Reuters reported that China's interest rate hikes are fanning fears of a deeper slowdown in the world's top copper consumer but demand remains strong and is picking up in the United States and Europe.
Industry executives said that the Chinese central bank raised rates for the fourth time since October as it seeks to counter price pressures initially depressing prices but copper ended firmer as tight supply underpins the market.
Mr Charlie Sartain CEO of Xstrata Copper said that "The fundamental demand is still there in China. The credit situation in China when that changes has a short term effect but the underlying growth story in demand is still there. Internationally we see a recovery in other markets not as significant as China. In markets such as the US we see a recovery there."
Mr Sartain expects demand for copper in the United States to grow by around 6% and sees signs of an emerging recovery in Europe after the 2008 financial meltdown. The consensus among industry players is that demand in China will remain buoyant as the world's No 2 economy forges ahead with infrastructure and urbanization projects.
Copper prices surged 31 percent in 2010 and hit an all time high of USD 10,190 per tonne this February before easing. And with markets expecting a copper supply deficit of 444,000 tonnes in 2011 and a narrower 184,500 tonnes deficit the following year prices are expected to remain high.
Mr Miguel Angel Duran CEO of Anglo American's Chile arm said that copper deliveries to China have eased. For now, it's something that needs monitoring, but I have no reason to think it will be a worry in the long term. Some are concerned that rising stocks held by investors as collateral in China, not immediately visible to the market could significantly shrink copper deficit projections.
Mr Richard Adkerson CEO of US miner Freeport-McMoRan Copper & Gold Inc said that "In the near term, it has been and will continue for the foreseeable future to be the performance of China. Behind China is the global economy and rising oil prices is one factor that affects the global economy. China today is consuming 35% to 40% of the world's copper and providing the growth in this industry."
