South Korea-based LS-Nikko Copper, the world's second-largest copper smelter, said on Thursday it would cut copper cathode output by about 10 percent due to weak demand in its first such move in more than four years.
The move comes as a deepening global economic slowdown threatens to weaken demand for the red metal, which is extensively used in the power and construction industries.
Copper prices, however, rallied to one-month highs this week following the rebalancing of commodity indexes, with three-month copper on the London Metal Exchange jumping to $3,570 a tonne only to fall back to $3,262 on Thursday.
This is to accommodate prevailing weak copper demand caused by the ongoing global financial situation... With this production cut, LS-Nikko will produce 515,000 tonnes of copper cathode in 2009, it said in a statement.
The joint venture between South Korea's LS Corp and a Japanese group led by Nippon Mining & Metals, Mitsui Mining & Smelting and Marubeni has annual copper cathode production capacity of 560,000 tonnes and last reduced output by 25,000 tonnes between late 2003 and 2004.
As demand for base metals tumbles, Chile's Codelco, the world's No.1 copper miner, has cut annual copper premiums for some buyers by a further 4 percent to $72 a tonne after initially settling the 2009 premium at $75, itself a 32 percent drop from 2008 level. (Reporting by Miyoung Kim; Editing by Ken Wills)
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