China to see 4-5% growth in semi-finished copper production in 2021

Chinese semi-fabricators will see a 4-5% growth in semi-finished copper production in 2021, according to an industry analyst.

“With the 2020 low base due to the Covid-19 pandemic, we expect a 4-5% growth in semis production in 2021,” Li Lan, head of China’s Lilan Consulting Group, said during a webinar discussing Covid-19’s impact on copper demand on Thursday October 22.

This expected growth will be underpinned by China’s “strong investment in infrastructure-related projects -including ultra-high-voltage (UHV) transmission lines, large digital centers, new energy vehicle (NEV) charging facilities and wind power generation – will extend into 2021,” Lan said in a presentation at the ‘2020 Copper Demand Update: Copper Fabricator Industry During Covid-19’ virtual workshop.

“We will see positive growth in auto, aircon and other general consumer goods production in 2021, due to a low base this year and recovering domestic demand,” Lan said.

Fastmarkets’ assessment of the copper grade A cathode ER premium, cif Shanghai was $45-54 per tonne on October 22.

China’s gross domestic product increased by 0.7% year on year in from the first quarter to third quarter of 2020, with a 4.9% year on year rise seen in the third quarter of 2020.

The actions of the Chinese government in the aftermath of the Covid-19 pandemic and its subsequent growth are the main driving force behind the recovery in copper prices, the chief executive officer of Freeport-McMoRan Richard Adkerson told Fastmarkets in an interview.

China cathode imports not reflective of real consumer demand
China’s bumper imports of copper cathode from May to September is not reflective of real end-user demand, Lan said during the webinar.

“Between May to September, the monthly average of cathode imports was close to 500,000 tonnes, whereas in a normal year it would be 250,000-350,000 tonnes,” she said, referencing the accumulating copper inventories in both bonded and Shanghai Futures Exchange (SHFE) warehouses.

China imported 656,483 tonnes of copper cathode in June this year, and 762,211 tonnes in July.

Lan said some imported refined copper was used to replace copper scrap feed, due to the tightening of domestic scrap supplies caused by the Covid-19-induced halt in industrial activity in the initial months of 2020.

Semi fabricators – which convert the red metal into products such as wire-rod, tubes, sheet and strip – have had to replace some of their copper scrap feed with cathode in 2020, because the sharp fall in the red metal’s price and the lack of scrap supplies in the first few weeks of global lockdown.