China’s Expanding Copper Capacity Impacts Codelco’s Exports

China’s Expanding Copper Capacity Impacts Codelco’s Exports

Declining Cathode Sales in China

Codelco, the Chilean state-owned copper producer, is witnessing a decline in its cathode copper sales to China. This trend comes amidst a significant expansion of smelting capacity within China, as noted by Codelco’s chairman Maximo Pacheco at Asia Copper Week. The company has observed a reduction in sales volumes due to increased domestic output in the Asian market.

China’s Strategic Importance

Despite the drop in cathode sales, Pacheco emphasizes China’s continued strategic importance for Codelco. He remains optimistic about the overall demand for copper in China, which he estimates has risen by 5% this year, driven by the country’s fast-paced energy transition and stable housing completions.

Shift in Copper Sales

Codelco, a major benchmark in the copper market, has reduced the premium for its Chinese customers by 36% for the upcoming year. Chilean refined copper imports by China are expected to reach their lowest since 2008. China is now importing more copper in the form of concentrated ore rather than metal.

Market Outlook

The global copper market is facing a split, with Chinese demand recovering while other regions, particularly Europe, exhibit weaker demand. This situation, coupled with global expansions in copper smelting capacity, could lead to an oversupply in the market.

Codelco’s Production and Plans

Codelco plans to produce 1.315 million tons of copper in 2023, with a slight increase projected for 2024. The company supports the Chilean government’s initiative to build a new copper smelter but will not undertake its construction, focusing instead on delivering major mining projects.

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