Copper Consumption Growth in China to Slow, Antaike Predicts

Aug. 17 (Bloomberg) -- Copper usage in China, the world's largest consumer, may grow at a slower pace this year as real- estate curbs cut demand, according to a state-owned researcher.

Consumption of the metal used in appliances and construction is expected to expand 11 percent to 6.2 million metric tons this year, compared with 14 percent growth last year, Yang Changhua, a senior analyst at Beijing Antaike Information Development Co., said in a phone interview. Usage was 5.6 million tons in 2009, he said.

"The main contributor to the slowdown will come from the construction sector as the real-estate market cools," said Yang, who has been analyzing the country's copper market for 12 years.

China's banking regulator told lenders last month to assess the impact of a property price drop of as much as 60 percent, underscoring concern that the government may take additional steps to cool its real-estate market. Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

Copper for three-month delivery on the London Metal Exchange dropped to an eight-month low of $6,037.50 a ton in June as Chinese regulators curbed loans for third-home purchases, increased downpayment requirements and raised mortgage rates in a series of announcements from mid-April to rein in spiraling property prices. The contract was at $7,265 at 8:26 a.m. in Singapore, 1.5 percent lower this year.

Property Prices

China's property prices climbed at the slowest pace in six months in July, the statistics bureau's newspaper, China Information News, reported last week, adding to signs government measures are taking effect.

Antaike's forecast for slowing consumption growth is expected given the outlook for copper-products output this year, said Zhu Bin, president of research at Nanhua Futures Co.

"Even though demand from appliance makers and wire-and- cable manufacturers has been robust this year, copper-products output is expected to rise 16 percent this year compared with an increase of 18 percent last year," Zhu said from Hangzhou.

Codelco, the world's largest copper producer, said Aug. 6 that China's demand will slow in the second half of the year because of government measures to tighten lending and curb inflation. The country's copper demand may fall 10 percent in the second half, twice the rate previously forecast, UBS AG said in a July 8 report.

China's Supplies

China imported 1.56 million tons of refined copper in the first half of 2010, according to customs data. That's 12.7 percent less than the same period last year when imports were boosted to a record by state stockpiling and the country's $586 billion of stimulus spending.

"Antaike's forecasts tend to be on the conservative side, although a slowdown is not unexpected," said Jia Zheng, a trader at Soochow Futures Co. The increase in demand this year "is most probably due to restocking and stockpiling by both producers and consumers, rather than an actual increase in usage," she said.

Shipments were still more than double the level in the first half of 2008, driving stockpiles up 50 percent in the past year, according to Bloomberg calculations. Inventories tallied by the Shanghai Futures Exchange expanded last week by the most in four months to 113,870 tons.