Production at Chinese copper fabricators slowing:Beijing Antaike
Source: www.chinamining.org Citation: Platts Date: May.24, 2012
Production at Chinese copper fabricators has slowed this year due to higher costs and financing issues, according to a report released Tuesday by Beijing Antaike, the state-owned metals research firm.
Citing recently released data from the China Nonferrous Metals Industry Association, Antaike analysts noted that production of semi-fabricated copper products peaked last year at 10.28 million mt.
Semi-fabricated copper production in January-February 2012 totaled 1.58 million mt, up nearly 18.75% from January-February 2011, but the pace is slowing, Antaike said.
"Chinese copper fabricators have entered a bottleneck period after several years of capacity expansion, as refined copper prices have been rising and demand of end-users went down," Antaike analysts said in the report.
Production of air conditioning copper tube was the best over the period, with production of copper wire rod second, while orders for copper plate and strip decreased sharply.
Capacity utilization by copper fabricators has gradually declined, falling to 81.84% in 2011, 3.4 percentage points lower than 2010, according to CNIA data.
According to a survey of Chinese wire cable makers, more than 70% said that April orders saw no obvious increase from March and that most orders were short term, Antaike analysts said.
"Profit was squeezed due to weak demand for copper products in domestic and overseas markets," they added.
As a result, monthly semi-fabricated copper production is likely to grow an average of 2.77% in the first six months of this year, but then decline to an average of 0.98% in the second six months.
The power industry will likely continue to be the largest consumer of copper products in China, Antaike said. Strong semi-fabricated copper production by the electrical power industry kept operating rates at wire and rod makers relatively high over the period, according to Antaike analysts.
Operating rates in copper tube manufacturers are slowly improving, while operating rates for air conditioning tube makers were in the range of 75-80%, leaving only a few enterprises at more than 90%, Antaike analysts said.
The operating rate of most copper rod producers was around 75% in the January-February period, with some enterprises over 80% while the operating rate at producers of copper plate and strip was below 70%.
Turning to fixed-asset investments related to copper, Antaike analysts cited statistics from the China Electricity Council showing that overall investment in electrical power construction reached Yuan 68 billion ($10.75 billion) during January-February, up 17.1% from the year-ago period.
Of that total, investment in electrical power sources came to Yuan 45.1 billion, while investment in the power grid totaled Yuan 22.9 billion, up by 22.9% and 7%, respectively, from January-February 2011, according to Antaike analysts.
"[The] power industry is still the biggest driving force for Chinese copper consumption growth. Antaike estimates that refined copper consumption will be 1.77 million mt in Q1 of 2012, with a slowdown growth rate of 4.1% year over year," they said.
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