Copper processing contracts faster than expected in Oct-Shanghai Metals Market

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Copper processing contracts faster than expected in Oct

SMM Insight 04:46:59PM Nov 01, 2018 Source:SMM

SHANGHAI, Nov 1 (SMM) – Copper processing in China contracted faster than expected in October as consumption across end-users failed to meet expectations and as the government’s infrastructure push did not appear to benefit the copper sector yet, SMM research found.

The SMM purchasing managers’ index (PMI) across firms that manufacture products with copper as feedstock fell to 46.64 in October, down from 49.04 in September and below the 50-point mark that separates contraction from expansion for a fifth straight month. SMM analysts had forecast the index to rebound to 51.16 in October.

Production enthusiasm across copper processors further waned last month as consumption across automobile, property and power sectors failed to pick up. The production sub-index came in at 42.53 in October, down 6.35 from September, compared with an expected rebound to 50.47.

The sub-index for new orders saw a decline of 1.91 in October, coming in at 45.62. New starts or completion of building or transportation construction projects dwindled across northern areas in the colder weather while consumption across home appliances, automobile and real estate sectors saw no signs of resilience and cash issues continued to plague the power sector. This generated smaller-than-expected demand for copper products.

While spot premiums or discounts fell amid poor demand, copper processors saw their material costs grow sharply last month as prices of futures went up from September. Weak consumption across end-users grew willingness among spot traders to release their cargoes while high prices, cash flow issues and dim outlooks kept copper consumers being cautious in purchasing raw materials.

The sub-index for raw material prices increased by 9.56 to 50.87 in October while the figure for feedstock inventories came in at 47.99.

Overall sluggish performance across construction, power, transportation and home appliances accounted for the overall contraction of copper processing while electronic maintained relatively steady performance last month.

Activity across the construction sector decreased at a faster pace last month with its PMI at 43.65, down 5.23 from a month ago and 7.59 from a year ago.

Stricter regulation over housing markets hampered sales. This slowed, or even suspended, operation across construction sites even though workers used to hurry to meet deadlines in October. With increasing cash pressure, demand for construction products in copper shrank.

Operating rates across producers of copper wire and cable extended their declines last month as tepid demand downstream slowed their operation and as a longer capital recovery period frustrated them. The PMI for the power sector stood at 45.68 in October, down 5.41 from September but up 2.66 compared to a year earlier.

Manufacturers of copper products for electronic products saw relatively stable activity last month with its PMI down 1.74 month on month to 50.1, 0.42 lower than the corresponding month of 2017. Besides, firms grew their stocks of finished products as the massive Singles Day shopping events in November approaches.

While overall activity across the transportation sector remained in contraction territory amid a low season last month, a slower decline in new orders helped to push the index up 1.76 to 48.34, standing 5.28 lower than the same period last year. Export-oriented firms received more orders as exporters tended to step up shipments before the US follows through on its promise to increase its tariffs to 25% at the turn of the year. New-energy vehicles continued to see upbeat performance.

PMI for the home appliances sector increased by 5.25 to 48.02 in October as export orders rebounded. Overall production across this sector slowed amid a seasonal lull and new orders for home appliances continued to shrink, in a sign of weak consumption likely to carry over into near term. But production of air conditioner slightly improved in October.

Key Words:  Copper   PMI 

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46800.0
-710.0
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46775.0
-715.0
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46700.0
-715.0
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Copper processing contracts faster than expected in Oct

SMM Insight 04:46:59PM Nov 01, 2018 Source:SMM

SHANGHAI, Nov 1 (SMM) – Copper processing in China contracted faster than expected in October as consumption across end-users failed to meet expectations and as the government’s infrastructure push did not appear to benefit the copper sector yet, SMM research found.

The SMM purchasing managers’ index (PMI) across firms that manufacture products with copper as feedstock fell to 46.64 in October, down from 49.04 in September and below the 50-point mark that separates contraction from expansion for a fifth straight month. SMM analysts had forecast the index to rebound to 51.16 in October.

Production enthusiasm across copper processors further waned last month as consumption across automobile, property and power sectors failed to pick up. The production sub-index came in at 42.53 in October, down 6.35 from September, compared with an expected rebound to 50.47.

The sub-index for new orders saw a decline of 1.91 in October, coming in at 45.62. New starts or completion of building or transportation construction projects dwindled across northern areas in the colder weather while consumption across home appliances, automobile and real estate sectors saw no signs of resilience and cash issues continued to plague the power sector. This generated smaller-than-expected demand for copper products.

While spot premiums or discounts fell amid poor demand, copper processors saw their material costs grow sharply last month as prices of futures went up from September. Weak consumption across end-users grew willingness among spot traders to release their cargoes while high prices, cash flow issues and dim outlooks kept copper consumers being cautious in purchasing raw materials.

The sub-index for raw material prices increased by 9.56 to 50.87 in October while the figure for feedstock inventories came in at 47.99.

Overall sluggish performance across construction, power, transportation and home appliances accounted for the overall contraction of copper processing while electronic maintained relatively steady performance last month.

Activity across the construction sector decreased at a faster pace last month with its PMI at 43.65, down 5.23 from a month ago and 7.59 from a year ago.

Stricter regulation over housing markets hampered sales. This slowed, or even suspended, operation across construction sites even though workers used to hurry to meet deadlines in October. With increasing cash pressure, demand for construction products in copper shrank.

Operating rates across producers of copper wire and cable extended their declines last month as tepid demand downstream slowed their operation and as a longer capital recovery period frustrated them. The PMI for the power sector stood at 45.68 in October, down 5.41 from September but up 2.66 compared to a year earlier.

Manufacturers of copper products for electronic products saw relatively stable activity last month with its PMI down 1.74 month on month to 50.1, 0.42 lower than the corresponding month of 2017. Besides, firms grew their stocks of finished products as the massive Singles Day shopping events in November approaches.

While overall activity across the transportation sector remained in contraction territory amid a low season last month, a slower decline in new orders helped to push the index up 1.76 to 48.34, standing 5.28 lower than the same period last year. Export-oriented firms received more orders as exporters tended to step up shipments before the US follows through on its promise to increase its tariffs to 25% at the turn of the year. New-energy vehicles continued to see upbeat performance.

PMI for the home appliances sector increased by 5.25 to 48.02 in October as export orders rebounded. Overall production across this sector slowed amid a seasonal lull and new orders for home appliances continued to shrink, in a sign of weak consumption likely to carry over into near term. But production of air conditioner slightly improved in October.

Key Words:  Copper   PMI