Copper’s surge toward a record high is starting to cause stress for industrial consumers in China, the world’s largest market for the metal.
Some Chinese manufacturers of electric wire have idled units and delayed deliveries or even defaulted on bank loans, according to a survey by the Shanghai Metals Market.
End-users, such as power grids and property developers, have also been pushing back delivery times, while producers of copper rods and pipes saw orders slump this week, the researcher said.
Copper on Thursday topped US$10,000 a tonne for the first time in a decade and has been among the best performers in a scorching surge in metals prices. The rally is being fueled by stimulus measures, near-zero interest rates and a global economic recovery from COVID-19.
“Domestic copper users are feeling the pain right now after the recent surge caught them off guard,” Guoyuan Futures Co (國元期貨公司) analyst Fan Rui said. “Electric wire producers are being hit the most, with smaller plants keeping run rates low as the spike is seen slowing the pace of investment by power grids.”
A gauge of China’s manufacturing industry slipped last month and the services sector also weakened, suggesting that the economy is still recovering, but at a slower pace.
To be sure, analysts at banks, including Goldman Sachs Group Inc, are predicting further gains for the metal as the global economy picks up pace.
Copper fell 0.6 percent to settle at US$9,825 a tonne on the London Metal Exchange (LME).
The metal reached US$10,008 on Thursday, the highest since February 2011.
Aluminum also declined, while nickel rose.
In sign of potential weakness in Chinese physical demand, the spot contract traded at a discount of as much as 215 yuan (US$33) a tonne to Shanghai futures’ prices this week, the widest in about 10 months.
The appetite for imports is also low, with the Yangshan copper premium, paid on top of benchmark LME prices, slumped to the lowest since data were first published in 2017.
There is a precedent for demand destruction in China amid higher prices, BMO Capital Markets analyst Colin Hamilton said.
“2006 was the only year this century where annual Chinese copper consumption fell on a y/y [year-on-year] basis, as marginal buyers simply stepped away,” Hamilton said in a note.
On Friday, gold for June delivery fell US$0.60 to US$1,767.70 an ounce, down 0.6 percent for the week.
Silver for July delivery on Friday fell US$0.22 to US$25.87 an ounce, down 0.8 percent weekly.
Additional reporting by AP
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his