* Slower copper demand from property, power and automobile
* China's copper-related exports fall on recession fears
* Demand from air conditioners a sliver lining for copper
By Siyi Liu and Naveen Thukral
YANTAI, China/SINGAPORE, April 27 (Reuters) - Chinese copper product makers are cutting their output for the second quarter, typically the peak demand season, because of a slower-than-expected recovery in domestic consumption after COVID-19 and sluggish exports. A slump in demand for the red metal, nicknamed Doctor Copper for the correlation between its consumption and the economic health of a country, highlights troubling signs that China's economy, the world's second largest, is failing to return to its pre-pandemic output. China is the world's biggest copper consumer and slowing demand there, combined with fears of a global recession, is likely to weigh on prices, which dropped this week to one-month lows in London and Shanghai .
Officials from six manufacturers who make copper plates, rods and strips that are used in housing, appliances and vehicles told Reuters at an industry conference held by Shanghai Metals Market (SMM) this week that orders in the second quarter are down from a year ago, forcing them to cut offer prices and sell at a loss."Our orders dropped by 10% compared with last year," said Wang Liguo, the general manager at Qiangda Tongcai, a manufacturer in Shandong province that makes about 250 tonnes of copper products per month. After 14 years in the industry, Wang said "never have I seen such poor demand like this year", adding they have cut their offers by up to 500 yuan ($72) per tonne. A slump in copper product output would undermine a forecast from SMM, an industry information provider, for China's copper consumption in 2023 to rise by 2.4% from a year earlier to 14.12 million tonnes. Finished copper product output rose in the first quarter by 7.8% from a year ago to 5.21 million tonnes, according to the National Bureau of Statistics. But, SMM data also shows operating rates at copper rod production lines in China have fallen to 64% by mid-April from 75% at the end of March, while rates for plate and strip manufacturing have slumped to 68% in mid-April from as high as 77% in March.
STRUGGLING SECTORS The property, power and automobile sectors, which make up around two-thirds of copper consumption in China, are struggling with dismal sales that are curbing metal demand. China's automobile production in the first quarter fell 4.3% from a year earlier to 6.21 million units while sales were down 6.7% to 6.08 million units, data from the China Association of Automobile Manufacturers showed. Housing completions rose in the first quarter but new construction starts as measured by floor area fell 19.2% from a year earlier, while developers raised less money. "Household electrical appliances face huge pressure this year due to the ailing property sector last year as it takes about 14 months for house sales to boost demand," said Ye Jianhua, a director at SMM. Lackluster exports from China amid slowing global economic growth will also add to pressure on metal prices, Zeng Zhihua, a senior economist at the World Bank, told the conference. Around 40% of China's copper consumption is supported by exports, according to SMM's Ye. China's exports of copper cable and wire in the first quarter dropped 5.7% from a year ago while exports of household electronic appliances slid 2.8%, data from the General Administration of Customs showed.Copper tubing demand is a lone bright spot for the sector because of increases in air conditioning production, which accounts for about 15% of China's total copper use. China produced 17.67 million household air conditioning units in the first quarter of 2023, up 5.9% from a year ago, according to industry information provider China IOL.
Wu Xiangling, a sales manager at Mengyao, a copper product maker in Henan province whose clients include air conditioner makers Haier, Gree and Midea, said production has climbed to replenish low inventories as output fell during the pandemic but that will likely slow down. "Our orders from air conditioning makers for May and June delivery are quite good," Wu said. "But demand might drop after they build up enough stocks. Also, we expect to see less orders during summer time as it is typically a weak demand season."
($1 = 6.9236 Chinese yuan renminbi)
(Reporting by Siyi Liu in Yantai and Naveen Thukral in
Singapore; Editing by Christian Schmollinger)
