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By Lee Chyen Yee and Meg Shen
SINGAPORE/HONG KONG, April 2 Key copper firms in
China, the world's top producer and consumer of the refined
metal, are expected to face another tough year as a sluggish
global economy and tapering growth at home dampen demand and
pressure prices of the metal.
Jiangxi Copper Co Ltd and Yunnan
Copper Co Ltd, China's No.1 and No.4 producers, as
well as Shenzhen Zhongjin Lingnan Nonfemet Co Ltd -
a major lead and zinc producer that also makes copper - posted
either profit falls or losses in 2013.
China's production of refined copper rose 13.6 percent to
6.84 million tonnes in 2013, faster than the 11 percent rise in
2012, according to official data, with excess capacities pushing
"Economic conditions are not looking optimistic," Yunnan
Copper said in its earnings statement posted on the Shenzhen
stock exchange late on Tuesday.
"Competition is fierce within the industry and smelting
capacities have been coming on stream in recent years."
The company, based in the ore-rich southwestern province of
Yunnan, swung into the red with a net loss of 1.5 billion yuan
($241 million), blaming the dismal performance on huge falls in
LME copper prices, which lost around 7 percent last
year, fell about 5 percent in March, logging the biggest fall
since June due to weak demand from China.
China's consumption of copper, used for making products such
as electrical wires and roofings, is seen slowing to 6.7 percent
in 2014 after exceeding 10 percent last year due to an inventory
pile-up, brokerage Kim Eng Securities said.
"We find that the tight credit conditions will weed out low
value activities leading to more sustainable and less volatile
copper consumption growth ahead," Kim Eng Securities said in a
note after Jiangxi Copper's results.
Last week, Jiangxi Copper said that its first-quarter net
profit was expected to drop by at least half from the year-ago
period. Three-month copper prices in London and Shanghai hover
at current levels or continue to fall.
The profit warning came as its net profit fell by almost a
third to 3.57 billion yuan in 2013, logging the second straight
year of profit falls.
China's second-largest copper producer Tongling Nonferrous
Metals Group Co Ltd has delayed the release of its
annual results to April 30 from March 8 due to the massive
workload of auditing and preparing the report, it said in
Its net profit is expected to be at 602 million yuan,
according to a mean estimate by four analysts, down by a third
from 923.9 million yuan in 2012 and logging the second straight
year of profit falls.
($1 = 6.2180 Chinese Yuan)
(Additional reporting by Twinnie Siu; Editing by Michael Perry)