SMM Exclusive: China Copper Industry Market Research, Copper Intermediate Products

Copper processing and production is an important link in the copper industry chain. Copper semis refers to copper materials of various shapes made of copper and copper alloys, including copper plates, copper strips, copper wires, copper bars, copper pipes, copper billets, copper foils, etc. At present, China is one of the richest countries in terms of copper products, having approximately 250 kinds of copper alloys, and nearly a thousand product varieties.

China is the world's largest producer and consumer of copper semis, but urgently needs industrial upgrading. China still needs to import high-end products. The price gap between imported and exported copper semis is gradually widening, and domestic products are less competitive than overseas products. Meanwhile, most of the copper semis is mid-to-low-end products with low capacity utilisation rates. Low-end products see oversupply and industry profits continue to fall.

In the face of the complex and ever-changing domestic and overseas macroeconomic situation and development environment, domestic copper semis industry has promoted transformation and structural adjustment to maintain the sustained and rapid development of the industry in recent years. This article mainly analyses the current status and future trends of the domestic copper industry from the perspective of copper intermediate products.

In primary processing, copper cathode or copper alloy is processed into various forms of copper semis through rolling, casting and other methods, such as copper rods, copper tubes, copper strips, copper foils and copper billets. These copper semis will be further processed into copper products, which are widely used in fields such as electric power, home appliances, transportation, architectural decoration and new energy.

According to SMM statistics, the output of copper rods, copper pipes, copper plate/sheet and strips, copper foils and copper billets in 2022 accounted for 54%, 11%, 14%, 4% and 10% respectively. The overall output growth rate of the copper semis industry remained stable, and some varieties such as copper foil and copper strip grew faster.

China copper semis output structure in 2022

Source: SMM

From 2017 to 2022, the apparent consumption of the five intermediate copper products in China increased from 15.56 million mt to 17.78 million mt, with an average annual growth rate of 2.7%. In terms of products, the consumption of copper rods exceeded 50% of the total consumption of intermediate products. With the gradual commissioning of capacity in the domestic copper rod market, the output has continued to grow in recent years, and its apparent consumption rose from 7.84 million mt in 2017 to 10.49 million mt in 2022, with a compound annual growth rate of 6%. From the perspective of application demand, wire and cable is the main consumer of copper rods, accounting for about 33%, followed by electrical equipment, accounting for 25%.

With the continuous rapid development of my country's total industrial volume, the demand for wires and cables in industries such as electric power, construction, machinery, electronics, automobiles, communications, transportation, and light industry has also increased, and this demand has changed from a simple increase to a The pursuit of high quality has further promoted the development of the copper rod and wire industry. It is estimated that the demand for copper rod industry will increase from 10.21 million mt to 11.22 million mt from 2023E-2026E, with an average annual compound growth rate of 3.2%.

Copper pipes are mainly used in home appliances. Due to the decline in sales of home appliances in recent years and the substitution of copper by aluminium in air conditioners and refrigerators, the demand for copper pipes dropped from 2.5 million mt in 2017 to 1.71 million mt in 2022. The average annual growth rate was -7.3%. The output accounted for 14% of the total output of copper semis. It is expected that the demand for the copper pipe industry will also stabilise in the future, increasing from 1.81 million mt in 2023E to 1.87 million mt in 2026E, with an average annual compound growth rate of 1.1%.

Copper strips are widely used in many downstream industries including electronics, electric power, communications, light industry, machinery manufacturing, household appliances, automobiles, construction, national defense, and transportation. In recent years, the prosperity of the real estate industry has weakened, which has brought varying degrees of impact on upstream strip companies. This, combined with higher processing fees, chip shortages and power rationing, has brought more uncertainty to the strip industry. Affected by the COVID-19 pandemic, the apparent consumption for copper plate/sheet and strips declined between 2019-2022, but will rebound from 2023E-2026E. By 2026E, the demand will increase to 3.21 million mt.

With the rapid development of China's electronic information industry in recent years, the demand for copper cathode foil in China has maintained a relatively fast growth rate. China, a net importer of copper foil, has been restricted in high-end copper foil production due to technical factors, with a significant trade deficit. From 2017 to 2022, the apparent consumption for copper foil continued to grow, with an average annual compound growth rate of 14.9%.

From the perspective of application requirements, printed circuit board (PCB) copper foil is mainly used in printed circuit boards, and lithium battery copper foil is mainly used in motive power batteries. With the rapid development of domestic PCB industry in recent years, the demand for PCB copper foil has also increased. The rapid development of new energy vehicles and energy storage fields has also driven rapid development of the lithium battery industry. The demand for copper foil will increase to 1.13 million mt by 2026E.

From 2017 to 2022, China’s copper billet demand increased from 1.98 million mt to 2.09 million mt, with a compound annual growth rate of 1.1%. China is a net importer and major importer of copper billet in the world. In recent years, with the increase of copper billet capacity and technological progress in China, the output of copper billet has risen, weakening the demand for imports. It is estimated that by 2026E, demand for copper billet will remain stable at 2.16 million mt.

Apparent consumption of intermediate copper cathode products 2017-2022 (unit: 10,000 mt)

Source: SMM

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