| SANTIAGO, April 5
SANTIAGO, April 5 The copper business will
recover from crisis mode after plummeting prices for the metal
resulted in output cuts, industry executives said at a meeting
in world top copper producer Chile this week, but they expect
that incipient recovery will be slow.
"The market seems to have left behind its worst moment,
although it's very premature to anticipate a new cycle of high
prices," Chilean Mining Minister Aurora Williams told the
Views varied from extremely wary to bullish at the CRU World
Copper Conference in Santiago, but the overall atmosphere was
more positive than in recent years. Most delegates agreed that
fundamentals such as a lack of new projects and Chinese demand
would likely support the copper price.
Most in the market agreed that prices would likely converge
at around $3 to the pound over the next two to three years,
Oscar Landerretche, chairman of world No. 2 producer Codelco
, told Reuters.
Copper was trading at around $2.70 on Wednesday, up
some 27 percent since its low point at the start of 2016. Yet it
remains far below its peak of $4.50 during the heady days of
Rio Tinto's copper and diamonds unit chief
Arnaud Soirat said copper prices would draw support from factors
such as limited new greenfield projects, ore grade decline and
end-of-life mine closures over the next few years.
"Copper's long-term fundamentals are quite positive, and we
expect to see further demand growth from emerging markets," he
said, forecasting a small deficit this year.
Copper consultancy CRU was forecasting an upward trend in
prices through 2021, said its director of copper research,
"We expect pressure on costs to continue...but we see copper
prices rising faster than operating costs, ensuring that profit
margins increase," she said.
However, some warned that a dose of caution was in order.
Many said U.S. President Donald Trump's administration could
help the copper sector by boosting infrastructure spending, but
hurt global trade with greater protectionism.
And the last supercycle was "exceptional", said
Landerretche, adding that there was little sign of an
era-defining change like the entry of China into the world
economy to boost prices.
"I don't think companies will return to invest like crazy,"
he said. "They were pretty hurt...they will begin to invest
again but much more cautiously."
Well-stocked inventories and still weak Chinese consumption
constituted a drag that meant a deficit this year was unlikely,
said Southern Copper's chief executive Oscar Gonzalez.
Others have warned that large supplies of scrap could weigh
on the price.
But scrap industry veteran Michael Lion said he was not so
sure. China's maturing economy would continue to need high
levels of copper, and scrap supplies were more transparent than
in the past, he said.
"If people think there's a lot of scrap there that's going
to come out and fill the gap, I wouldn't hold your breath," he
(Reporting by Rosalba O'Brien, Barbara Lewis and Mitra Taj;
Editing by David Gregorio)