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REUTERS
Shanghai, Dec 2: Chinese copper prices are likely to post only modest gains in 1999 from their currently depressed levels, metals analysts said. A sharp upturn in infrastructure spending, aimed at spurring domestic economic growth, is likely to push demand for copper higher and give prices a slight boost, said Chen Dong, a metals analyst at Shenzhen Star Futures.
Speaking at a weekend metals conference, he forecast average three-month copper futures at 17,000 yuan ($2,053) per tonne next year, moving in a range of 16,000 to 18,000 yuan.
Year-to-date, the average price of three-month copper futures on the Shanghai Metal Exchange was 16,960 yuan, down 26 percent from the 1997 average price, he said. China's domestic demand for copper has been sluggish because of tight credit and a time lag in the previously announced increase in infrastructure spending, Chen said.
China has stepped up infrastructure spending this year to ensure the economy reaches its 8.0 percent growth target. Economists say China willcontinue to spend heavily on infrastructure next year, and many of the current projects will move into high gear. A cut in export duties for copper materials should also help boost exports In August, China abolished export duties on fabricated copper materials to prop up the sagging export sector.
Tariq Salaria, a London-based analyst at brokerage Brandeis Ltd, agreed with Chen that China's infrastructural spending, combined with easier credit, would drive fixed asset investments and base metals demand. "China would be a bright spot in world copper consumption," he told the same conference. He said that China's demand would expand somewhat but world prices would not be buoyant as a result of slack demand in many regions.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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