SMM Copper Demand Surprise Index: China Copper Demand to Worsen in April 2017

Published: Apr 17, 2017 10:38

Save

The SMM Copper Demand Surprise Index (SMMCDSI) was -30.65 in March, below market expectations, and the index is expected to weaken further to -43.09 in April.

SHANGHAI, Apr. 17 (SMM) – The SMM Copper Demand Surprise Index (SMMCDSI) was -30.65 in March, below market expectations, and the index is expected to weaken further to -43.09 in April, a sign that copper demand in China is estimated to drop further from market expectation.

SMM survey finds that orders at domestic copper tube/pipe, copper plate/strip, sheet and foil producers recovered after the 2017 Chinese New Year holiday from late January to early February, but dropped at copper wire rod producers on a yearly basis. Hence, the average operation rate at domestic copper processing enterprises fell in March on a yearly basis as copper demand in the copper wire rod sector accounts for about 53% of the total. (For details, please see SMM Copper Monthly Report)

The SMMCDSI averaged at 31.68 in 2016 thanks to different positive factors, higher than market estimation. However, the reading fell to the negative territory for the first time in March 2017 due to worries on real estate, home appliance and power sectors. In 2016, China’s copper consumption growth was up from 2.7% in 2015 to 3.02% in 2016, supported by new highs of both auto production and sales, investment growth in power sector and the recovery of real estate market. After the higher-than-estimated growth in 2016, markets expected too much for the 2017 market.

Month	1	2	3	4
2017 SMMCDSI	78.88	77.13	-30.65	-43.09
2016 SMMCDSI	83.25	30.93	63.72	36.47

The SMM Copper Demand Surprise Index (SMMCDSI) is an objective and quantitative method of evaluation of copper demand in China, and the index is issued around 15 every month, and the issuing date will likely be advanced for business development in the future.

The SMMCDSI index defines the spread between published data of refined copper cathode and scrap copper supply in China, and SMM surveyed and estimated data of domestic copper downstream producers. After normalization, the spread is called the Surprise. When the reading is in positive territory, it indicates that copper demand is above market expectation, and when the reading is above 50, it indicates a high chance for copper futures prices to rise; when the reading is in negative territory, it indicates that copper demand is below market expectation, and when the reading is below -50, it indicates a high chance for copper futures prices to fall.

copper price china copper demand The SMM Copper Demand Surprise Index (SMMCDSI)

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

1 min ago

Domestic Wire and Cable Firms See Raw Material Inventory Days Rise in February Amid Post-Holiday Resumption

[SMM Copper Flash] Regarding the inventory performance of domestic wire and cable enterprises in February, days of raw material inventories increased 1.11 days MoM, mainly because as enterprises advanced their work resumption and production resumptions, they gradually began purchasing raw materials for subsequent production. Days of raw material inventories increased 0.46 days MoM, mainly because end-users were on holiday during the Chinese New Year, and pick up goods was relatively slow.

1 min ago

Copper Wire and Cable Production Drops 14.29% in February Amid Chinese New Year Holiday

[SMM Copper Flash] In February, the operating rate of copper wire and cable enterprises came in at 55.81%, down 14.29 percentage points MoM, mainly due to the Chinese New Year holiday. During the holiday, wire and cable enterprises took about 11 days off on average. By sector, orders from the power sector were strong with production schedules concentrated, while engineering-related orders were relatively weak, showing clear divergence in end-use sector orders.

1 min ago

41 mins ago

Shanghai Copper Spot Discount on Slow Recovery Path Amid Stable Supply and Rising Demand

Looking ahead, the spot discount for Shanghai copper is expected to continue its slow recovery. With the decline in futures prices, orders from downstream enterprises have increased. In terms of market structure, the C1-C2 price spread has narrowed, which may reduce holders' willingness to deliver to exchange warehouses. On the supply side, continued arrivals of domestic copper and previously price-locked imported copper, coupled with high social inventory levels, ensure ample market circulation. On the demand side, the ongoing resumption of operations at downstream enterprises provides some support for spot premiums and discounts. In summary, spot premiums and discounts are showing a trend of slow recovery and gradual stabilization.

41 mins ago