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Chinese stimulus measures announced during the summer have yet to translate into demand. Power-sector demand, which accounts for 45% of China’s copper consumption, has fared better than other sectors this year, ..

02 Oct 2012

LONDON (Commodity Online): Chinese copper demand is likely to remain subdued in the near term but pick up in early 2013, said British bank Barclays Capital in a commodity research note.

According to Barclays, Chinese stimulus measures announced during the summer have yet to translate into demand. Power-sector demand, which accounts for 45% of China’s copper consumption, has fared better than other sectors this year, but September orders have not picked up substantially from low levels in August.

The decline in power-sector investment during August suggests a slow implementation of the stimulus. Home appliance demand may have bottomed, however. “Air conditioner stocks are now at multi-year lows, and a successful reshuffle at a large appliance-maker may also help output to recover,” said analysts with Barclays Capital, reporting on a research trip to China.

Meanwhile, Barclays reported that a shift in which infrastructure spending in western China is picking up as investment withers in eastern China. Financing imports returned in September, and a reported 100,000 metric tons of stocks have built at bonded warehouses.

“In addition, buyers have balked at higher prices, which also led to stock building. On the other hand, if China starts exporting copper to take advantage of stronger LME prices and more favorable export taxes, stocks may shift from China to elsewhere in the world,” they added.

A key issue will be copper imports in 2013. “Clients noted that China may contract less after record imports in 2012 led to stock building, but the scale of the decline will depend on Asian premiums in the weeks ahead of negotiations,” Barclays concluded.


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