COMMENT - It is galling that the Zambian government managed to keep the mines going when copper prices were at $2,000 per tonne, but these so-called efficient private sector mining companies are complaining that prices won't rise over $10,000 per tonne. They are only efficient in lining their own pockets.
Copper prices unlikely to exceed $9,000 - De Wet
By Kabanda Chulu
Fri 17 Feb. 2012, 12:00 CAT
COPPER prices in 2012 are not likely to exceed US$9,000 per tonne due to the decline in the Chinese construction sector, says Standard Bank head of commodity strategy Walter de Wet.
And de Wet stated that global copper consumption is expected to grow by 1.2 per cent
in 2012 to reach 20.3 million metric tonnes. In a statement yesterday, de Wet stated that for most investors, copper was a base metal of choice and its price provides insights into how traders viewed the global economic outlook.
"But to analyse the global copper demand, outlook for the Chinese market, the largest global consumer, needs to be considered in detail. After stabilising over the second half of 2010 and into the first half of 2011, Chinese property sales growth started to deteriorate again in September 2011," de Wet stated.
"We expect sales growth to decline further during the first half of 2012. Most of the growth in construction to date has come from the private sector, with government related property development making up only a small percentage of total developments, so this declining health of the Chinese construction sector poses a real risk to demand and prices are unlikely to be much above US$9,000 per metric tonne for 2012."
He explained that construction currently accounts for 55 per cent of China's total copper demand with domestic consumption accounting for around 29 per cent while exports account for 16 per cent of total demand.
"Exports are perceived to be the primary risk to Chinese copper consumption but this sector constitutes only a modest percentage of total demand. For demand to remain at current levels, domestic consumption would need to fill the gap," stated de Wet.
"Despite macroeconomic unrest in the West, the US and Europe are still key players in the global copper market."
Labels: COPPER, STANDARD BANK LONDON
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Standard Bank sees Africa gains in China-US rivalry
By Gift Chanda
Wed 16 Mar. 2011, 04:00 CAT
AFRICA stands to benefit from increasing rivalry between China and US to become the continent’s leading trading partner, according to Standard Bank.
In its latest economic strategy report titled “China and the US in Africa: Measuring Washington’s response to Beijing’s Commercial Advance”, the bank stated that competition between the two economic giants presents Africa with better strategic choices.
The report however cautions African governments against using “out-dated models that place ideology ahead of commerce” when engaging the world’s two economic giants, and suggests that Africa strives for balance rather than choosing between the two.
The authors of the research - Simon Freemantle and Jeremy Stevens - note that the tussle between the world’s two largest economies had elevated Africa to a new position of influence and as much-sought-after market.
The duo argues that while China’s rise might have overtaken the US in Africa, there are merits in engaging with both countries, and that Africa should rather capitalise on the frictions between the two countries.
“Africa must ensure reciprocity,” read the report. “The relative (and varied) merits of engaging with both must be measured and capitalised on.”
They note that China’s rise as a new global pole of influence should be seen as supplementing rather than replacing the role of the continent’s traditional trading partners, such as the US.
“African states must engineer a new foreign policy based on this understanding, balancing rather than selecting between the US and China,” they stated.
The researchers note that while China’s rise has been sufficiently swift to eclipse the US in Africa, “African states must remain acutely aware of the separate benefits to be gained from seeking deeper alliances with the world’s most powerful economy”.
“It is an oddity of economic commentary that the importance and size of the US economy is downplayed. The US economy is nearly three times the size of China’s…It should be no surprise that the world’s largest consumer is also Africa’s largest export destination,” stated the report.
Labels: CHINA, STANDARD BANK LONDON
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Standard Bank predicts massive copper demand
By Kabanda Chulu in Kitwe
Mon 07 Feb. 2011, 04:01 CAT
COPPER mining companies will not meet global demand for 2011 and next year because it is growing faster than supply, says Standard Bank head of commodity research Walter de Wet. In an interview, de Wet said the copper market would be in deficit this year and next year.
“We estimate deficit to be 385,000 metric tonnes for 2011 and 465,000 for 2012, so clearly demand is growing faster than supply at this stage and mining companies will not meet this global demand,” de Wet said.
“Demand will remain strong until 2013 and after that we don’t see demand falling; it will be a case of supply start catching up with demand.”
When asked about copper benefits to Zambia and investor sentiments in view of the forthcoming general elections, de Wet said higher copper prices were an incentive to start new projects.
“And new projects means new jobs as well as revenue for government … speaking from a copper perspective people view Zambia as a source of new supply. No doubt and as long as copper price remain favourable and obviously economic conditions are favourable and we should see people investing in new mining projects,” de Wet said.
And making a presentation at the 2011 Stanbic Bank global micro-economic metals markets in Kitwe on Thursday, de Wet said the world should expect a tighter copper market in 2012.
He said China and other emerging markets were driving the increasing copper demand whose price was projected to stay at US$9,200 per metric tonne in 2011 and US$10,000 per metric tonne in 2012.
“Since 2008, China has been importing over 180,000 metric tonnes of copper per month and this is more than what some Zambian mines produce per year so this demand of course it being driven by China and other Asian and emerging markets and we are seeing the USA and other developed countries also coming on board and the construction,” said de Wet.
De Wet said consumer goods sectors were also huge consumers of the copper commodity.
Labels: COPPER, STANDARD BANK LONDON
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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.
Labels: COPPER, STANDARD BANK LONDON
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