copper demand to rise in brazil as country bui

Copper product sales in Brazil to recover in 2010

Stocks | Basic Materials

* Strong growth seen sustaining growth for years to come

By Peter Murphy

SAO PAULO, Feb 11 (Reuters) - Building works ahead of the 2014 World Cup and 2016 Olympics, fast growth and a strong auto industry, will secure stronger long-term demand for copper products in Brazil, an industry official said on Thursday.

The Latin American country's copper product sector, represented by the Sindicel industry association, experienced an expected dip in 2009, of about 15 percent of physical sales volume, but expects to make a firm recovery this year.

"We think we can get back to 2008 levels, forgetting that 2009 existed," Sergio Aredes told Reuters in a telephone interview.

"It will be a pretty good year I think, but the perspective for the years ahead is even better," he said.

In this developing and fast growing nation, demand for copper products tends to track closely the overall performance of the country's economy. Years of strong growth in Brazil were only interrupted last year by a brief crisis-induced recession.

Aredes said 2010 product sales, including cables and semi-manufactured products, would contain about 400,000 or 410,000 tonnes of copper after the quantity used dipped to roughly 360,000 tonnes in 2009.

"This (estimate) takes into consideration the growth of 5 percent in GDP and industrial growth of 8 percent and an LME price of around $6,600 on average," he said.

By comparison, sales in 2008 when the economy grew 5.1 percent, reached about 430,000 tonnes.

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Aredes said strong demand from some of the most copper-hungry sectors plus more construction and investment with the two global sports tournaments would assure firm demand for several years to come, particularly after 2010.

"The car industry is trying hard to raise exports ... civil construction will come back again and there is a lot of oil prospecting and production that will demand copper and cables of all kinds. Steel plants and energy generation and transmission will demand a lot of cables," Aredes said.

Aredes said Brazil's automobile sector, which turns out close to 3 million cars a year, continued a strong source of demand through 2009 after the government cut taxes on new cars, pushing sales to a record high at one point.

The construction of three new and badly-needed subway lines in Sao Paulo and more rail projects in other large cities would also add to demand, he said.

Development of Brazil's offshore oil fields, particularly the deep-lying sub-salt reserves under a layer of salt rock below the sea bed, have already prompted state-controlled Petrobras to place orders for floating platforms.

A growing interest in developing electricity-generating wind farms in Brazil would also bring new custom to local copper product makers, Aredes said, while copper use in fixed line telephony was falling with the shift to fiber-optic cables.

"(Wind turbines) are something for 2011. There are many projects coming up and obtaining quotes and foreign companies are coming to Brazil to prepare to supply locally," Aredes said.