Mr Walter de Wet Standard Bank Group's head of Commodities Research said that global copper consumption is expected to grow 1.2% in 2012 to reach 20,349 million tonnes with China accounting for the bulk of the demand.
He said that within China, the health of the construction sector will be the main risk to copper demand the Mining Indaba conference in Cape Town which runs from February 6th to 9th 2012.
Mr De Wet noted that demand for copper is unlikely to be strong enough to support prices above USD 9,000 per tonne for most of the year. Copper is a base metal of choice for most investors and speculators and its price generally offers great insights into how traders view the global economic outlook.
He told delegates that China will still remain the most important factor as far as global demand for copper in 2012 is concerned. He said China's demand, which has been growing on average by 15.1% per year since 2000 was expected to increase by 6.6% in 2012.
Although China is the key driver of global copper consumption, Mr De Wet said that he expected the US and Europe to also remain important centers of copper demand.
He said that China should once again account for the majority of copper refined consumption growth in 2012. Understanding Chinese copper demand and potential weaknesses are crucial in understanding copper.
Mr De Wet noted that construction accounts for around 55% of China's total copper demand, domestic consumption around 29% and exports adding about 16% to total demand. The impact of a Chinese slowdown in construction would be the decisive factor with domestic consumption needed to fill the gap.
He said that although exports are perceived to be a risk to Chinese copper consumption this sector constitutes only a modest percentage of total Chinese copper demand. We believe the real risk to copper demand remains within the construction sector.
He added that after stabilizing over the second half of 2010 and into the H1 of 2011, Chinese property sales growth started to deteriorate in September 2011. We expect sales growth to decline further during the H1 of 2012. We note that most of the growth in construction has come from the private sector with government related property development making up only a small percentage of total developments.
(Sourced from www.4-traders.com)
