Reuters reported that consumption of refined copper in China will rise 5.5% to about 8.1 million tonnes next year as the economy in the world's top consumer of the metal picks up.
A senior analyst at state backed research firm Antaike said that metal demand in China has fallen this year after economic activity slowed in global markets but traders hope that appetite will rebound in the Q4 and early next year on the back more infrastructure spending.
Mr Yang Changhua from the respected research house referring to both state and private investment said that "The new government will try to give people more confidence in the economy. Investment will be the main engine next year."
Mr Yang said that the ruling Communist Party begins a key congress on November 8th 2012 which will usher in a generational, once in a decade leadership change. When the economy improves, people will be more relaxed about spending.
Mr Yang expects real consumption of refined copper to rise 4.8% YoY to 7.68 million tonnes this year weaker than 7.8% in 2011, 11.5% in 2010, 19.6% in 2009 and 11.8% in 2008.
He said that demand from the power sector the top user of copper in China would rise 7.1% this year from an 8% increase in 2011. Consumption of refined copper from the air conditioner and cooling sector, the second largest user of the metal in the country will climb just 1.7% this year from 15.2% increase the year before.
China's economy grew an annual 7.4% in the Q3 marking the first time the nation has missed its official target since 6.5% growth in the Q1 of 2009 and leaving it on course for its slowest full year of growth since 1999.
Mr Yang said that China's appetite for copper imports may fall next year as production of refined copper at home rises. He sees domestic production of refined copper growing 8.9 percent YoY to 6.1 million tonnes in 2013, as new capacity comes online. In 2012 output is expected to rise 8% from the previous year to 5.6 million tonnes.
China is likely to add 920,000 tonnes of copper smelting capacity and 1.4 million tonnes of refining capacity next year. The increase in smelting capacity in 2013 would be larger than the 600,000 tonnes seen this year which would increase Chinese imports of raw material concentrates next year. We think treatment and refining charges will rise next year and will peak in 2014 as global supply increases. But demand growth from China could limit the TC and RC rise next year.
Chinese copper smelters were seeking treatment and refining charges of USD 75 to USD 80 per tonne and 7.5 to 8 cents a pound for 2013 term shipments of copper concentrate, versus USD 60 to USD 63.5 and 6 to 6.35 cents this year.
TC and RCs are paid by overseas miners to Chinese smelters for converting concentrate into refined metal, then the charges are deducted from the sale price based on the London Metal Exchange copper prices. Higher charges are typically seen when concentrate supply rises.
Source - Reuters
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