China's major copper companies, both producers and consumers of refined copper, are expected to face difficulties this year due to sluggish global economic growth and a slowdown in domestic economic growth, which have suppressed copper demand and suppressed copper prices.
Jiangxi Copper and Yunnan Copper are the largest and fourth largest copper producers in China, respectively. Shenzhen Zhongjin Lingnan Nonferrous Metals Co., Ltd. is a major producer of lead and zinc, and also produces copper. These companies either recorded a decline in profits or a loss in 2013.
Official data shows that China's refined copper production increased by 13.6% to 6.84 million tons in 2013, a growth rate greater than the 11% in 2012, but overcapacity dragged down prices.
Yunnan Copper Industry stated in its financial report released by the Shenzhen Stock Exchange later on Tuesday, "The current economic situation does not seem very optimistic
The competition within the industry is fierce, and in recent years, the smelting capacity has grown rapidly
The headquarters of Yunnan Copper Industry is located in the mineral rich province of Yunnan. In 2013, the company incurred a net loss of up to 1.5 billion yuan, mainly due to a significant drop in copper prices.
The London Metal Exchange (LME) copper futures fell nearly 7% last year, and in March of this year, they fell by about 5%, the largest decline since June last year, due to weak demand from China.
According to brokerage firm Kim Eng Securities, the growth rate of copper consumption in China for the production of wires and other products is expected to slow down to 6.7% in 2014, compared to over 10% last year due to the accumulation of copper inventory.
After Jiangxi Copper Industry released its financial report, Kim Eng Securities said, "We believe that China's credit tightening will eliminate production activities with lower output value, and copper consumption growth will develop towards a more sustained and stable direction in the future
Last week, Jiangxi Copper estimated that its quarterly net profit would decline by at least half year-on-year. LME three-month copper and Shanghai copper prices are expected to hover around current levels or continue to decline.
Jiangxi Copper's net profit in 2013 fell by nearly one-third to 3.57 billion yuan, marking the second consecutive year of decline in profits.
In February, Tongling Nonferrous Metals Group, the second largest copper producer in China, announced that it would postpone the release date of its annual financial report from March 8th to April 30th due to the heavy workload of auditing and preparation.
According to the average estimate of four analysts, the company's net profit for 2013 is expected to be 602 million yuan, a decrease of one-third from 923.9 million yuan in 2012 and the second consecutive year of decline.