SANTIAGO (Reuters) - The chief executive of Germany’s Aurubis AG said uncertainty caused by the U.S-China trade war and Brexit had hit its copper products business but that long-term demand would be rescued by higher use in electric vehicles.
The Hamburg-based company produces flat rolled products, cables and foils used in the automotive industry.
“People are hesitating in making purchases and are lowering their inventories with all the discussion around China and the U.S. and the Brexit discussions creating more uncertainty,” Juergen Schachler said on Wednesday on the sidelines of the World Copper Conference in Santiago.
“We are seeing some slowing in demand which is related to automotive. We are seeing this in the last five to six months starting in the flat rolled business,” he said.
Global growth and metal demand have been hit by a long-standing trade conflict between China and the United States.
New car sales in the across the European region are mostly trending lower also on political uncertainty over Brexit. Schachler, who steps down in June, said that despite the political uncertainty, the rest of Aurubis’ copper business was “doing fine” due to help from higher demand in the construction industry and that the rest of the company was performing well. Aurubis was still positive on copper demand due to the expected rise in renewable energy and in electric vehicles, which use twice as much of the metal as internal combustion engines.
“I’m still optimistic about demand in the long term for copper and I don’t see any really big threat to optimism except for this China-U.S. situation,” Schachler said.
In February, the European Commission blocked the sale of the flat rolled products business, which has annual sales of about 1.3 billion euros, to Germany’s Wieland due to competition concerns.
Aurubis, Europe’s biggest copper smelter, was evaluating different strategic options with the main intention to sell, Schachler said.
The company still favored small to mid-sized companies over larger ones in any its hunt for potential acquisitions, armed with its $1.4 billion war-chest, Schachler said.
Reporting by Zandi Shabalala; Editing by Marguerita Choy