Economists often joke that copper has a Ph.D in economics because it does such a nice job of predicting the health of the economy.
For those who subscribe to this view, Morgan Stanley’s Asia/Pacific research team has good news.
“Current copper prices reflect an expectation that weak demand in China will continue – but our channel checks suggest signs of improvement,” write the team led by Rachel Zhang.
They note demand improvements in power grid and autos.
The vast majority of the copper used in China goes to power infrastructure – it makes up 47% of the nation’s copper demand…YTD, power cable production has shown 36% growth YoY, and high voltage switch production is up 25% YoY.
The auto industry accounts for 10% of Chinese copper demand. Passenger vehicles sales YTD have totaled 8.51mn units, up 9.0% YoY.
Here’s a chart:
Photo: Morgan Stanley
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