China copper downstream PMI returned above 50 in March

SHANGHAI, Mar 31 (SMM) – Manufacturing activity across Chinese copper downstream industries expanded in March last month, after registering a record contraction in the prior month, as businesses in the country resumed work with new domestic Covid-19 cases grinding to a halt.

The latest SMM survey showed that the purchasing managers' index (PMI) across construction, power, electronics, transport and home appliance sectors in China climbed to 51.55 in March, returning above the 50-mark that separates growth from contraction.

March’s reading marked a sharp increase from 37.97 in February, the lowest since SMM began to conduct the monthly survey in January 2017.

The expansion across copper downstream sectors echoes government data. The National Bureau of Statistics (NBS) said Tuesday morning that its PMI for China’s manufacturing sector rose to 52 in March from a plunge to a record low of 35.7 in February.

The NBS attributed the rebound in PMI to its record low base in February and cautioned that the readings do not signal a stabilisation in economic activity.

The SMM survey showed that enterprises in China failed to recover to normal in March and that demand is still far away from full revival with public health measures in place and the pandemic raging on outside China.

In the China copper downstream activity report, a sub-index of production rose to 53.07 in March, up 17.38 from February, while the new orders sub-index advanced 18.86 to 52.83.

A reading of new export orders climbed to 52.17, but China’s exports have come under great pressure as global coronavirus crisis knocks foreign demand and threatens a steep economic slump.

Worries about the economic fallout from the pandemic and a collapse in oil prices sparked by oil price war fears battered global markets in the past month. Copper prices on the Shanghai Futures Exchange tumbled 12% for March, the biggest monthly percentage decline since 2015. The sub-index of raw material purchasing prices across copper downstream industries slipped 2.33 from February to 38.91.

Raw material inventory sub-index increased 6.94 to 45.75 in March, but remained in the contraction territory, as end-users did not take delivery of goods that they ordered after copper prices dived, leading to finished goods inventory accumulation.

The sub-index for supplier delivery time index slipped 2.77 to 47.7 as the removal of restrictions on trans-provincial transport facilitated logistical recovery.