Fitch forecasts poor profitability for Chinese copper companies

Fitch Ratings said China's copper processors will continue to record thin margins due to overcapacity and the sustained weakness of copper prices.

Copper product prices may continue to fall more rapidly than the price of copper cathode and copper scrap - two major raw materials for copper processors - due to slowing demand, the ratings agency said Wednesday.

At the same time, increasingly stringent labor and environmental protection requirements will raise costs, which will further squeeze processors' profitability, according to Fitch.

More than one fifth of copper processors in China have been posting net losses for the past three years.

However, Fitch expected large companies with R&D capability, technical know-how and economies of scale to record resilient margins.

"We expect large and leading Chinese copper processors to continue to actively invest in R&D of high value-added copper products, diversify their product offerings, and pursue vertical integration," said Fitch. Endi