Apparently the shock of China's property implosion has led to the sell-off. This is remarkable as the property collapse and construction void is now at least 18 months old and yet the copper price has, if anything, firmed moderately.
The cost of rectifying this extraordinary mess may be too large for the administration to contemplate but if it does Nomura's analysts say that upwards of $430 billion would be required to finish all the various incomplete projects. Country Garden has over 2000 across China so there could be 8-9000 tower clusters across 110 cities which are bare bones structures some or many without power, water. lifts and landscaping.
Meanwhile China plans to double its solar and wind capacity and double its rollout of fast and super fast trains - all copper intensive. Fast rail of 35,000-40,000 kms is to be added to the 45,000 kms of existing track.
Over the last 6-9 months sales of electric appliances slowed sharply like air conditioners as well. Some of these sales may have been lost permanently but at the worst China's copper demand is likely to be firm as it increases investment in green energy rather than weak. Steel may be a different story as the steel part of the structures is already done.
AW1 Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
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