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Codelco seeing solid interest from China for copper contracts
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Monday, 03 Dec 2012

Bloomberg quoted Codelco as saying that there’s sound and solid interest from customers in China for next year amid signs of an economic recovery in the world’s biggest market for the metal.

Mr Thomas Keller CEO of Codelco said that “There’s a lot of optimism regarding copper demand going forward. Demand may grow about 5% to 7% next year in China.

The world’s second largest economy in September approved plans to build as much as 2,018 kilometers of roads and subways estimated by Nomura Holdings Inc to be worth about CNY 1 trillion. Data from factory production to retail sales show growth in China picking up this quarter after a 7 quarter slowdown and Tom Albanese CEO of Rio Tinto Group said the nation is beginning to see green shoots.

Mr Keller said that “We’re positive about the prospects for next year which to some extent has been confirmed by the interest our clients have demonstrated in our contracts for next year. I can indicate that the interest is very sound and solid.”

Confidence in China’s economy is at the highest in more than a year amid optimism that the new leadership headed by Xi Jinping will be better for the financial climate.

Analysts and traders who are Bloomberg subscribers said that respondents who see the Chinese economy improving or remaining stable surged to 72% from September’s 38% in the quarterly global poll of investors. 53% said they’re more optimistic about the effect of Xi’s policies on investors up from 42% who were asked in September about President Hu Jintao.

Mr Keller said that China’s new leadership may be boost for the copper industry should it continue with policies that accelerate urbanization. We have ground to believe that kind of policy will underpin copper demand. Urbanization is very copper demand intensive exercise.

Santiago, Chile based Codelco plans to cut the premium on sales to China by 11% to USD 98 for 2013. Contracts are still being finalized while not confirming the premium figures. Codelco is targeting annual output of more than 2 million tonnes toward the end of the decade from slightly below 1.7 million tonnes this year.

Source – Bloomberg


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