Chinese demand is once again boosting copper's prospects according to the latest metals commentary published by analysts at Ambrian. The broker quoted Rodrigo Toro, corporate senior sales vice president of Chile's Codelco, the world's largest copper producer, as expecting China's copper demand to grow at an annual rate of 8 per cent this year and next, against global growth this year of 4 per cent. "The growth of demand in China is practically unstoppable," he said.
China's all-consuming appetite for copper was also highlighted last week in the International Copper Study Group's 2010 statistical yearbook, which showed a 20 per cent increase in global refined copper usage over the period 2000 to 2009. Chinese demand growth over the period was estimated at 280 per cent, whereas global demand excluding China in fact decreased by 17 per cent, with particularly weak usage during the 2008/09 global recession.
The urgent need to urbanise vast swathes of its population is often quoted as the main driver of China's ravenous consumption of copper and other commodities such as iron ore. Chen Huai, director of China's ministry of housing, recently remarked that China might need to replace more than half of its housing stock in the next 20 years, which would have obvious consequences for copper consumption.
China's growing electricity transmission sector is another important user of copper, with the International Copper Association estimating that this sector alone could consume a million tonnes over the next two-and-a-half years (by comparison, global production was 15.8m tonnes in 2009).
The re-emergence of Chinese demand reinforces Ambrian's view that we could be "in the foothills of a new bull market for copper which should last for all of next year and possibly for much, if not all, of 2012." The report concludes that the copper market is tight and is likely to become tighter as 2011 progresses, and that price dips will be increasingly well bought.
