Our latest China copper survey shows some positive signals for the copper market: Enduser demand started to show clearer recovery from seasonal softness, fabricators plan to raise production rates and restock copper, and sentiment remains positive across the industry chain. However, it is still unclear whether demand growth is more than seasonally driven, but expectations toward demand recovery seem to be building with positive macro numbers.
End-user demand started to pick up following seasonal softness: After being in contraction since last November, copper fabricators in our survey reported a MoM improvement in their sales in February, including both wire/cable producers and plate/pipe producers. By end-use sectors the growth in orders were mainly from power, white goods and transportation sectors, while orders from the construction sector remained in a small albeit narrowing contraction. The only sector that has yet to show any strength is the machinery sector, with orders from this sector continuing to struggle. Given power accounts for 23% of China’s copper consumption and white goods accounts for 14%, any order recovery from these two sectors is clearly positive for copper demand in China.
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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.
