UPDATE 1-INTERVIEW-Aurubis CEO says trading conditions improving
* Says demand for some copper products rising
* TC/RCs and scrap smelting fees seen firming
* Operating profit expected in full financial year 2008/09
* Says LME copper price likely to remain about $5,000 a tonne
(Adds detail throughout)
By Michael Hogan and Jan C. Schwartz
HAMBURG, July 10 (Reuters) - Aurubis (NAFG.DE), Europe's largest copper producer, sees evidence of a recovery in its business environment, CEO Bernd Drouven said on Friday.
"Trading conditions are more positive than at the beginning of the year, the lower energy prices are also contributing," Drouven told Reuters. "We are relatively optimistic."
Aurubis, formerly Norddeutsche Affinerie, has seen a recovery in some demand since April in its key copper product sector, especially for continuous cast rod used for wire and cable production.
Some improved demand was seen in the automobile industry.
In other product sectors no worsening of demand had been experienced in the last three months, he said.
Output of copper cathodes - new metal - was currently at full capacity.
Fees earned for smelting copper scrap had risen by 30 to 50 percent in the past few weeks as London Metal Exchange and Shanghai copper prices were now at similar levels, he said.
In past months higher Shanghai copper prices had enabled Chinese traders to make heavy purchases of scrap copper in Europe at high prices, cutting European scrap supplies.
But this Chinese purchasing had now fallen and copper scrap supplies available to Aurubis were again good, he said.
This meant smelting fees had risen sharply but it was uncertain if the improvement in the volatile market was sustainable.
Copper treatment and refining charges (TC/RCs), fees charged to mines and traders to refine concentrate into new metal, were expected to rise from the spot level of $30 a tonne and 3 cents a pound seen in June, way below the $75/7 cent 2009 level for long-term contracts.
The low TC/RC spot level had also been generated by higher Shanghai copper prices which permitted profits to be made on lower TC/RCs by Chinese smelters.
"This difference no longer exists, TC/RCs must rise as no Chinese refinery can operate profitably with $30/3 cents," he said, stressing Aurubis operates with long-term contracts.
Mines had not suffered strikes and some refineries had reduced work because of low sulphuric acid prices, a key by-product. This meant a slight surplus in concentrate supplies was expected along with rising TC/RCs if Shanghai and LME copper prices remained at similar levels, he said.
LME copper prices are likely to hold their gains in recent months and remain around $5,000 a tonne in the near future, he said. This was partly because of continued strong Chinese demand for refined metal.
LME benchmark copper MCU3 was at $4,4855 a tonne at 1012 gmt.
Aurubis will announce its third quarter results on August 12 and Drouven confirmed forecasts of an operating profit for the 2008/2009 financial year which ends in September. "We are standing by this," he said.
German steel company Salzgitter (SZGG.DE) has signalled it intends to raise its 23 percent stake in Aurubis to around 25 percent. But Drouven said he did not see prospects for a close cooperation generating significant synergy benefits and did not expect a takeover offer from Salzgitter.
(Editing by Philippa Fletcher)
((michael.j.hogan@thomsonreuters.com Reuters messaging: michael.hogan.reuters.com@reuters.net +49 40 419 03 4275)) Keywords: COPPER AURUBIS/
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