Maravi

Higher copper prices not sustainable observes Khan

COMMENT - Last time Edith Nawakwi was told by the IMF/World Bank that copper prices 'would not rise in her lifetime'. It should also be noted that China is not stockpiling just for speculative purposes - they want and need to create thousands of miles of copper wiring. And Zambia should directly benefit from those purchases of copper.

Higher copper prices not sustainable observes Khan
By Kabanda Chulu
Wed 13 Jan. 2010, 12:10 CAT

STANDARD Chartered Bank has warned that higher copper prices will not be sustainable since China, which is the world's major consumer has stockpiled the commodity and its reduction in purchase will result in lower metal prices.

During a briefing in Lusaka by the Bank’s Head of Research for Africa Razia Khan, that the outlook for copper was positive and the commodity’s performance in the market would be supported by various strong indicators.

However, Khan questioned the sustainability of the current boom in copper prices, expressing concern that if China reduces its buying power, prices will fall down.

“The outlook for copper is optimistic but we can’t move away from the issue of sustainability and in the short to medium term, these higher prices will become vulnerable since China has taken over the US as major auto maker and also China has taken over other major copper consuming industries like construction, home appliances and manufacturing,” Khan said.

“And it is evident, looking at the how China bought copper during recession that it has been stockpiling and this will affect price movements in the short to medium term and since prices will be vulnerable, we think between US $ 6, 000 and US $ 7,000 per metric tonne will be fair.”

She explained that any threat to the current price of copper, which is above US $ 7,600, would have a psychological impact on the Zambian kwacha.

“But we do not expect huge swings especially that there is policy of restricting foreign players to purchase more than US $ 100 million within a year,” said Khan.

Labels: CHINA, COPPER

posted by MrK @ 6:03 PM