[Cu] Impact of Stimulus Plan for Non-ferrous Metal Industry on Copper Market

SHANGHAI, May 14 (CBI China) -- On May 11th, the State Council released the stimulus plan for non-ferrous metal industry, with the period of 2009-2011. Attentions should be paid to the points concerning copper market.

    300kt of inefficient copper smelting capacity will be eliminated in 2009. In the mean time, Central Government will form 3-5 comprehensive Groups with strong strength through reorganization, and the proportion of output of domestic top ten copper enterprises in China’s total output will be lifted to 90% by 2011.

    CBI believes 300kt elimination target for inefficient copper smelting capacity will be realized due to significant expansion of Chinese copper capacity, constant tightness of resources supply and the deteriorating economic conditions.

    The proportion of output of domestic top ten copper enterprises in China’s total output was 76.8% in 2008. As the production scale of domestic copper smelters including Jiangxi Copper, Tongling Non Ferrous Metals (group) Inc. and Yunnan Copper continued to expand, the concentration rate of Chinese copper smelters has been improved further, so the target can be realized as well.

    The self-sufficiency rate of domestic copper concentrate was 34% in 2008, so the target will be difficult to achieve considering the limited domestic copper ore resources. In addition, scrap copper supply declined since the global financial crisis erupted 2008, leading to declines in the proportion of secondary copper. Besides, the reform of value-added tax for scrap copper and the degree of economic recovery will exert influence on the implementation of scrap copper goals.

    In summary, any impact from the stimulus plan for non-ferrous metal industry on copper price will be limited in the short term, but it will play an important role in the structural adjustment and development of copper industry.

Copyright ? 2009, CBI (Shanghai) Co., Ltd. All Rights Reserved.

None of this material may be used for any commercial or public use in any form or means, without the prior written consent of CBI China. For reproduction issue, please contact us by email: metalresearch@cbichina.com or tel:86-21-51550040