(Bloomberg) -- Copper is poised to drop this year as higher U.S. interest rates and elections in Europe curb demand, according to the chairman of China's second-largest refiner of the metal.
Prices will end the year lower than where they started, Jiangxi Copper Co. Chairman Li Baomin said Sunday in an interview in Beijing as the government announced growth plans for 2017. Jiangxi Copper plans to increase production to the maximum capacity of 1.36 million metric tons, compared with about 1.2 million tons last year, he said.
Copper got a lift in November on speculation that U.S. President Donald Trump will increase spending on roads, bridges and airports, expanding demand for metals. After a surge in January, copper has slipped on mounting expectations that the U.S. central bank will raise interest rates again just three months after a quarter percentage point increase.
“There are things worrying us,” Li said, including Trump's “not clear” policies, higher U.S. rates and uncertainties about who will win European elections. “In addition, some emerging economies' development is losing momentum.”
Copper will average 45,000 ($6,524) to 46,000 yuan a ton in 2017, Li said. That's lower than the year-to-date average of 47,513 yuan. Futures in Shanghai traded at 48,220 yuan at 9:04 a.m. local time on Monday.
Global demand still looks set to exceed production, with China's consumption growth at 6 percent this year compared with 5.8 percent last year, Li said. Demand is getting a boost from power grid spending and a push toward more energy-efficient vehicles that use copper, he said.
To contact Bloomberg News staff for this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.
To contact the editors responsible for this story: James Amott at jamott@bloomberg.net, Claudia Carpenter, Amy Teibel
With assistance from Winnie Zhu
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