The copper market, traditionally a bellwether of economic health, is finding some support from the energy transition and Beijing’s efforts to revitalize growth. But buyers lack conviction and the view from the factory floor remains cautious as margins are suppressed and profits wither.
Copper’s widespread applications offer a comprehensive view on the landscape faced by policymakers as they bid to restore China’s economic fortunes, while at the same time pivoting the economy from investment to consumption-led growth and hastening the transition away from fossil fuels. But the outlook for the second half is less promising. Demand growth could fade to 3.9% as China’s solar expansion slows and households scale back on purchases, said Ji Xianfei, an analyst with Guotai Junan Futures Co.
More aggressive stimulus from Beijing could change the equation, but over the longer term it’s likely that China’s economy will be consigned to a phase of slower growth, said Eric Liu, head of trading at ASK Resources Ltd.