The current drop in copper prices below US$7,000 per tonne is likely to have an effect on the availability of foreign exchange on the Zambian market thereby adding more pressure on the Kwacha.
The Copper shipments out of Zambia, which have resumed after a two-week export halt because of a railroad accident on Tazara on the 9th April, will bring about additional supplies of copper which will arrive in a market in which stockpiles of extra copper are already on the rise. The amount of the metal held in warehouses overseen by the London Metal Exchange rose 2,000 tons, to 614,350 tons, on Thursday, up 92% this year.
Copper prices have been in decline for much of this year as investors wagered that supplies from new and expanded copper mines would overwhelm demand from manufacturers.These fears escalated at the start of the week, after China reported slower-than-expected economic growth for the first quarter.China is the world’s top copper consumer, accounting for about 40% of global demand. Its gross domestic product expanded 7.7% in the first quarter, a slowdown from 7.9% in the final quarter of 2012.
Copper lost 5.9% on the week, its biggest weekly percentage decline in 16 months, and is down 13% this year. The metal is a component in many products, ranging from bathroom pipes to iPhones.
“Copper is telling us right now that all is not well with the global economy,” said Matt Zeman, head of trading with Chicago brokerage Kingsview Financial. “If people still look at copper as a barometer of economic activity, we’re in for some rough times ahead.”
Analysts said weak demand and robust supplies could continue to put pressure on copper prices.
Zambian economist Professor Oliver Saasa has described the development as bad news for the country and said it is likely to have an effect on the government treasury.
Sad development.Takes me back to high school commerce days.If demand remains unchanged and supply increases, a surplus occurs, leading to a lower prices.
So what measures will PF put in place to mitigate the situation should things not improve?.Will borrowing more money help?.This is exactly what happend to KK and Unip.Copper prices fell terribly and then no forex was coming in to service loans. Hence us becoming a hipc nationa.Very embarrasing.
Miles and his team should slow down on borrowing until they are sure copper prices will rise again.Otherwise it will be another failed attempt at borrowing to develop idea.
Also,the companies running out of borrowed funds should start utilsing the funds,so that pay back can start.eg ZR.The borrowed funds are not doing us any favor if they are still un-utilised in the banks.Remember,future generations will pay for these mistakes, like we paid for KK`s mistakes.
what are you talking about?The pririty of the PF now is bye -elections.
I think the answer is not to stop borrowing but to direct the funds to areas where there will be an expansion of the economic output come the time when there is no copper and that time is fast approaching. There is need to be bold ! Key to this is opening and linking new areas which were previously simply inaccessible and also upgrading of key roads such as dual carriage way between Kitwe and Solwezi as an example among others. Once this is done, it will spur development . What this government is doing and the one before were doing of trying to open up new areas eg Nansanga and other areas and building more roads is the right thing to do. The many entrepreneurs that have developed in Zambia will see this as an opportunity to make money in the “rural” areas for lack of a better term.
When prices are good, the foreign investor benefits while Zambia admires; when prices are bad the investor flees while Zambia licks the wounds!
Economic diversification in Zambia is nothing more than mythical! Soon people will be laid off, crime rates will soar, inflation etc. We almost always just have the wrong leaders!
When prices are good, the foreign investor benefits while Zambia admires; when prices are bad the investor flees while Zambia remains to lick wounds!
The effects of good copper prices have not been seen trickling down to us the under – privileged people. Even before this drop in copper prices, our kwacha performed very poorly compared to other international currencies. I am certain that, as usual, the poor people will bear the worst burden in during this period if the govt does not play its cards correctly.
This has nothing to do with the strength the kwacha. These criminals running the mines do not offload any Forex on the market. If even only 10 percent of the total copper exports’s Forex can be offloaded on the Zambian market even in its troubled market price, the kwacha will be trading at a lower rate of kwacha 2.50.
Ask chirwa not Saasa
I said it so many times on this forum…. Zambia is going to be in real trouble. Lowest copper prices in a decade will be in 2016
The party will soon come to an end you will even fail to pay the EUROBOND
Watch this space
you are not smart,you probably grew up as a malnourished child during your childhood thank God you survived
You seem to underestimate the versatility of copper usage; in the UK it is the preferred for domestic heating pipes and is now widely being used in the heath sector for fixtures and fittings due to anti-bacterial properties. Add to that wherever there is construction on earth the metal will be required at one point in the construction phase….armies can not do without bronze for ammunition and will always be re-arming.
Its just shame that we don’t manufacture these products in Zambia for export!!
I will have the last laugh. Have been long in the copper business. UK uses 5 % of copper produced in the world. China 40%… the fact is China is not importing copper and seating on 4 million tons of inventory
London Metal exchange stock 700,000 tons
In 3 months time lets chat again and you tell me what the copper price will be.
Zambia is heading for a ruff time
people who understand economics forecasted this trend and as usual they were lebelled to be bitter’….so here go now copper price plumeting and our economic polcy is still not known apart from politcking and sharing the eurobond on themselves…awe kwena we in for it…if i wer you i would prpare for hard times ahead
at Australia engineer…you are not smart at all.you had a difficulty upbringing in fact you were malnourished during childhood.
It makes no difference to the common citizen apart from economical thevies, capitalists and PF ruling class. The price of meal mill has been higher since PF won the so call election by minority votes.
Indeed it makes no difference to the common man. The benefits of high copper prices are not felt by the common man including those living where the copper is mined. The price can keep on dropping for all we care.
Despite the slump in copper prices, the prices of finished commodities will remain high. Africa’s biggest copper producer where all household plumbing is done using galvanized pipes… And we sit and wait for someone from outer space to increase the price……..
COPPER PRICES ALWAYS TUMBLE THIS TIME OF THE YEAR WHEN ITS SUMMER IN EUROPE & USA. ITS CALLED LAW OF SUPPLY & DEMAND.
This is a new theory. Is Copper like heating oil? Care to elaborate?
Analysts at Goldman Sachs said in a fresh note today that they expect a rebound in copper prices over the next three months, after it underperformed other metals the past month. With expectations of accelerating Chinese growth in the second half of the year and the U.S. economy to be through its soft patch, prices should start to rebound, the analysts said. “An improvement in sentiment towards demand, with the backdrop of reasonable copper price fundamentals in the near term should see prices move higher, especially in the context of significant short positioning in the market at present,” they said in a note.
Pf is just after by-elections forget about copper prices
Comments are closed.