Metals usage in China

Metals usage in China

* Internal demand for copper and other metals should outweigh a fall
in metals use for export orientated goods. Production of air conditioners
is expected to fall by around 10% from 78m units last year due to weaker
export markets according to the Metal Bulletin. But greater internal demand
from the interior of China could revise sales forecasts higher as Chinese
stimulus packages encourage rural savers to convert cash into domestic
goods. Chinese total retail sales grew 15.9% yoy in March largely driven by
Chinese interior demand.
* Other stimulus packages are also likely to increase metals demand as
every yuan of stimulus seems likely to attract four yuan of other
investment. Infrastructure construction projects are larger consumers of
copper and many other metals and Chinese construction of new infrastructure
is looks likely to grow demand beyond Western expectations.
* Chinese SRB activity in securing supplies of physical copper are
evidence of a longer term need to acquire metals for current and future
demand growth according to internal expectations. Copper prices might fall
this week but the SRB is a long-term buyer in the market and is unlikely to
go away for long.

Source: Fairfax Inc.