Cheaper foreign copper boosts nation's reserves

(Shanghai Daily)
Updated: 2009-01-20 13:20

China is to buy copper from international markets to boost state reserves, given the attractive prices currently on offer, an executive at China's top copper producer said yesterday.

The purchase by the State Reserve Bureau would match national interests and wouldn't push up global prices, Wang Chiwei, an executive director of Jiangxi Copper Co, told a conference in Shanghai.

London Copper has more than halved from July's record of US$8,940 a ton and was trading around US$3,410 yesterday afternoon. Copper was at 27,930 yuan (US$4,083) a ton in Shanghai.

Wang said that the SRB was unlikely to buy copper from domestic smelters because copper firms were still profitable and stockpiles were not high.

To support domestic metals industries hit by slowing demand, the SRB has been buying metals, including aluminum and zinc, from domestic firms. Copper prices are relatively firm compared to other metals, analysts said.

Meanwhile, overcapacity and oversupply could push domestic aluminum prices under the cost of production this year, although room for further reductions could be limited, Wen Xianjun, vice chairman of the China Nonferrous Metals Industry Association, told the Shanghai conference.

His comment came after Aluminum Corporation of China, or Chinalco, China's top aluminum maker, posted a sharp decline in earnings in 2008 because of falling prices. Chinalco's revenue fell 4.3 percent to 126 billion yuan last year, Vice President Lu Youqing said recently. Profit just exceeded 2 billion yuan, against more than 20 billion yuan in 2007.

Chinalco is to cut pay by up to 50 percent for executives and 15 percent for workers this year to avoid layoffs, Lu said.