Photo: Hisgett on Flickr
From Lazard, some perspective on Chinese copper demand:Chinese copper imports: What, me worry? One of the hot data points that the stock market has been watching lately has been the declining copper price and the perceived decline in demand from China. Indeed, Chinese import demand for copper is pacing to be down ~18% this year. This said, Chinese copper imports have been accelerating at a double-digit pace since June and on an annualized basis are up over 26% compared to 2007 (by all accounts a boom year, particularly with construction for the Olympics). As well, Chinese domestic production of copper is up ~40% since 2007 (according to USGS) and has a 9-year CAGR of 11%, with this year forecast to be up 14% by the Chilean Mining Council. Over 2007-2008 Chinese imports of copper had a mildly negative correlation to the price of copper: While copper prices dropped 60% in 2008, Chinese import demand dropped 5%, then grew ~63% in 2009. Finally, at $7,100/ton today after a 20% drop in recent weeks, copper is only at its 5-year average price. The increasing import demand of late suggests that the Chinese may import more raw materials as commodity prices moderate and this is backed up by the recent moderate strength (relative to the last 24 months) in the Baltic Dry Index.