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Copper Consumption Fell on Weak Chinese Demand

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Copper consumption

In the last part of this series, we discussed that global apparent copper demand fell 3% YoY (year-over-year) in the first three months of the current year. The data were released by the ICSG (International Copper Study Group) in its June bulletin. The ICSG estimates that China’s apparent consumption fell 4% YoY until March.

Excluding China (FXI) (EWT), the global apparent consumption fell 1.5% over this period. This was largely due to a 40% fall in Russia’s apparent copper consumption.

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Russian copper demand fell

As we discussed in the last part, “apparent demand” is defined as production plus imports minus imports. Russian demand has been subdued due to its languishing economy. However, Russian copper exports rose as the country withdrew its copper cathode tax in September 2014.

Strong demand in the Americas

Apparent copper consumption in Europe fell 9% YoY until March. This can be seen in the previous chart. However, copper demand in the Americas has been strong over this period. Until March, the apparent copper consumption in the Americas rose 3%—compared to last year. Thompson Creek Metals (TC) gets a major part of its revenue from the North American market. Freeport-McMoRan (FCX) also gets more than half of its revenue from North America. These companies would benefit from strong copper demand in this region.

Together, Freeport and Teck Resources (TCK) account for ~1.5% of the iShares North American Natural Resources ETF (IGE).

The ICSG estimates that the global refined copper production rose 5% YoY in the first three months this year. In the next part of this series, we’ll discuss more about the dynamics of global copper production.

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