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Copper price high but warns of near-term volatility ¨C Mr Ivan Arriagada-2018 China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
8/8/2017 Copper exhibition -non-ferrous metals expo |
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The Australian reported that copper¡¯s winning streak saw it hit fresh two year highs last week, but volatility could constrain its upward reach in the short term.
Mr Ivan Arriagada CEO of Chilean mining company Antofagasta told The Australian said that ¡°There is volatility in the short term which means that prices could eventually stay at the levels they are today or even reduce.¡±
Chilean-based Antofagasta is listed on the London Stock Exchange and has a market cap of GBP 9.17 billion.
Mr Arriagada cited economic adjustments in China, geopolitical developments and protectionism as potential risks for the copper price in the near term.
Over the long term, Mr Arriagada believes it will increase progressively, but rather than speculate on how high it could go, he says ¡°a new floor exists under the copper price and it¡¯s unlikely to drop below USD 2.50 (a pound)¡±.
Copper prices hit a two-year high of USD 2.88 last week after rising steadily in 2017 on the back of supply disruptions and expectations of increased demand from China. The red metal hit an all-time high of USD 4.62 in 2011, but Mr Arriagada thinks it¡¯s ¡°a bit bullish¡± to expect prices to go back up to that level in the near term.
He said that ¡°In the shorter term we think the market is gradually moving to a tighter demand-supply position, which increases the likelihood of a small market deficit sooner rather than later.¡±
He said that while there may be short-term volatility, the outlook for the metal in the mid to long term is positive. He said that ¡°The underlying fundamentals in the mid- to long-term are very favourable and on the back of this we expect demand growth to be between 1 to 2% per annum.¡±
Despite the recovery in copper prices, Mr Arriagada doesn¡¯t expect a flood of M&A deals to hit the market as a result.
¡°As commodities have recovered, some of the companies which were more stressed on the debt side have been able to get cash flow relief ... I don¡¯t expect, in an environment where there is more cashflow in the sector and the balance sheet of companies is less stressed from that point of view, that there will be more M&A coming out of this turn.¡±
Speaking on the anticipated ramp-up in production at BHP Billiton and Rio Tinto¡¯s Escondida copper mine in Chile, Mr Arriagada said he didn¡¯t think it would impact the market too significantly.
-2018 China(Guangzhou)Int¡¯l
Non-Ferrous
Metal£¨Copper£©Exhibition
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