The world copper market will end 2010 with a slight surplus as a result of economies in the US and the Eurozone not having totally recovered from the global crisis, Chilean state copper producer Codelco’s CEO José Pablo Arellano said Monday during a press conference.

Arellano said the expected surplus will be registered despite strong demand currently from China and India, driven not only by growth rates but also development of infrastructure projects where the use of copper is very intensive.

Codelco’s CEO also said current copper prices have been mainly driven by China’s present and future expected demand, but warned that the presence of financial investors in the red metal markets will increase price volatility. “It is not only supply and demand that are explaining current price levels. Financial investors are having an impact on the price and, as a result, we will experience more volatility than we were used to.”

The price of copper averaged US$3.385/lb cash on the London Metal Exchange in March, up 9% from February and the highest average since August 2008.

Arellano also said there is concern about China possibly taking measures to control inflation by slowing down economic growth, thus pushing copper prices lower. Still, he added, demand will continue strong as the rest of the world is recovering. “We believe there is going to be some kind of synchronization between the possible slowdown in China and the strengthening in the rest of the world, particularly in the US first and then Europe.”

Codelco is the world’s largest copper producer, and Chile the number one producing nation.

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