London, 13 April 2010

Global copper demand will rise by 8-9% this year versus 2009 as China's economy powers ahead, the U.S economy continues to improve and Europe follows suit, Swedish copper fabricator Elektrokoppar said on Monday. The privately owned firm, Europe's fifth-largest copper wire rod producer, said its April order books were about 7-8% up on last year due to improved demand from white goods, infrastructure and autos sectors.

"European demand will be about 4-5% (better), but China seems to have very good demand and we also see the economy improving in the United States," Astor Brorsson, Elektrokoppar's head of marketing and sales and metal procurement told Reuters in a telephone interview.

"If you mix those continents together I think we will have an increase of 8-9% of refined copper demand (this year). Our order books are about 7-8%  better than last year at the moment."

Global copper demand was knocked sharply by the economic crisis and although copper miners have turned decidedly bullish in recent outlook statements, fabricators or users of copper are usually more circumspect. Benchmark copper prices are about 11% below their all-time high of $8,940 struck in July 2008 - making them a pricey feed for copper fabricators. They traded at around $7,930 a tonne late on Monday versus $7,920 at the close on Friday.

Brorsson said it was difficult to say whether copper is fairly priced or not, but he noted: "It will probably be 2012 until we see (demand) figures in Europe similar to what we had in 2008." He added that while long-term demand for raw materials will swell thanks to China, there is always the risk that miners ramp up production too promptly. "For the next few years there will be enough copper. This year we will have a small surplus, around a couple of 100,000 tonnes. High prices are driving miners to invest as much as possible."

Real Consumption

Elektrokoppar's Helsingborg wire rod plant in Sweden has a 150,000-160,000 tonnes per year capacity. Wire rod is used to make wire and cable for use in industries such as transport and power. The company expects to produce around 7-8% more copper products this year versus last. It believes its customers, who are currently restocking, will see improved sales by 2012 as real consumption of copper products returns.

In terms of its own consumption of raw materials like copper, Elektrokoppar expects to use about 155,000 tonnes this year versus last year's 145,000 tonnes.

Brorsson believes global copper supply will rise by around 7-8 percent this year, slightly less then the uptick in global demand. All the same, he says there is no shortage of copper and no problem securing it.

Turning to China, Brorsson said he was little concerned about how potential interest rate hikes there might negatively impact demand from the world's biggest copper consumer. "Rate hikes might dampen demand a bit but we see an increase there and have seen it every year. Overall, we still expect a strong increase in demand (from China)," he said.

Ends --