SHANGHAI, Jul 3 (SMM) – Major copper downstream industries in China returned to contraction territory in June, as a low consumption season, the ongoing US-China trade dispute and heavier rainfall weighed on demand.
SMM's purchasing managers' index (PMI) across construction, power, electronics, transportation and home appliance sectors, released on July 1, fell to 45.99 in June, after exceeding the 50-mark that separates expansion from contraction for three consecutive months.
SMM had expected the reading to slip from May’s 50.94 to 49.02.
The rise of 5G enterprises substantially boosted new orders in electronics, which became the only sector that grew last month. Sluggish car sales made transportation the poorest performing sector.
The electronics sector saw its activity reading for June rise 0.63 from May to 50.71, while the transportation PMI dropped 4.84 to 41.93.
Overall production across copper downstream shrank in June, with the sub-index falling 6.38 month on month to 44.51.
High inventories of finished goods and a seasonal lull drove home appliances producers to scale back operations, while weaker demand from state grid projects and completed real estate projects affected the power sector.
The sub-index for new orders shed 4.91 to 45.84, as a low consumption season and semi-annual financial settlement limited procurement by buyers.
Prices of raw materials climbed in June, with the sub-index gaining 6.35 to 53.28, as rising expectations of rate cuts from the Federal Reserve subdued the US dollar, and buoyed copper prices. Optimism surrounding the meeting between US President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit as well as tight supplies of raw materials also bolstered copper prices.
Falling concentrate treatment charges reflected tightness in ore supply, while scrap markets will tighten following the imposition of import quotas from July 1.
