SHANGHAI, Jul 1 (SMM) – Manufacturing activity across Chinese copper downstream industries expanded for a fourth straight month in June, as the economy continued to recover after the government lifted strict lockdowns and ramped up investment.
An SMM survey released Tuesday showed that the purchasing managers' index (PMI) across China’s construction, power, electronics, transport and home appliance sectors slipped 0.73 to 52.51 in June from May. The 50-point mark separates expansion from contraction on a monthly basis.
The downtick was in part due to a spike in copper prices, which deterred enterprises, especially wire and cable producers, from moving up a gear and aggressively stockpiling raw materials and meanwhile encouraged producers to discharge finished goods.
The sub-indexes for production, inventories of raw materials and finished goods fell to 52.91, 50.07 and 58.08, respectively, in June, while the reading for raw materials purchasing prices jumped 4.77 points from the previous month to 63.19.
The most actively traded copper contract on the Shanghai Futures Exchange surged more than 11% in June, which marked the third consecutive monthly increase as well as the biggest monthly percentage gain since November 2016. Optimism over global economic reopening, stimulus efforts by governments and central banks as well as concerns over mine supply accounted for the strong rally in copper prices.
The forward-looking total new orders gauge remained upbeat, but inched down 0.58 from May to 51.34 as new orders received by electronics enterprises shrank after the US government introduced new sanctions on the Chinese telecom giant Huawei in mid-May.
Notably, export orders contracted at a faster clip, with a sub-index standing at 48.19 compared with 48.69 in May, as the global coronavirus crisis shattered demand.
By industry, the home appliance sector outperformed in the past month, with its PMI jumping to the expansionary 53.55 from the contractionary 49.24 in May, as production and new orders sharply increased on a recovery in exports, mid-year sales promotion and a spike in demand for air-conditioners.
The June PMIs for China’s construction, power, electronics and transport sectors all remained in expansionary territory, but slipped by more than 1 point, to 51.97, 52.45, 50.86 and 53.12, respectively.
The official PMI for China’s manufacturing sector came in at 50.9 in June, compared with May’s 50.6, the country’s National Bureau of Statistics (NBS) showed on Tuesday.
