See Wide Movement, May Hit RMB 17,500/mt
Zhang Chenguang, Aluminum Industry Analyst from SMM expects a moving band of RMB 15,500-17,500/mt for this year’s aluminum in China and USD 1,900-2,700/mt in LME.
◆Copper and Aluminum Industries See Both Risks and Opportunities in 2012
Chinese Cable Industry Faces Four Restraints
Although the Chinese cable industry has already become the world’s largest, four factors including capital, raw material, quality and talent are hampering its development, according to Liu Long, Deputy General Manager of Far East Holding, the largest cable producer in China.
Energy-Saving to Boost Copper Demand
Qiu Hong, Senior Consultant with International Copper Association, said the future growth driving force for copper will come from the energy efficiency concept in vehicle and home appliance industries.
Jiangxi Copper Expects Rebound in TC/RC
Chen Hehui, General Manager for Trade from Jiangxi Copper, expects copper TC/RC to increase from USD 56/mt in 2011 to USD 60/mt in 2012. Charges for converting copper concentrate into refined copper were as high as USD 85.5/mt and USD 95/mt in 2005 and 2006 respectively. Mr. Chen said a lower copper demand in China owing to structural adjustment of the Chinese economy is the major driver of higher processing fees.
Tightness in Global Copper Concentrate Supply to Stay for Next 4 Years
China’s copper demand will maintain moderate growth and global copper concentrate supply will stay tight during the following four years. Improvement in supply and demand balance will continue to support copper prices.
Aluminum Semis Export Not Optimistic in 2012
Aluminum semis has met the most trade frictions in the nonferrous metals industry, and, according to Wen Xianjun, Vice President of China Nonferrous Metals Industry Association, will see little improvement in export this year mainly restrained by the LME/SHFE aluminum price ratio. The export volume in 2012 is expected at the same level of 2011.
Aluminum Semis Demand Still Promising in 2012
Despite suspended high-speed rail projects, aluminum semis demand is still promising in China, mainly supported by strong appetite in the auto industry, power grid construction and aluminum packing foil, aluminum can as well as aluminum CTP plate sectors.