Bloomberg reported that copper consumption in China will contract this year for the first time since 2008 as demand falters and inventories climb in the largest user before rebounding in 2013.

Mr Simon Hunt CEO of the Weybridge, Surrey based consultancy, which compiles analysis for users and fabricators said that consumption will drop about 8.5% to 5.6 million tonnes in 2012. Next year usage may grow 5.6% to 5.9 million tonnes.

Mr Hunt’s assessment adds to signs that China’s slowdown is hurting demand for commodities. Copper, used in wires and cables helps set the pace for other base metals and the drop in China’s consumption may hurt prices and cut profits at mining companies including Freeport McMoRan Copper & Gold Inc. Copper rose 6.8% last quarter as central banks in the US, China, Japan and Europe expanded stimulus to try to revive economic growth.

He said that the safety valve of exports has gone, the domestic economy is slowing down they have a problem of surplus capacity and cash is extraordinarily tight including reported and unreported stockpiles. There are no signals of a recovery in heavy industry and manufacturing.

Source - Bloomberg.com

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