"National Subsidy" Stimulates Home Appliance Consumption, Boosting Orders for Related Copper Processing Materials [SMM Analysis]

On July 25, 2024, the NDRC and the Ministry of Finance issued a notice on "Several Measures to Intensify Support for Large-Scale Equipment Renewal and Trade-In of Consumer Goods," specifying the allocation of approximately 300 billion yuan in ultra-long-term special government bonds to support large-scale equipment renewal and trade-in of consumer goods, with a clear emphasis on supporting the trade-in of home appliances. On August 25, 2024, the Ministry of Commerce and three other departments issued a notice on "Further Improving the Trade-In of Home Appliances," specifying that local governments can independently determine the "8+N" categories of home appliances eligible for subsidies, with a maximum subsidy of 2,000 yuan per item. The subsidy funds for home appliance trade-in are shared between the central and local governments on a 9:1 basis, with the central government covering 85%, 90%, and 95% for the eastern, central, and western regions, respectively. Provincial finances will allocate funds based on the central fund distribution.

With the implementation of the home appliance trade-in policy, market confidence has been significantly boosted, and home appliance producers are eagerly ramping up, rapidly stimulating market demand. According to ChinaIOL, the production and sales of household air conditioners saw substantial growth in September. In September 2024, household air conditioner production reached 12.213 million units, up 26.0% YoY from a low base last year. Air conditioner sales were 12.125 million units, up 21.4% YoY.

The production schedule data for white goods also showed impressive performance. According to ChinaIOL, the total production schedule of air conditioners, refrigerators, and washing machines in November 2024 is 31.35 million units, up 20.7% YoY. Specifically, household air conditioner production is 15.192 million units, up 41.6% YoY; refrigerator production is 8.56 million units, up 9.3% YoY; and washing machine production is 7.6 million units, up 2.4% YoY.

The SMM survey of several copper pipe & tube and enamelled wire enterprises supporting the white goods sector provided the following feedback:

For enamelled wire, Guangdong led other regions in order growth. Enterprises indicated that the "national subsidy" policy had a significant stimulating effect on home appliance consumption, and the air conditioner industry transitioned from the off-season to the peak season starting in October, leading to an increase in related enamelled wire demand MoM. Several enamelled wire enterprises in Guangdong reported that since October, they have felt the boost in enamelled wire demand from the home appliance sector, with related orders growing by 8%-10%, and they expect this trend to continue in November.

For copper pipe & tube, October marked the traditional peak season for copper pipe & tube enterprises, with top-tier enterprises seeing order growth. In October, while the overseas market performed well, the domestic home appliance stimulus policy combined with the "Double 11" shopping festival drove a surge in home appliance consumption. Air conditioner production and sales data were impressive, leading to an increase in production schedules for air conditioner enterprises and a corresponding rise in demand for related copper pipe & tube.

Overall, the "national subsidy" policy has significantly boosted the home appliance market, driving growth in orders for related copper processing industries. However, the home appliance industry still faces multiple pressures, including a cooling real estate market, declining population, and sluggish domestic demand. Enterprises are concerned that while the policy stimulus has led to short-term consumption demand growth, it may to some extent, deplete future demand in the home appliance market.