Our latest survey shows a moderating copper market but not a contracting one: Our latest China survey shows a moderating copper market, but importantly not a contracting one. End-user demand continues to grow, but now very slowly, while fabricators have slightly lifted their capacity utilisation rate, yet it remains lower YoY. Traders’ sales improved last month and smelters saw better orders over the same period, helped by the stable downstream demand as well as reduced net copper imports. Chinese copper smelters have restocked concentrate but this didn’t reverse the rising trend in spot TCRCs – with concentrate imports trending towards 1.5mt gross weight per month there is clearly plentiful supply available.
End user demand growth continued to slow: Although still higher MoM, the trend of a slower end-user demand growth continued over the past month, as shown by the decline in fabricators sales index in Fig.1. By sector, the slowdown was apparently driven by a sharp fall in orders from the white goods sector (as expected), while power sector demand remained clearly in expansion territory. Copper demand from the machinery sector continued to pick up but construction and transportation sectors continue to struggle. Looking forward fabricators expect this trend to continue – sales still growing but at an even slower pace (fig.3), a reflection of seasonality in demand.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
