falling copper demand in china
http://news.yahoo.com/s/afp/20061228/bs_afp/chinametalscommodities_061228091323
BEIJING (AFP) - Copper demand in China, the world's largest consumer of the metal, is likely to fall seven percent this year to 3.4 million tonnes, the first decline so far this decade.
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The National Development and Reform Commission, the country's top economic regulator, said copper imports will slump 40 percent to less than 800,000 tonnes this year as a result of weakening demand, the China Daily reported Thursday.
Demand has shrunk mainly because both domestic and international prices for the metal have hovered at high levels, the report said.
Copper demand from China has global implications as it paces the recent commodity boom and keeps prices from straying too far from recent highs, analysts say.
Prices doubled from last year to hit an average of more than 60,000 yuan (7,670 dollars) per tonne in 2006, with the London market hitting a record above 8,000 dollars in May. The metal currently trades around 6,420 dollars.
"The high price is threatening many small- and medium-sized enterprises in China with bankruptcy," said Jiang Bo, a Beijing-based copper analyst with Mysteel.com.
"As for large companies, they are reacting to the uncertainty in the price trends by only buying copper that they plan to use immediately, not for stockpiles," he said.
Numis Securities said earlier this month that the decision to reduce stocks was a key factor in bringing about declining demand in China.
"We believe this is partly due to destocking further down the supply chain," Numis said in a research note, arguing that 2006 Chinese copper demand had been a disappointment.
The high price has also forced many companies in China to shift to cheaper substitutes such as aluminium and alloys, according to the China Daily.
Analysts believe the decline in demand in the world's leading consumer will force prices to come down next year.
"Copper prices in 2007 will decline slightly due to slowing demand and expanding production in China," the newspaper quoted Shang Fushan of the China Non-Ferrous Metal Industry Association as saying.
He forecast copper output in China, the second largest producer after Chile in 2005, will grow at least 10 percent in 2007 from the almost three million tonnes expected this year, the report said.
The tight domestic supply situation had been worsened by rising exports as Chinese exporters looked to higher international prices, the China Daily said.
The country exported 228,000 tonnes of copper in the first nine months of this years, comparing to 140,000 tonnes for all 2005, the report added.
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