Copper-Cable Demand Sustained Even as Prices Climb to Record, Nexans Says
Nexans SA, the world’s largest cable maker, said demand from customers will be sustained even as copper soars to a record.
“Many of our cables represent a rather small portion of end-market product costs,” Julien Catel, vice president, metal- risk management, at the Paris-based company, wrote in an e- mailed reply to Bloomberg questions. “In our industry, the price of copper or aluminum has usually little or no direct impact on demand.”
Copper climbed 2.7 percent today to a record $9,010 a metric ton in London as supply trails demand led by China and as investors buy commodities on concern currencies may depreciate as governments pump more money into their economies. Copper has jumped 22 percent this year as global exchange stockpiles tumbled 23 percent, according to data compiled by Bloomberg.
“There is usually no alternative” for the cable industry, Catel wrote Dec. 3. “Investments in power grids for instance are rather strategic for any country. It cannot be postponed for an undetermined period based on metal price assumptions.”
Nexans represented 3 percent of global copper consumption last year. The company used 546,000 tons in 2009, its annual report said. World usage totaled 18.12 million tons, according to the Lisbon-based International Copper Study Group.
Global consumption may be 100,000 tons less than expected in 2011, and 250,000 tons below predictions in 2012, as rising prices prompt replacement with other materials, according to Credit Suisse Group.
ETF ‘Not a Worry’
ETF Securities Ltd., BlackRock Inc. and JPMorgan Chase & Co. are planning to introduce exchange-traded products backed by copper. Such funds may attract $2 billion, equal to 250,000 tons of copper, according to an estimate by Hamburg-based Aurubis AG, Europe’s largest copper smelter.
Their introduction “is not a worry for Nexans,” Catel said. “We do not expect it to have any impact on our supply chain, as we buy most of the copper we process directly from cathode producers.”
Traders “might have more difficulties in finding copper” because of the ETFs, and LME stockpiles may fall to some extent as a result, he said. LME-monitored copper stockpiles shrank 30 percent this year and are heading for their first annual decline since 2004.
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