China mulls new home appliance subsidies to support copper demand
Shanghai. April 5. INTERFAX-CHINA - China is mulling a new round of subsidies for the home appliance sector that may help support copper demand this year, Hu Xiaohong, an official with China Household Electrical Appliances Association (CHEAA), told the 8th International Copper Summit 2012 in Shanghai March 30.
Subsidies for the purchase of energy-saving models of air-conditioners and televisions are being considered, Hu said.
China's copper demand has ebbed since the conclusion of an earlier home appliance subsidy scheme last year, with several investment banks forecasting a slowdown in consumption growth to less than five percent in 2012 after a six-percent increase the previous year.
Copper producers got a boost last year as demand picked up in anticipation of the end of the subsidy program, with output and sales revenue rising 10 percent and 21.8 percent year-on-year respectively to reach all-time highs.
Whether the new measures will succeed in reviving demand depends heavily on timing, said analysts. As long as the new round of subsidies are introduced by the end of the second quarter (Q2), air-conditioner manufacturers will have time to adjust output targets for the peak production season in April and May, Standard Chartered commodity analyst Judy Zhu told Interfax.
If the policy is delayed, however, the market might not feel the effects until next year, Zhu noted.
Abundant air-conditioner inventories meanwhile will keep the market well-supplied and reduce the need for further copper purchases among manufacturers. China's inventories stood at 20 million units at the end of 2011, about double the normal level, according to CHEAA figures.
Last year air conditioner manufacturers were the second largest consumers of copper in China behind the power sector, accounting for 15 percent of the total consumption. The country produced more than 100 million air conditioner units last year, about 80 percent of global output, while national copper consumption was up six percent year-on-year at 7.99 million tons.
-KHM