November 29, 2012 / 2:46 PM / 5 years ago

WRAPUP 2-Chile industry output leaps in October,lifted by demand

* Manufacturing output up 19.7 pct in Oct from Sept
    * Manufacturing output up 9.1 pct y/y, beats forecast
    * Retail sales grow 6.6 pct in Oct
    * Chile copper output up 1.4 pct in Oct to 476,202 tonnes


    By Antonio De la Jara and Moises Avila
    SANTIAGO, Nov 29 (Reuters) - Chilean manufacturing
production surged in October, beating expectations and posting
its biggest annual gain in 2012, on the back of extra working
days and a pick-up in already buoyant domestic demand, the
government said on Thursday.
    Manufacturing output leapt a seasonally adjusted
19.7 percent in October from September. It also grew a
stronger-than-forecast 9.1 percent from a year earlier.
    October had five more working days than a holiday-packed
September in Chile, fueling the leap in manufacturing.   
    Of the 9.1 percent jump, the INE statistics agency said: 
" At the local level, manufacturing production was favored by a
positive calendar effect, with three more working days versus
October 2011, and also by an increase in domestic and external
demand for various products, strongly highlighting increased
production of food and beverages."
     The INE also said that retail sales grew 6.6 percent in
October versus a year earlier, similar to the preceding month's
rate.
     Following the data releases, Finance Minister Felipe
Larrain said that while exports overall fell in the third
quarter, "Investment and consumption are pushing the Chilean
economy forward." 
     Export-dependent Chile has so far fared better than
expected amid fears of a slowdown on the back of slowing demand
from top trade partner China. The Andean country's economy
expanded 5.7 percent in the third quarter from a year earlier
. 
      Easy access to credit in Chile and a growing retail
industry have gone hand-in-hand with a surge in domestic demand
in the Andean country, as in much of Latin America.
     A Reuters poll had seen manufacturing output in October
rising 2.7 percent from a year earlier. 
 
    Chile produced 476,202 tonnes of copper in October, a 1.4
percent rise from the same month a year earlier on improved
mineral ore grades and increased production at some of the
nation's new mines, the government also said on Thursday.
    World No.1 copper producer Chile is struggling with
stubbornly dwindling ore grades in many of its aging, tired
deposits though new and expanded deposits have helped increase
output this year.
    Compared with September, output of the metal grew 2.6
percent. 
    Copper production expanded 3.8 percent to clock 4.46 million
tonnes between January and October, compared with the
year-earlier period.
    Central bank board member Joaquin Vial said in a
presentation on Thursday that strong economic growth in emerging
countries boded well for copper demand in coming years. 
    "But there is considerable uncertainty about the short and
medium term outlook," Vial said. "In the short-term due notice
must be taken to the very unusual pattern of the current cycle.
Supply has taken far more than normal to respond and consumption
will remain weak over the next year."
    Analysts have called into question Chile's aim of producing
5.4 million tonnes of copper this year, deeming it
overambitious. 
    A recovery in the world No. 1 copper mine, Escondida,
majority owned by BHP Billiton Ltd, as well as higher
output from Anglo American Plc's disputed Los Bronces
mine are boosting Chile's production.
    But slipping ore grades and operational problems have dented
output. Production at state copper giant Codelco and
world's No. 3 copper mine, Collahuasi are down year-on-year.

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