Anxiety about the health of the world economy grows and copper giant KGHM may expect 2009 to be more difficult than 2008
Copper hasn't been spared in the financial market crisis and top copper miner KGHM expects 2009 to be more difficult than 2008 as prices have fallen more than seven percent over fears of the state of the global economy.
KGHM's Chief Executive Mirosław Krutin told Reuters that the company's revenues may be affected in 2009, more so than in 2008 due to lower copper demand and sale volumes. "I would say that we may [be] among the first to be hit," Krutin said. "I expect that as soon as fourth quarter there might be problems with sales at KGHM."
Metal prices have dropped 41 percent from a record high in July, while KGHM has slid 63 percent on the Warsaw Stock Exchange this year. Analysts call these times dramatic for the company and the copper industry. "It's not that the company will sell less copper, but that it will sell the metal at market prices," said Paweł Puchalski, analyst with BZ WBK to Reuters. "With the currency trading at zł.2.5 per dollar, KGHM needs copper at $5,250 per tonne to be at part on the net profit level in 2009," he added.
The price of copper has fallen on Wednesday to $5,282 per tonne on Wednesday, lowest since February 2007. KGHM has also been hit hard on the WIG20, dropping above 3 percent during Wednesday's trade.
