Chinese Copper Use in Financing Seen by Jinrui Dropping in 2013

Use of copper in financing accords in China is set to drop this year as credit becomes more available, said Zhong Min, vice-general manager at Jinrui Futures Co.

China might import more copper concentrate this year and less refined metal, according to Jinrui, a unit of Jiangxi Copper Co. The nation’s demand for refined copper will expand 5.5 percent in 2013, speeding up from last year’s 3.5 percent gain to 7.59 million metric tons, according to Jinrui.

Following are comments made by Zhong at Metal Bulletin’s 26th International Copper Conference in Madrid on March 6. Jiangxi’s production of refined copper rose 9 percent last year to 1.03 million tons, ranking fourth globally, according to researcher CRU. China is the world’s biggest consumer of copper, used as a backup for borrowings by banks.

On copper use in financing:

“It is believed in the industry 70 percent of all refined copper is for financing needs. In 2013 we are expecting loose credit and no renminbi appreciation. Copper financing should drop.”

On China’s refined-copper capacity:

“Mining capacity increases slowly, while smelting capacity grows fast. In 2013 the estimated excess of concentrate could result in more imports into China.

“Local government pursuing high GDP growth made refined copper capacity increase rapidly in the past. In 2012 Chinese smelters had 330,000 tons of excess capacity, and in 2013 there will be 440,000 tons of new capacity. In total, as high as 770,000 tons of capacity may be released. In 2013 refined copper could be greater than the 9.75 percent growth rate in 2012.”

On Chinese copper demand:

“A lower level of the growth rate of China’s copper consumption is not a short-term situation, but will be constant in the future. But in 2013 we will see better consumption growth.

“Even with rapid growth in the past, China’s consumption per person was as low as 5.87 kilograms (12.9 pounds) in 2011. It’s almost the same as when Japan, Taiwan and Korea were at the beginning of their economic growth. Considering the development history in Japan, Korea and Taiwan … copper consumption growth in China is still good.

“Copper consumption per person will grow and nuclear power, high-speed rail and city rail should be the new areas of consumption growth.

“It is estimated that copper consumption per person in China will be 7.3 kilograms in 2020 and 8.2 kilograms in 2030. China will remain the largest copper consumer at least for another 10 to 20 years.

“Looking at the composition of industries, along with modernization and industrialization, electric power has become the largest part of copper consumption.

“Low-income housing should be an important point of growth in 2013’s copper consumption. Transmission-grid investment will have a stable increase.”

On China’s economy:

“The economy is currently rebounding. We believe in 2013 macroeconomic policies will not be tight. Monetary policy will be looser than expected.”

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