China's demand for commodities phenomenal - Xstrata

Manila, Beijing - China's demand for commodities "is just phenomenal" and prices might increase for the next few years, Charlie Sartain, the chief executive for copper at Xstrata, said yesterday.

Demand for copper in the Asian country might rise 8 percent to 10 percent this year compared with last year, said Sartain. "We do see, across all commodities, phenomenal growth."

China has spurred a five-year rally in commodity prices as manufacturers use more steel, nickel and tin. The price of copper on the London Metal Exchange rose to a record $8 800 (R64 000) a ton last May.

"The Chinese economy will keep growing strongly and so will commodities demand, including copper," said Chen Yue, an analyst at Guotai Junan Securities. "We are bullish on copper prices."

Demand for copper was rising in Europe, especially Germany, and the Middle East, said Sartain. "The other part of the equation is supply, and over the past two to three years, we've seen the increase in supply has been significantly lower than the market was expecting.

"China's industrial growth is just spectacular," said Sartain. Output rose 18.5 percent in January and February, the National Bureau of Statistics said, beating the 15 percent median estimate of 20 economists surveyed by Bloomberg News. Output gained 14.7 percent in December.

Sartain's comments were the latest in a series of remarks from mining executives about the resilience of the growth in demand for commodities in the world's most populous country.

Bret Clayton, the head of copper at Rio Tinto Group, the world's third-largest mining firm, said China's economic growth was "absolutely mind-boggling."

Codelco's executive president, José Pablo Arellano, who runs the world's largest copper company, said on March 22 that there was "unimaginable" new construction in the country.

Richard Adkerson, the chief executive of Freeport-McMoRan Copper & Gold, the world's second-biggest copper producer, said the Chinese economy "is going strong".