Copper use to rise in 2013 after contraction
Source: Bloomberg News |
October 10, 2012, Wednesday
|
Print Edition
Print Edition
COPPER consumption in China will contract this year for the first time since 2008 as demand falters and inventories climb in the largest user, before rebounding in 2013, according to Simon Hunt Strategic Services.
Consumption will drop about 8.5 percent to 5.6 million tons in 2012, said Simon Hunt, CEO of the Surrey-based consultancy, which compiles analysis for users and fabricators. Next year, usage may grow 5.6 percent to 5.9 million tons, Hunt said in Singapore after visiting China for two weeks last month.
Hunt's assessment adds to signs that China's slowdown is hurting demand for commodities. Copper, used in wires and cables, helps set the pace for other base metals and the drop in China's consumption may hurt prices and cut profits at mining companies including Freeport-McMoRan Copper & Gold Inc. Copper rose 6.8 percent last quarter as central banks in the US, China, Japan and Europe expanded stimulus to try to revive economic growth.
"The safety valve of exports has gone, the domestic economy is slowing down, they have a problem of surplus capacity and cash is extraordinarily tight," said Hunt, who estimated total copper reserves in China at 3.5 million tons, including reported and unreported stockpiles. "There are no signals of a recovery in heavy industry and manufacturing."
China's slowdown this year "has been significant," the World Bank said in a report on Monday, citing declining external demand and a property-market correction. Copper stockpiles monitored by the Shanghai Futures Exchange totaled 162,547 tons in the week to September 27, about 66 percent above a year earlier.
"There's a huge amount of inventories of all types," said Hunt, whose visit to China included one of the top five power-cable makers. "You walk round and trip over drums of cables."
China imported 2.39 million tons of refined metal in the first eight months, up from 1.51 million tons the previous year, according to Bloomberg News calculations based on customs data. Global demand exceeded output by 129,000 tons in the first half of 2012, the World Bureau of Metal Statistics said on August 16.
Consumption will drop about 8.5 percent to 5.6 million tons in 2012, said Simon Hunt, CEO of the Surrey-based consultancy, which compiles analysis for users and fabricators. Next year, usage may grow 5.6 percent to 5.9 million tons, Hunt said in Singapore after visiting China for two weeks last month.
Hunt's assessment adds to signs that China's slowdown is hurting demand for commodities. Copper, used in wires and cables, helps set the pace for other base metals and the drop in China's consumption may hurt prices and cut profits at mining companies including Freeport-McMoRan Copper & Gold Inc. Copper rose 6.8 percent last quarter as central banks in the US, China, Japan and Europe expanded stimulus to try to revive economic growth.
"The safety valve of exports has gone, the domestic economy is slowing down, they have a problem of surplus capacity and cash is extraordinarily tight," said Hunt, who estimated total copper reserves in China at 3.5 million tons, including reported and unreported stockpiles. "There are no signals of a recovery in heavy industry and manufacturing."
China's slowdown this year "has been significant," the World Bank said in a report on Monday, citing declining external demand and a property-market correction. Copper stockpiles monitored by the Shanghai Futures Exchange totaled 162,547 tons in the week to September 27, about 66 percent above a year earlier.
"There's a huge amount of inventories of all types," said Hunt, whose visit to China included one of the top five power-cable makers. "You walk round and trip over drums of cables."
China imported 2.39 million tons of refined metal in the first eight months, up from 1.51 million tons the previous year, according to Bloomberg News calculations based on customs data. Global demand exceeded output by 129,000 tons in the first half of 2012, the World Bureau of Metal Statistics said on August 16.
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