July 10, 2008 / 9:40 AM / 12 years ago

Rio Tinto sees copper price surging to fresh peaks

Picture shows part of the processing and stockpile area at a Rio Tinto iron ore mine at Tom Price, about 1,300 km (800 miles) north of Perth May 28, 2008. REUTERS/Tim Wimborne

LONDON (Reuters) - Copper prices could hit fresh record highs this year as the Chinese economy continues to expand despite a slowdown in the United States, the chief economist of miner Rio Tinto (RIO.L) said on Thursday.

“I think the conditions still exist for yet another peak in the prices of most metals,” Vivek Tulpule, chief economist of the world’s second largest miner by market capitalisation, told Reuters in an interview.

Asked whether copper prices, which hit a record high of $8,940 per tonne last week, could surge to further peaks this year, Tulpule said: “Yes.”

“Supplies remain constrained and there’s scope for demand pick up once the Chinese stocks, which have been built in the past, are taken away ... In a few months time, there will be conditions for strong buying,” he said.

Tulpule said he believed the Chinese economy was “decoupling” from the West, and that it would still grow strongly despite a slowdown in the United States, ensuring strong demand for metals.

“The Chinese economy is pretty resilient to U.S. slowdown ... We don’t see a big effect coming back into commodity markets,” he said.

Tulpule said a shortage of electricity was a key issue for the market for energy-intensive aluminium, and it was affecting production.

He declined to predict how much iron ore prices could rise next year after a jump this year of as much as 96.5 percent in the contracts for Chinese steelmakers:

“What we see over 1-3 years is pretty robust conditions ... In the long run prices are probably going to be much higher.”

Reporting by Humeyra Pamuk; editing by Christopher Johnson

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