Southern Copper 2Q15 Earnings Call Notes

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Maintain our confidence in copper

“we maintain our long-term confidence in the positive fundamentals of this market. Looking at demand, we’re expecting worldwide copper demand growth of about 3% for the year. That is new demand for refined copper of approximately 700,000 tons. The main drivers are a 4% demand growth in China, a continuation of demand recovery from export European industries and a stable U.S. copper demand in line with the American DVP increment.”

Structural factors will continue to affect supply

“On the supply side, as we have expressed in the past, we believe that several structural factors will continue to affect supply from new projects and existing operations as well as the scrap production. Among these factors, we want to emphasize delays in project startups, technical problems, labor unrest, excess government taxation and other difficulties.”

Current prices are not sufficient to promote supply growth

“We also want to emphasize that copper prices at current levels are not sufficient to promote the necessary future supply growth, thereby improving the strong long-term fundamentals of our industry.”

We don’t forecast copper prices, but we are expecting more activity on the demand side and weak supply trends

“we don’t do a forecast on copper prices. Even though we’re in the business of controlling copper cost, not in the business of forecasting copper prices. Having said that, we’re expecting the second half of the year, a combination of more activity on the demand side, particularly on the Chinese demand and this trend on supply underperformance to be hold or even deepen a little bit due to the current price environment.”

We think the headwinds to speculative demand have been absorbed

“all the macroeconomic headwinds have been — have affected the speculative segment of the demand and that has been — most of the impact has already been absorbed. So we believe that that portion of the demand will not be a negative matter in this second half of 2015.”