Metals News
Copper Tube/Pipe Demand May Improve in 3Q on Air Conditioner Subsidy
smm insight
May 30,2012

SHANGHAI, May 30 (SMM) – According to China Securities Journal sources, market insiders disclosed that China's Finance Department and the RDRC has stipulated detailed rules on the implementation of energy efficient air conditioners, deciding to subsidize constant speed air conditioners with first-grade energy efficiency, and first and second-grade inverter air conditioners. The principal of “higher energy efficiency products enjoy higher subsidy standard has also been confirmed, with each energy efficiency air conditioner getting a subsidy of nearly RMB 1,000/mt. data revealed that, household air conditioner output was 11.85 million units in April, down by 4% on a yearly basis and by 2% on a monthly basis, due largely to drops in both domestic and overseas sales. Household air conditioner sales fell by as high as 12% in April. Although air conditioner producers slowed production, slack consumption caused household air conditioner inventories to rise by 4.2% YoY in April. In the face of poor market environment, air conditioner demand was significantly weaker during the traditionally peak demand period than last year. According to SMM survey, operating rates at copper tube/pipe producers in March and April slid by around 2-3% YoY. 

SMM holds the view that if new subsidy policy for energy efficient air conditioners can be implemented, it can ease high air conditioner inventories to some extent. However, inasmuch as the Chinese housing market remains sluggish due to the ongoing curbs, air conditioner demand from this sector is unlikely to improve, despite the subsidy policy. 

Multistep electricity price conferences were recently held across China. The initial purpose of multistep electricity price policy is to optimize the pricing mode, promote reasonable electricity prices, and push ahead energy saving and emission reduction. Whether or not the implementation of multistep electricity price policy and subsidy for energy efficient air conditioners can boost air conditioner demand in the first and second tier cities deserves great attention. 

In SMM's views, copper tube/pipe consumption will enter the traditionally low demand period in 3Q, but if these measures can promote consumption, the effects of this year's low demand period may weaken.


air conditioners; copper tube/pipe demand
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