Copper Seen Near Bottom by Antofagasta as China Takes Supplyby and
Modest pickup in China demand may stem further declines: CEO
Antofagasta is not a `swing producer,' no plans to cut output
The head of Antofagasta Plc, the copper miner controlled by Chile’s richest family, believes prices of the metal are near a bottom as a modest pickup in Chinese demand next year is set to stem further declines.
“It doesn’t look like it will go down more than what it is,” Chief Executive Officer Diego Hernandez said in an interview in London on Thursday. Still, prices may remain flat through next year as a modest increase in Chinese demand is expected to absorb any supply increase, he said.
The view is similar to that of Chile’s Mining Minister Aurora Williams, who said this week that lower prices will persist through next year followed by a measured recovery in early 2017. Copper has fallen 16 percent this year as China’s economic slowdown means there’s less demand for pipes, wiring and other building materials.
“If China wants to continue to grow at a reasonable pace they need to continue with programs on infrastructure and power distribution,” Hernandez said. If the Chinese economy continues to grow at 6 percent to 7 percent annually then copper demand will grow by at least half of that figure, he said.
Copper hit a six-year low of $2.20 a pound in August, down from an all-time high of about $4.66 in 2011. The metal traded at $2.4035 in New York on Friday.
Antofagasta has no plans to pare back production from its mines as all operations are profitable. Rival producers Glencore Plc and Freeport-McMoRan Inc. have announced output cuts this year amid a slump in prices.
“Of course if you have an operation that is not paying its cost, then you should cut production,” Hernandez said. “But we are not swing producers.”
The miner said in August that it’s targeting 665,000 metric tons of copper production this year after cutting the outlook in July.
Antofagasta shares have lost 22 percent this year, making it among the worst performers on the U.K.’s benchmark index along with Glencore and Anglo American Plc.
The stock gained 1 percent to close at 586.5 pence on Thursday. The FTSE 350 Mining Index has dropped 29 percent in 2015.