Friday, September 04, 2009

Standard Bank London predicts fall in copper prices

Standard Bank London predicts fall in copper prices
Written by Mutuna Chanda in Kitwe
Friday, September 04, 2009 5:06:16 PM

STANDARD Bank London head of Commodity Research, Walter de Wet, has said copper prices may fall from the current level of over US $6,000 per tonne but may not decline to lower than US $4,200.

And Standard Bank South Africa head of Africa Research Group Economics, Yvonne Mhango, has said Zambia’s inflation is unlikely to drop below 10 per cent this year and will mainly be driven by the rate at which food prices increase.

Meanwhile, Standard Bank Group Southern Africa chief economist Goolam Ballim noted that Africa will be less of a priority in donor funding as most of the developed states that supported it are hit by the economic downturn.

During an economic briefing on the global and Zambian economies with a special focus on copper in Kitwe on Tuesday afternoon, de Wet said the current projections of the lowest prices of copper for the remaining part of the year could be upgraded from US $4,200 per tonne to US $4,500 per tonne.

He said that he did not see stronger copper prices this year than the current levels owing to high debt levels on the world market.

De Wet cited the United States consumer expenditure patterns which showed that four to five per cent of spending was taken away from the global economy and channelled to savings which was not the case prior to the world economic downturn.

He said consumer spending in China could not be matched with the US.

De Wet also warned of expected lower global car sales which had recently been on the rise in China, among other markets.

He said car sales were expected to drop after an end to government supported policies in some markets for people to buy cars.

De Wet said lower car sales were not good news for copper, aluminium and steel, among others.

And Mhango projected Zambia’s end year inflation at 13.7 per cent.

She also projected that Zambia’s economy could grow by 3.9 per cent this year, and forecasting the country’s exchange rate at K5,180 per US dollar at the end of the year.

She further said the effects of the global economic downturn were more telling on Zambia’s external exports sector as reflected by the overall depreciation of the kwacha against major convertible currencies.

Mhango however said Zambia’s real economy, which excluded copper, had not been so much impacted and cited the strong performance of the wholesale and retail trade, construction, transport and telecommunications sectors.

And Ballim said Africa suffered the indirect consequence of the economic downturn although its banking sector was healthy.

He said Africa’s trade and foreign investment inflows had been affected as a result of the global economic downturn.

Ballim further said remittances to African countries declined owing to job cuts in developed countries where Africans worked in the Diaspora.

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