UPDATE 1-China's Jiangxi Copper sees '09 demand, output growth

Published: 05 Mar 2009 17:40:36 PST

BEIJING, March 5 - Refined copper consumption in China, the world's top consumer, will rise in 2009 but growth will slow from 2008, Li Yihuang, president of the group company of Jiangxi Copper, said on Thursday.

"I feel this year's copper consumption growth should very closely track the country's gross domestic product growth," Li told reporters on the sidelines of a parliament meeting during the country's key annual session.

Expected rising consumption in China, which aims for 8 percent economic growth and plans to spend $26 billion on building grains and metals reserves, will lift domestic copper prices, Li said.

He expects Chinese copper prices to average more than 30,000 yuan ($4,387) per tonne this year, with a likely level around 32,000 yuan. Key Shanghai copper futures closed at 29,500 yuan on Thursday, while London copper traded at $3,690 by 1152 GMT.

Li said Jiangxi Copper, the world's third-largest copper smelter, aims to produce 800,000 tonnes of refined copper this year, a rise of more than 10 percent from a year earlier.

The output plan was in line with previous comments by Jiangxi Copper executives.

Jiangxi Copper is among the state-owned enterprises hoping for government support to tide them through the global financial crisis, which caused metals demand and prices to fall sharply.

The company is the flagship firm and largest tax-payer in Jiangxi, a poor, mountainous province that nonetheless hopes to achieve 11 percent economic growth this year, according to its party secretary Su Rong.

Jiangxi Copper has applied for discounted electricity supply, similar to that offered to aluminium smelters, Li said. The application has not yet been approved.

China has ordered power generators to offer aluminium smelters discounted electricity in a bid to help smelters' margins and boost power demand, industry sources have said.

And it could benefit from copper purchases by China's State Resources Bureau.

China has been buying up commodities of which it is a net importer, including copper, crude oil and soybeans, and helping struggling producers of goods in which it is oversupplied, such as aluminium, zinc and cotton, by buying above market prices. ($1=6.838 Yuan)