UPDATE 1-Growth in Chinese copper demand not enough to boost imports - Antaike

Tue Oct 29, 2013 12:51am EDT

Related Topics

* Production forecast to rise 7.4 pct to 6.8 mln tonnes in 2014

* Consumption to rise 6.5 pct to 8.7 mln tonnes in 2014

* China expected to have a deficit of 1.9 mln tonnes of refined copper

By Polly Yam

KUNMING, China, Oct 29 (Reuters) - China's consumption of refined copper is expected to grow more quickly in 2014, though not fast enough to boost imports significantly as production increases more quickly, state-backed research firm Antaike said.

China is the world's top producer and consumer of the metal and import have been dropping in line with weaker economic activity, dragging international prices down nearly 10 percent so far this year.

But the market has been looking for a rebound next year as the economy stabilises and infrastructure spending increases.

China's consumption of refined copper is forecast to grow 6.5 percent to 8.7 million tonnes in 2014, as Beijing continues to invest heavily in the power sector, Antaike's chief copper analyst Yang Changhua told Reuters.

The rate is slightly up from the 6.4 percent growth rate expected this year and the 4.8 percent increase recorded in 2012, Yang said.

On the supply side, Antaike sees production growth moderating to about 7.4 percent in 2014 to 6.8 million tonnes.

That would put China's supply deficit at 1.9 million tonnes in 2014, against 1.84 million tonnes expected this year.

Despite a shortage of scrap supplies, a cheaper alternative to producing refined copper, China's total output is expected to rise 12.7 percent to 6.33 million tonnes this year, as more smelters turn to concentrates.

Out of 2013 production, nearly 70 percent would be made from concentrates, higher than 66 percent in 2012 and 65 percent in 2011, Yang said.

POWER SECTOR INVESTMENTS

After a sluggish six-months, China's copper demand has picked up noticeably since June as Beijing boosted spending on power grids and other infrastructure work to support its economy.

China's refined copper consumption is expected to stay robust in 2014 under Beijing's urbanisation push, driving demand for housing, infrastructure and electrical appliances.

Yang said refined metal demand from manufacturers of copper tubes, widely used in home appliances and cooling systems, had been stronger than expected this year and was expected to be steady in 2014.

The shortage of scrap had also forced manufacturers of semi-finished copper products to use less than 100,000 tonnes of refined copper to replace scrap as feed in 2013.

Treatment and refining charges for copper concentrate are also expected to rise in 2014 because of increased supply in the global market, Yang said, adding that better profits would encourage Chinese smelters to run at full capacity.

Yang estimated China would add 650,000 tonnes of smelting capacity in 2014 to 5.59 million tonnes. Refining capacity was set to rise 750,000 tonnes next year to 9.71 million tonnes.

Separately, scrap copper supply is forecast to rise slightly in 2014, as Chinese customs wraps up a crackdown on low grade scrap imports launched in the first quarter of 2013, Yang said. (Editing by Ed Davies)

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