SHANGHAI, Sep 17 (SMM) - There are still no consumption bright spots in various copper terminal industries after mid-September. Consumption has not been strong despite the peak season this year, but from the current point of view, there are still three terminal consumer areas worthy of attention in the second half of the year.
After mid-September, there are still no bright spots for consumption in various copper terminal industries. Although the peak season of this year will show a trend of "not busy", from the current point of view, there are still three terminals that are worth paying attention to: the rebound of power grid investment, the upward restoration of automobile consumption and the copper consumption driven by the increase in the completed housing area.
Electricity investment is expected to rebound
Although the completed investment in power grid projects from January to July accounted for only 35.8% of the annual total, which is well below the 44.6% in the same period last year, investment will gradually increase according to experience from years past. It is expected that this year the State Grid will accelerate the pace of investment in the third and fourth quarters. The rural power grid is mainly a low-voltage distribution network. The procurement scale of main components such as transformers, cables, and box-type substations of medium and low voltage levels will increase, and the consumption of copper rods will be boosted to a certain extent.
Car consumption is expected to recover
According to data from the China Association of Automobile Manufacturers, automobile output and sales in August fell by 18.7% and 17.8% respectively year-on-year. But the output and sales from January to August still increased slightly by 1.3 percentage points and 2.7 percentage points from the same period of 2019. Passenger car sales in August showed a double-digit negative growth year-on-year. In addition to the supply-side disruption caused by the shortage of chips, the high base last year driven by the consumption growth also resulted in the negative growth. With the current pandemic raging in Southeast Asian countries, the current economic pressure is huge due to the blockade. Countries are constantly introducing new epidemic prevention measures to ensure the smooth reopening of the economy, and chip capacity is expected to recover in the future. We expect that the chip shortage problem will be gradually improved in mid-to-late October. At the same time, the traditional automobile consumption peak season in September-December will boost copper consumption (Automobile wiring harnesses, cylinder head gaskets, electrical connectors, starting motors, generators and engine bearings all use copper).
The completed area of houses increased
Due to the release of a series of national real estate control data, the real estate market prosperity index continued to fall. The newly started area has shown a negative growth since July, and other indicators have also shown a downward trend. However, the completed area data still saw a large year-on-year increase. As of August this year, the cumulative completed area of real estate in China was 467.39 million km2, a cumulative year-on-year increase of 26%. SMM understood that in addition to laying cables during the real estate construction process, related substation equipment and architectural decorations need to be installed after the completion of construction, such as roof panels and anti-theft doors. House upgrading will also drive copper consumption in terms of hydropower transformation, household appliances and hardware sanitary ware. But in the long run, real estate construction area will see negative growth, and completed area is unlikely to increase significantly. Copper consumption in the real estate sector is expected to gradually weaken.
In summary, although overall copper terminal consumption has been smooth this year, there are signs of marginal improvement in several sectors in the second half of this year. However, to what extent it can boost copper terminal consumption, we still need to continue to pay attention to the regional pandemic and the impact of unexpected events like power rationing and production restriction on the copper market consumption in the second half of the year.