China copper downstream PMI fell to lowest on record as coronavirus bit

SHANGHAI, Mar 2 (SMM) – Activity across Chinese copper downstream industries contracted at the fastest pace since at least 2017 last month, as factories delayed their resumption or failed to swing back to high gear amid widespread transport curbs and tough public health measures to contain the outbreak of the COVID-19 epidemic.

The latest SMM survey showed that the purchasing managers' index (PMI) across construction, power, electronics, transport and home appliance sectors in China dropped from 47.04 in January to 37.97 in February, the lowest since SMM began to conduct the monthly survey in January 2017. The 50-mark separates growth from contraction.

A sub-index of production nosedived to 35.69 in February, down 12 from January, as the absence of approval from authorities slowed the resumption of factories and as labour and logistical issues subdued the operating rates at restarted plants.

Local authorities of most part of China required businesses not to resume work earlier than the second week of February, but most of the re-openings were seen in late February and end-users resumed work later.

The slow recovery reduced demand and orders received by copper downstream industries, leading to a plunge of 12.79 in the sub-index of new orders, which stood at 33.98 in February. A reading of new export orders slumped to 32.3.

Procurement of raw materials and shipment of finished goods by copper downstream industries have felt strong impact from logistical constraints amid the outbreak. Raw material inventory sub-index fell 10.84 to 38.81 in February, while a gauge of suppliers’ delivery time rose 4.6 to 50.5 and the sub-index for inventories of finish goods increased to 52.67.

Copper prices on the Shanghai Futures Exchange dived on the first trading day after the Lunar New Year holiday. SHFE copper later recouped some losses before it returned to three-year lows by the end of February. The sub-index of raw material purchasing prices across copper downstream industries slipped 11.26 from January to 41.24.

China’s National Bureau of Statistics said on Saturday that its PMI for the manufacturing sector fell to a record low of 35.7 in February from 50 in January.