GENEVA (AP) — Commodities trader Glencore International PLC said Wednesday that demand for raw materials remains robust as China and the U.S. help offset the impact of the downturn in Europe.
In a first-quarter report on raw materials extracted — but not its profits — the Swiss-based company said "physical demand for commodities remains broadly healthy across the globe, although precise conditions vary by location."
The company's operational update came ahead of its first shareholder meeting Wednesday. The company is expected to face calls from anti-corruption campaigners for more transparency on its deals in resource-rich Democratic Republic of the Congo.
Last year, Glencore, already one of the world's biggest traders in raw materials such as coal, cotton and corn, floated on the stock market by selling $10 billion worth of shares. Recently, the company announced plans for a $90 billion merger with Anglo-Swiss mining group Xstrata PLC.
Glencore said Wednesday that the two companies expect the merger to be completed during the third quarter of this year, with savings of "at least $500 million in 2013."
The company said U.S. demand "has continued to strengthen in areas such as automobiles and aerospace, while European conditions remain generally weaker." Chinese demand "continues to be healthy," it added.
Glencore also noted that global inventories for raw materials "are generally low, both on exchanges and within supply chains."
Renewed concerns over Europe following Greek elections drove prices down for a wide range of commodities Tuesday as worries persisted about future demand for everything from copper and oil to soybeans.
Country Hedging LLC market analyst Sterling Smith said demand for U.S. and Chinese products will flatten without a resolution in Greece and that, in turn, would hurt demand across the board for commodities.
Production of high-grade copper from the Mutanda Mining operation in Congo's Katanga province rose 46 percent on the year, Glencore said Wednesday, while gold production from the Kazzinc Ltd. operations in Kazakhstan increased 24 percent. Glencore holds a 40 percent stake in Mutanda, 50.7 percent in Kazzinc.
The Baar, Switzerland-based company reported in March a 7 percent rise in full-year profit to $4.06 billion for 2011, citing rising prices for key raw materials and strong demand in developing countries.