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US Copper Demand Strong in Auto Sector, Appliances

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Apr. 27 2015, Updated 5:06 p.m. ET

US copper demand indicators

China is the biggest consumer of copper. So, previously in this series, we discussed Chinese economic indicators. Yet Freeport-McMoRan (FCX) gets 45% of its revenues from the North American market. Teck Resources (TCK) and McEwen Mining (MUX) are other leading copper companies in the US.

Freeport currently forms 3.25% of the SPDR S&P Metals and Mining ETF (XME) and 3.1% of the Materials Select Sector SPDR ETF (XLB).

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Construction sector

March housing starts declined by 3.5% on a year-over-year basis. Starts dropped by 2.3% in February. Released April 16, the data came in lower than expected. Lower housing starts are negative for copper companies in the US, as the sector is a major copper consumer.

The Architecture Billing Index, a leading indicator of the nonresidential construction industry, was above 50 in the latest reading in February. Readings above 50 are associated with expansion in this industry.

Automobile sales

Vehicle sales in the US are going strong. Sales have been above 16 million SAAR (seasonally adjusted annual rate) for the last several months. In the latest reading in March, vehicle sales were 17.05 million SAAR, up 4.4% on a year-over-year basis. Higher vehicle sales are positive for copper companies such as Freeport.

The US consumer confidence index has declined for three consecutive months. However, the index is still holding above 90. The index was last above 90 in mid-2007. Higher consumer confidence bodes well for vehicle sales.

Higher consumer confidence is positive for the consumer appliance industry also. And, copper is widely used in the manufacture of electrical appliance equipment.

In the next part of our series, we’ll analyze the latest trends in European copper demand.

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