SHANGHAI, Jan 2 (SMM) – Downstream copper industries in China grew moderately in December after they contracted for six consecutive months, as year-end stockpiling boosted production and new orders.
SMM's purchasing managers' index (PMI) across downstream copper industries, released on Saturday December 29, rose to 50.14 for December, exceeding previous expectations and up from 48.24 in November. A reading above 50 indicates expansion while one below 50 signals contraction.
The production sub-index climbed 3.37 month on month to 49.97 in December as consumption across end-markets marginally picked up ahead of Chinese New Year scheduled at the start of February.
In December, a cyclical high season improved production across the home appliance sector and greater investment in power grid projects raised production across the power sector.
Some firms may start their Chinese New Year break from the second half of January, which prompted them to step up production in December.
The poor weather slowed the commencement of new construction projects in north China last month.
While restrictions on home purchases limited consumption in the property sector and cold weather slowed construction in the north, a new orders sub-index, an indicator of future activity, grew to 50.11 in December, up 1.23 from November as an anticipated consumption boom around Chinese New Year grew orders.
Copper prices on the Shanghai Futures Exchange weakened in December. This lowered purchasing prices of raw materials acrosss downstream copper sectors, with the sub-index down 0.35 to 49.28, and prompted firms to purchase more raw materials. The New Year holiday also triggered stockpiling.
The sub-index for raw material stocks jumped 8.64 month on month to 51.19 in December, but continued cash pressures and year-end attempts to deplete inventories capped gains in stocks of raw materials at downstream copper firms.