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Up until the Olympics, China was infatuated with going for the copper. China typically accounts for roughly 25% of global copper demand, but because the Beijing games were on a world stage, the country cut back on seeking more in an attempt to reduce the factory emissions that have created a serious smog problem.
Watching this very closely were the creditors of bankrupt Asarco LLC, and not because they were interested in who took home the most gold or silver or bronze medals. A copper smelter and refiner based in Tucson, Ariz. Asarco has had a contentious three-year stay in Chapter 11, but its fortunes have changed. When Asarco lapsed into bankruptcy on Aug. 8, 2005, copper was selling at $1.60 a pound. Now it's selling for double that amount. China is a big reason for copper's price momentum. The nation's demand had already dropped 23% in the first half, even before the Olympics, since copper prices were soaring and inventories were sufficient to fulfill falling factory output. Some metals analysts tie an expected resumption in China's copper needs to dwindling stockpiles, which is what Asarco's creditors are hoping for. After all, Asarco is now a solvent company, which has put it squarely in the middle of a fight between its creditors and its parent company, Grupo Mexico SAB de CV. On Sept. 23, a unit of Vedanta Resources plc, a London-based mining giant, will ask Judge Richard Schmidt in U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to approve a plan that includes its proposed $2.6 billion cash deal for Asarco. But Grupo Mexico has filed a plan of its own for Asarco. This race for the gold will likely last well into the fall, especially if China revs up what's been the world's fastest-growing economy and sends copper prices skyrocketing again. - Terry Brennan Categories Deal Video
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