Jiangxi Copper May Have Record Profit on Power Demand

Jiangxi Copper May Have Record Profit on Power Demand

Jiangxi Copper Co., China’s second- biggest producer of the metal, may say full-year profit more than doubled to a record as demand from power and construction industries boosted prices.

Net income may be 4.76 billion yuan ($616 million) in the 12 months to Dec. 31, from 1.87 billion yuan a year ago, based on the median estimate of 16 analysts in a Bloomberg survey. The company, based in the eastern city of Guixi in Jiangxi province will report by tomorrow.

China, the world’s biggest copper consumer, may boost usage of the metal 10 percent this year as the nation expands electricity generation capacity, according to CRU International Ltd. Jiangxi Copper shares more than doubled last year and rebounding demand may drive prices in London toward last May’s record of $8,800 a metric ton.

“The copper price may rise to a record this year, so we are bullish on copper stocks,” said Zhou Dexin, who helps manage the 50-billion-yuan China Merchants Fund in Shenzhen, including Chinese stocks and bonds.

Jiangxi Copper is the fourth-biggest gainer this year in the Hang Seng China Enterprise Index, which tracks 41 mainland companies that have so-called H shares traded in Hong Kong. The stock rose 1.5 percent to close at HK$12.10 at 4:00 p.m. in Hong Kong, an all-time high. Shares in Shanghai gained 5.9 percent to end at 28.75 yuan, also a record close.

Second-half profit probably tripled to 2.67 billion yuan, from 895 million yuan a year earlier. The half-year earnings’ estimate was derived by subtracting first-half profit from the median estimate of full-year profit in the survey.

Pipes, Cables

Copper for delivery in three months on the London Metal Exchange has risen 27 percent this year, trading 0.3 percent higher at $8,075 a ton at 4:00 p.m. Beijing time. Copper on the Shanghai Futures Exchange rose 3.7 percent to settle at 75,610 yuan at 3:00 p.m. local time.

Jiangxi Copper controls about a third of the copper reserves in China and supplies 17 percent of Chinese production of refined copper, used in wires, pipes and cables.

The company ranked second by 2006 output in China, producing 443,443 tons of refined copper last year, an increase of 5.2 percent from 2005. State-owned Tongling Nonferrous Metals Co., based in eastern Anhui province, made 544,798 tons of the metal.

Share Sale

It plans to raise 4 billion yuan selling more yuan- denominated shares in Shanghai to fund expansion and buy copper mines from parent Jiangxi Copper Corp. The planned share sale is subject to government approval, it said March 20.

The company said Jan. 25 that it plans to boost refined copper production capacity 25 percent this year to 550,000 metric tons, and further to 700,000 tons in 2008.

To be sure, rising stockpiles and an expected slowdown of Chinese import demand this quarter may damp prices, said Chris Ding, an analyst with China International Capital Corp., China’s biggest investment bank. Copper inventories in Shanghai are near a nine-month high.

“Inventories are high, and Chinese demand growth may not grow fast enough to digest a global surplus of copper this year,” said Ding.

China may reduce copper imports by half in the second quarter, after it reached a record in March, said traders and analysts including Maike Futures’ Co. analyst Xue Feng on April 12. A slowdown in record shipments to China will cool a rally in the metal, affecting Jiangxi Copper’s profit.

Information from: www.bloomberg.com

Share this post