Copper Output in China Gains 12% to Record 4.79 Million Tons, Bureau Says

Blomberg Jan 20--Copper output in China, the largest consumer, increased to the highest-ever level in December and last year, as ample raw material supplies and record prices spurred production.

Chinese smelters produced 444,000 metric tons in December, 7 percent higher than a year ago, according to the National Bureau of Statistics. Output in 2010 gained 12 percent to 4.79 million tons, the data showed. That is a record, according to Wang Ning, an analyst at Xiangyu Futures Co.

Copper in London advanced to a record of $9,781 a ton yesterday after gaining 30 percent in 2010 as the global economy recovered from the worst recession since World War II. China’s economic growth accelerated to 9.8 percent in the fourth quarter as industrial production and retail sales picked up, adding pressure on policy makers to keep raising interest rates.

“Concentrate supplies are adequate now, so the bullish market encouraged smelters to produce,” Wang Fei, an analyst at Haitong Futures Co., said by phone from Shanghai. “It’s not surprising to see output at another record.”

Copper in London erased earlier gains, and traded little changed at $9,568 a ton at 2:09 p.m. Singapore time. The metal for April delivery on the Shanghai Futures Exchange fell as much as 2.2 percent to 71,330 （$10,827） a ton.

Chinese Imports

Chinese imports of copper concentrate in November gained 12 percent from a year ago to 552,773 tons and total imports in the first 11 months in 2010 rose 6.4 percent to 5.98 million tons, according to customs data.

Spot treatment charges were about $90 a ton in December, much higher than the contract price of $46.50 a ton, according to Qu Yi, an analyst at metals researcher CRU International Ltd. The fees for producing metal from concentrate usually rise when there is ample ore supply.

Global demand will outstrip supply for the next two years as the global economy recovers, China sustains consumption and mine output drops, said Pan Pacific Copper Co., Japan’s top producer. Demand will likely exceed supply by 635,000 tons in 2011, the biggest deficit since 2004, compared with 234,000 tons last year, Hidenori Kamoo, general manager of the marketing department at Pan Pacific, said in an interview Jan. 18. The shortage may be 91,000 tons in 2012, he said.

“People who expect further price gains are more than those expecting a decline, so any dip has become a buying opportunity for end users,” Fan Junmei, an analyst at Shenzhen Rongtuo Trading Co., said by phone today.

Holiday Slowdown

Still, record prices are prompting consumers to continue destocking ahead of the Lunar New Year holiday, which starts on Feb. 2, Haitong Futures’ Wang said. “There is no usual pre- holiday stocking at all. We’ll see whether it will improve after the holidays.”

Growth of copper consumption in China may almost halve this year as the government curbs monetary expansion, cooling demand, Michael Jansen, metals strategist at JPMorgan Securities Ltd., said Jan. 15. Real consumption is likely to gain about 7 percent to 7.88 million tons, down from 13 percent in 2010, he said.

China’s economy expanded 10.3 percent in 2010, the fastest pace in three years, the statistics bureau report showed. That compared with growth of 9.2 percent in 2009. The nation’s standing as the No. 2 economy may be confirmed on Feb. 14 when Japan reports gross domestic product for the fourth quarter.

Output of copper products increased 2.7 percent on year to 1.03 million tons in December, and gained 11 percent in 2010 to 10.67 million tons, according to the statistics bureau.