Bloomberg reported that Asia’s fastest-growing economy is likely to account for 40% of forecast growth in copper demand up to 2010, BHP Billiton principal industry analyst Andrew Shaw said in notes for a conference held in Sydney on Wednesday.
Beijing plans to spend 180-billion yuan ($22-billion) on roads, subways and stadiums for the Olympics and has started construction. That is likely to mean increased demand for metals such, as zinc, used to galvanise steel, and copper, at a time when slowing world growth is weighing on prices.
“The staging of the 2008 Olympic Games may have broader, positive ramifications for regional metal demand,” Shaw said in notes for the Copper Forecast Conference in Sydney.
Chile’s state-owned Codelco is the world’s biggest copper-producer, followed by Phelps Dodge Corporation. BHP Billiton owns 57,5% of the Escondida mine in Chile, the largest copper-mine.
China’s successful bid for the Olympics will add 0,3 to 0,4 percentage points to annual growth, spokesman for the National Bureau of Statistics Ye Zhen said last month.
The nation’s demand for copper, used in wires and pipes, rose from the mid-1980s to about two million tons a year, Shaw said in the speech. Overseas mines accounted for twothirds of that total, he said.
Increased Chinese demand has already helped push the price of copper up almost 5%, since slumping to a two-year low on August 13. Higher demand has been reflected by a 37% slump in copper inventories in the London Metal Exchange’s Singapore warehouse, analysts said.
“China’s rapidly rising demand for copper – above the pace of GDP expansion – is a key element in the apparent stabilising of copper’s intensity of use since the early 1990s,” Shaw said in the notes.
While Chinese copper demand is strong, global consumption of the metal is likely to rise by between 3% and 3,5% a year until 2010, unchanged from growth during the 1990s, Shaw said. ”Higher growth rates are possible – some forecasters are pointing to rates of 4% a year or greater – but reliance on these, especially the duration of a full cycle, is risky,” he said in the speech. Chinese copper demand is expected to more than double this decade to 3,9-million t by 2010 from 1,8-million t last year, Macquarie Bank analyst Jim Lennon said earlier this year.