Chinalco Luoyang Copper sales down 20% in Q3
Updated: 2008-10-29 07:06
(HK Edition)
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Chinalco Luoyang Copper Co, the biggest processor of the metal for parent Aluminum Corp of China, said orders fell 20 percent last quarter as the economy grew at its slowest pace in five years.
The decline represented a drop in monthly production to 7,000 metric tons in the third quarter, from between 9,000 and 9,500 tons in the first half, said an executive who declined to be identified because he's not an official spokesman.
Copper futures have tumbled 47 percent this year in Shanghai as the global credit crisis deepened and consumption in the world's biggest copper user slowed. Tongling Nonferrous Metals Group Co, China's biggest copper smelter, and Yunnan Copper Industry Co, cut their production last month, according to research firm Beijing Antaike Information Development Co.
"The implication for refined copper demand is bad, as even processors who have orders are reluctant to buy amid the remorseless fall in prices," said Zhao Kai, an analyst at Jinrui Futures Co who spoke by phone from Shenzhen. "The production at copper-rod and tube manufacturers could slow down further as the two sectors have more excessive capacity than copper sheets, which Chinalco Luoyang makes."
Sales to the United States, Canada and Southeast Asia have also declined, Luoyang Copper's executive said. Chinalco Luoyang buys copper metal to process into products that are then used in generators, phone wires and appliances.
Tumbling Prices
Chinalco Luoyang, based in Luoyang, Henan province, may produce 105,000 tons of copper products this year, less than the company's 120,000-ton capacity, the executive said. It exported 22,000 tons of products, including aluminum plates, last year.
Copper futures have tumbled by the exchange-enforced daily limit for five straight trading days, pacing losses in international markets on concerns that the worsening economic slump will reduce demand for commodities. The futures dropped 5 percent to 30,910 yuan a metric ton shortly before noon yesterday.
"Most buyers are using up their existing inventory instead of making new purchases," said Li Jingyuan, an analyst at Haifu Futures Co who spoke by phone from Shanghai. "Chinese buyers are very sensitive to price fluctuations, so we won't see them emerge until after they determine the price is low enough."
Officials at Chinalco Luoyang and the Beijing-based Aluminum Corp couldn't be immediately reached for comment yesterday.
Ningbo Jintian Copper (Group), a Chinese smelter and refiner, cut production from June and is now operating at 80 percent capacity, Zhu Xinchang, general manager at the smelter, said yesterday at a conference in Jiangxi province.
Bloomberg
(HK Edition 10/29/2008 page3)