BIENIO DE TEOLOGÍA BÍBLICA

The Aurubis Group is active on the international copper market and in its sub-markets, which have varying structures. On the global copper concentrate market Aurubis competes with other primary copper smelters, mainly in China and Japan. Aurubis is a significant purchaser and processor of recycling raw materials containing copper and other metals, which it procures in the European market first and foremost. Metal trading companies are the main actors on the supplier side of this market, while copper and metal smelters as well as com- panies in the processing industry are active on the demand side. The market for copper cathodes is international. Copper cathodes, which are made of refined copper, serve as the basis for trade on the international metal exchanges. While Aurubis is one of the largest producers in this area with an annual out- put of about 1.1 million t, it doesn’t hold a significant position relative to the overall market of 21 million t. The markets for copper products are also fragmented.

On the production side of the copper market, the mine and concentrate production of copper increased in nearly all of the main mining countries. During the first seven months of 2014 the output was about 3 % above the same period of the previous year, according to the International Copper Study Group (ICSG). Growth could have been higher but was limited in individual countries due to special factors. Indonesia in par- ticular registered a 10 % production decline resulting from the export restrictions for copper concentrates caused by the in- troduction of export taxes at the beginning of the year. There were also production losses in Zambia (– 13 %) due in part to technical problems and in Australia (– 4 %) due to the tempo- rary closure of two mines. Capacity utilization therefore only reached 82.7 % in the first seven months of 2014 compared to 83.9 % in the same period of the previous year.

There was a shortage on European copper scrap markets almost the entire fiscal year, a trend that was also evident in other regional markets. There were only temporary recover- ies, and therefore better availability, at the beginning of the calendar year and starting September 2014. Refining charges remained low overall.

The lower copper scrap supply negatively impacted the output of refined copper. There were also volume losses owing to production disruptions in South Korea and the Philippines. However, production losses were more than balanced out by the commissioning of new smelting capacities for copper con- centrates and a good supply of volumes in this raw material segment. On the whole, the global output of refined copper rose to 12.8 million t in the first seven months of 2014 accord- ing to the ICSG and was therefore about 840,000 t up on the same period of the previous year.

The visible copper inventories in the metal exchange ware- houses reflected a different trend. They fell distinctly in the course of the fiscal year from 712,331 t on October 1, 2013 to 253,190 t on September 1, 2014, or by 64.5 %. They recovered slightly afterwards to 265,095 t by the end of the fiscal year. In the regional breakdown of copper exchange inventories, the focus shifted from Asia to the US. In Europe the copper inventories in the LME warehouses were reduced to below 10,000 t. Furthermore, the physical supply of volumes was subject to limitations stemming from LME delivery regulations. According to estimates of the market research company CRU Group, 620,000 t were located in Chinese bonded warehous- es at the end of the fiscal year after a high of 875,000 t in late April 2014.

Global copper demand was once again strongly impacted by macroeconomic changes in China, Japan, the US and the euro zone in fiscal year 2013/14. Developments differed in these regions in some cases. China in particular exhibited inconsis tencies. It was affected by somewhat weakening eco- nomic momentum, state countermeasures and two notable occurrences: first, for the first time in quite a while there were reports of extensive cathode purchases by the Chinese Strategic Reserve Bureau, which was considered a signal for a favorable price level on the copper market. Later, reports about irregularities in copper-based credit transactions strained prices. However, this incident was viewed as an iso- lated case involving only relatively limited volumes. Further- more, in the first nine months of 2014 China imported 2.65 mil- lion t of refined copper, 17 % more than the previous year.

What was lost in copper demand momentum in China as a result of lower economic growth was largely balanced out by a more positive trend in the US, Japan and Europe. Although the US experienced an especially harsh winter, which affected copper demand, good economic development increased demand in all of the relevant industries as the year went on. In Japan the increase in VAT led to a good first quarter and a weaker second quarter in 2014. Increased infrastructure projects and the construction of solar plants created addi- tional demand. In Europe copper demand also benefited from an increasingly visible economic recovery initially. Demand from the electrical and electronics sector contributed to this in particular. Copper was sought after for applications such as submarine cable and wind farms. The construction indus- try also recorded higher demand. However, the improved order situation in the automotive and transport sector had the strongest effect. Consumer trust in Europe nevertheless weakened starting in the summer. While this affected copper demand, seasonal effects had the most substantial impact.

Overall, there was a production deficit of 472,000 t in the first seven months of 2014 on the global market for refined copper according to the ICSG. This figure includes inventory changes in Chinese bonded warehouses. The forecast we pro- vided in the last Annual Report therefore seems to have been confirmed: at that time we stated that the strong production surpluses expected by analysts were not anticipated in 2014.

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Copper price and metal exchange copper inventories

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LME copper price

Metal exchange copper inventories

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The LME copper price fell during the fiscal year and, at an average of US$ 6,996/t (LME settlement), was lower than the previous year (US$ 7,513/t LME settlement). Fluctuations were more moderate compared to 2012/13. After starting at US$ 7,219/t on October 1, 2013, the LME copper price changed only slightly at a level above US$ 7,000/t until early March. In the following weak period, which extended until around the end of June 2014, prices between US$ 6,600/t and US$ 6,900/t were recorded. They recovered in the summer months of July and August to slightly above US$ 7,000/t. Prices dropped again in September to just below US$ 6,800/t. Pricing was once again influenced by macroeconomic developments in the main regional copper markets to a large degree. The lower supply of cathodes was mainly reflected in high cathode premiums and a backwardation effect, in which the spot price was higher than the forward price.

Economic development in the