“Pretty goddamm bad”
That was how the Codelco chairman described the outlook for the mining industry last night at the LME.
Despite the expectation of many in the Copper market that cuts to production, most notably from Glencore (L:GLEN) point towards the market starting to rebalance, the view expressed by the world’s largest copper producer goes against the grain.
Only if copper prices fall below $2 per lb (equivalent to $4,400 per tonne or 17% below the current price) would Codelco consider cutting production. Prices hit a six year low near $4,830 per tonne in August.
Unlike publicly traded mining companies like Glencore and Rio, state owned copper producers do not have to answer to shareholders. Chile’s Codelco plans to push ahead with its annual target of producing 1.6 – 1.7 million tonnes in 2015 and 2016.
As with other commodity markets it’s worth remembering that not all market players play by the same rules. The opportunity to capture market share may be too good to resist for many state owned producers.
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Copper Needs To Fall Below $4,400 For Codelco To Cut Output
Published 14/10/2015, 10:13
Copper Needs To Fall Below $4,400 For Codelco To Cut Output
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