Growth in China copper downstream activity misses expectations in May

SHANGHAI, May 31 (SMM) – Activity expansion across major copper downstream industries in China fell short of expectations in May, affected by unexpected contraction in the transportation sector.

SMM's purchasing managers' index (PMI) across China’s construction, power, electronics, transportation and home appliance sectors, major consumers of copper, released on May 31, fell from April’s 52.14 to 50.94 in May, missing the forecast for an increase to 53.75.

A reading above 50 indicates expansion while one below 50 signals contraction.

The copper downstream in China maintained growth in May, but at a slower pace as end-market consumption failed to pick up and as an upcoming low season for manufacturing weakened new orders.

The sub-index for production slipped 2.26 to 50.89, as poor sales and high inventories slowed the production of automobiles and home appliances, respectively.

Operations across power and electronics held steady, but firms reported weaker performance from last year.

New orders also grew slower this month, with the sub-index dipping 0.46 to 50.75, partly due to the timing of the value-added tax cut at the start of April, which prompted firms to shift purchases to March. Continued weakness in end-market consumption also limited growth of new orders.

Strong performance in solar products, offshore wind turbines, and ultra-high voltage projects, the push for 5G networks construction as well as expectations for more economic stimulus measures from central authorities offered some relief.

The transportation sector sharply contracted this month, with auto sales remained sluggish as weaker consumer confidence, the imminent new vehicle emission standards and anticipation for more stimulus policies deterred car buyers from making purchases.

Data from the China Association of Automobile Manufacturers (CAAM) showed that vehicles sales in China fell 14.6% year on year in April, marking the 10th consecutive month of decline.

The PMI for the transportation sector came in at 46.78, down 3.75 from a month earlier.

Construction performed the best this month, with its PMI inching up 1.35 to 51.86. Operations across construction sites improved, especially in new housing starts.