The global refined copper market is expected to see a deficit in 2014, versus earlier projections of a surplus, on strong demand and lower operating rates at smelters in top producer China, the head of Japan's JX Nippon Mining & Metals Corp said.
A fifth straight year of shortage in refined metal should give legs to a recovery in benchmark copper prices, which fell almost 10 percent in the first three months this year, driven by forecasts for an uptrend in supply from mines.
"I personally expect the global copper market to stay tight throughout this year. Supply will likely be slightly short," said Shigeru Oi, the president of JX Nippon Mining, Japan's top copper refiner and a unit of JX Holdings Inc <5020.T>.
Oi, who forecast a slight delay in the ramp up of the firm's Caserones copper mine in Chile and sees metal prices rising this year by almost 11 percent from current levels, cited robust demand as a driver of the supply deficit.
"Despite the recent problem at China's Qingdao port, we've been constantly receiving enquiries from China for extra metal," Oi said in an interview, referring to a warehousing fraud investigation at Qingdao. Some investors fear the probe could prompt banks to cut credit for metals financing and curb demand.
"We've been also getting orders for additional supply from Japanese buyers on strong construction and automobile demand."
Delays in starting up new refining capacity in China and lower utilisation rate at the existing smelters in the country - the world's top consumer of the metal, are also leading to a supply crunch, Oi said.
"China's output of refined metal (this year) will be much less than everyone had anticipated," he said.
Oi's call of a deficit this year adds to a growing number of similar forecasts, partly prompted by a disruption to copper concentrate supplies from Indonesia, where a dispute between the government and miners Freeport-McMoRanand Newmont over an export tax has dragged on for months.
A senior executive at Jiangxi Copper, China's top producer of the metal, has said the global refined copper market may see a deficit of about 600,000 tonnes this year.
This is in contrast to earlier projections by Pan Pacific Copper, Japan's biggest copper smelter and a unit of JX Nippon Mining, for a global surplus of 178,000 tonnes.
The International Copper Study Group had projected a surplus of 405,000 tonnes and metals consultancy Thomson Reuters GFMS sees an excess of 352,000 tonnes.
With tight supply, copper prices are expected to stay between 320-360 cents per pound, or $7,056-$7,938 per tonne through next year, JX Nippon Mining's Oi said. London Metal Exchange copper is currently near $7,150 a tonne.
CASERONES RAMP-UP DELAYED
JX Nippon Mining, also Japan's key copper miner, will miss its 70,000 tonnes target for copper concentrate output at its Caserones mine in Chile for 2014 given a delay in the planned ramp-up due to a cold wave, Oi said.
"There has been some delay in ramp-up of Caserones due to severe cold weather. We expect to see the full utilisation rate in September, a month behind the planned August," he said.
Pan Pacific Copper (PPC) had said in June that Caserones began operations on May 31 with a plan to produce 70,000 tonnes of copper concentrate this year.
Oi, also the new president of PPC, said it will stick to its plan to produce 150,000 tonnes from Caserones in 2015, which is expected to contribute about 40 billion yen ($393.27 million) in recurring profit for the next business year to March 2016.
JX Nippon Mining is on track to post 130 billion yen in recurring profit in 2015/16, in line with the target in its current three-year business plan, Oi said.
Investors are now waiting for the firm's next project after Caserones, but Oi, who lived in Chile for 4 years, said the miner had not yet made any decision on this.
The company could invest in undeveloped mining projects, including in the region called Frontera that extends over Chile and Argentina, or buy brown-field project or mines that are already in operation, Oi said.
"We want to make a decision next business year so that we can include post-Caserones plan in the next mid-term business plan," Oi said.
A fifth straight year of shortage in refined metal should give legs to a recovery in benchmark copper prices
"I personally expect the global copper market to stay tight throughout this year. Supply will likely be slightly short," said Shigeru Oi, the president of JX Nippon Mining, Japan's top copper refiner and a unit of JX Holdings Inc <5020.T>.
Oi, who forecast a slight delay in the ramp up of the firm's Caserones copper mine in Chile and sees metal prices rising this year by almost 11 percent from current levels, cited robust demand as a driver of the supply deficit.
"Despite the recent problem at China's Qingdao port, we've been constantly receiving enquiries from China for extra metal," Oi said in an interview, referring to a warehousing fraud investigation at Qingdao. Some investors fear the probe could prompt banks to cut credit for metals financing and curb demand.
"We've been also getting orders for additional supply from Japanese buyers on strong construction and automobile demand."
Delays in starting up new refining capacity in China and lower utilisation rate at the existing smelters in the country - the world's top consumer of the metal, are also leading to a supply crunch, Oi said.
"China's output of refined metal (this year) will be much less than everyone had anticipated," he said.
Oi's call of a deficit this year adds to a growing number of similar forecasts, partly prompted by a disruption to copper concentrate supplies from Indonesia, where a dispute between the government and miners Freeport-McMoRan
A senior executive at Jiangxi Copper, China's top producer of the metal, has said the global refined copper market may see a deficit of about 600,000 tonnes this year.
This is in contrast to earlier projections by Pan Pacific Copper, Japan's biggest copper smelter and a unit of JX Nippon Mining, for a global surplus of 178,000 tonnes.
The International Copper Study Group had projected a surplus of 405,000 tonnes and metals consultancy Thomson Reuters GFMS sees an excess of 352,000 tonnes.
With tight supply, copper prices are expected to stay between 320-360 cents per pound, or $7,056-$7,938 per tonne through next year, JX Nippon Mining's Oi said. London Metal Exchange copper is currently near $7,150 a tonne.
CASERONES RAMP-UP DELAYED
JX Nippon Mining, also Japan's key copper miner, will miss its 70,000 tonnes target for copper concentrate output at its Caserones mine in Chile for 2014 given a delay in the planned ramp-up due to a cold wave, Oi said.
"There has been some delay in ramp-up of Caserones due to severe cold weather. We expect to see the full utilisation rate in September, a month behind the planned August," he said.
Pan Pacific Copper (PPC) had said in June that Caserones began operations on May 31 with a plan to produce 70,000 tonnes of copper concentrate this year.
Oi, also the new president of PPC, said it will stick to its plan to produce 150,000 tonnes from Caserones in 2015, which is expected to contribute about 40 billion yen ($393.27 million) in recurring profit for the next business year to March 2016.
JX Nippon Mining is on track to post 130 billion yen in recurring profit in 2015/16, in line with the target in its current three-year business plan, Oi said.
Investors are now waiting for the firm's next project after Caserones, but Oi, who lived in Chile for 4 years, said the miner had not yet made any decision on this.
The company could invest in undeveloped mining projects, including in the region called Frontera that extends over Chile and Argentina, or buy brown-field project or mines that are already in operation, Oi said.
"We want to make a decision next business year so that we can include post-Caserones plan in the next mid-term business plan," Oi said.
