* Production deficit will continue to support copper prices
* Copper market fundamentals remain strong
HAMBURG May 16 (Reuters) - Global copper prices are likely to remain well-supported despite recent weakness with a global production deficit forecast in 2011, Aurubis (NAFG.DE: Quote), Europe's biggest copper producer, said on Monday.
"The market's good fundamental conditions are still in place," Aurubis said in a report. "For example, a production deficit is still expected on the market as a result of good demand and insufficient production."
Copper prices had touched five-month-lows on Thursday on concern economic growth is slowing in top world consumer China. [ID:nL3E7GC1CC]
Following a global refined copper deficit in 2010 estimated at 252,000 tonnes by the International Copper Study Group, a further deficit is likely in 2011, Aurubis said.
"There are uncertainties regarding the scale for 2011, however, mainly owing to the situation in China," Aurubis said.
Investors feared China's monetary tightening to cool inflation could reduce copper demand. But China's industrial production remains high, it said.
Shanghai copper futures have also been above London Metal Exchange prices recently which is "evidently a consequence of higher physical copper demand in China," it said.
Spot copper treatment and refining charges, fees paid to smelters by mines and traders to refine copper concentrate into new metal, have slipped slightly, Aurubis said.
Spot market TC/RCs have fallen slightly to about $100 a tonne and 10 cents/lb due to good demand from refineries, it said. When more refinery capacity is available, the fees fall.
Spot TC/RCs had risen to $120 a tonne and 12 cents a pound following the Japanese earthquake in March which damaged some Japanese smelters from $80 a tonne and 8 cents a pound before the disaster. [ID:nLDE74C0JX]
"The concentrate stocks at smelters are nevertheless high in the meantime and demand intensity may decrease again owing to scheduled maintenance standstills," it said.
On the copper scrap market the decline in the copper price led to a reduced supply, it said. Scrap refining charges also decreased.
But existing demand is still being faced by sufficient scrap availability, it said.
(Source: http://af.reuters.com/article/metalsNews/idAFLDE74F0Y120110516?sp=true)
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