MNI: China Copper Demand To Hold Flat At 4% In H2

MNI (MNI (BEIJING)) - China will see flat 4% copper consumption growth in H2 as fiscal stimulus measures counter the expected 2% demand decline driven by the property-market slump, local analysts have told MNI.

Tianyu He, senior copper analyst at CRU Group based in Shanghai, noted weaker than expected demand from property and EVs, which has dropped 2% from earlier estimates, will offset additional copper demand from Beijing’s use of CNY300 billion in treasury bonds towards equipment upgrades and consumer trade-in schemes. 

“Overall total demand growth remains unchanged at around 4% y/y,” He added. However, the additional copper demand driven by the consumer stimulus will come at the expense of 2025 consumption, lowering demand growth by a few percentage points to 2.9% y/y next year, He calculated. 

“Less demand in 2025 may spur authorities to repeat or add additional support,” the analyst noted. Additionally, green transition and equipment upgrades will add 460,000 tonnes to demand in 2024, he continued. 

The International Wrought Copper Council estimated China’s refined copper demand reached 13.7 million tonnes last year.

SHOPPING SPREE

The autumn holiday season and Q4’s so called Double 11 online shopping festival will also support short-term copper consumption in H2, said Gu Fengda, nonferrous metals chief analyst at Guoxin Futures. A similar government scheme between 2007- 2012 had driven CNY659 billion of additional appliance sales from CNY76.5 billion in subsidies, a multiplier of around 7, Gu argued. 

However, previous subsidies had not proven effective longer term at clearing production capacity and tempering extreme competition, he continued. Historically, equipment renewal and upgrading was more sustainable, Gu added, noting the recent State-owned Assets Supervision and Administration announcement to invest CNY3 trillion in equipment renewals over the next five years would also lend support.

Beijing will likely tilt its measures towards consumption in H2 and could issue consumer coupons or other measures that offer subsidies to lower-income households, advisors recently told MNI. (See MNI: Beijing Shifts Focus To Consumption To Boost H2 GDP) The National Development and Reform Commission announced in late July CNY150 billion of treasury bonds could be used towards equipment renewal projects and another CNY150 billion could be allocated towards consumer goods and appliance trade-ins.

PRICE VOLATILITY

Policy stimulus measures had improved August’s market sentiment ending July’s pessimism that saw copper prices drop below US$9,500 per tonne, down from mid-May’s USD12,245 high, Gu said. (See: MNI: Copper Prices To Fall, Chinese Demand To Remain Flat)

China’s copper demand was expected to maintain medium-to-low growth this year, lending support to prices, Gu continued. “Given current market dynamics it's likely to see a moderate relief rally before the end of Q3,” said He.