China, primed by government spending to boost growth, will need enough copper every month to circle the globe more than 100 times.
The nation required 4.2 million kilometers (2.6 million miles) of copper cables in December, the most in nine months, to satisfy demand for electric grids, housing, autos and exports. That’s enough to go around the 40,075-kilometer equator about 105 times. Manufacturing and exports are growing at the fastest pace in two years, while cars are selling like never before in China, the world’s most-populated country and responsible for about 40% of world copper consumption.
Copper use in China will jump 8% to a record 8.833 million metric tons this year, boosting global demand and creating a 6,000-ton product deficit versus a surplus of 216,000 tons in 2012, according to Goldman Sachs Group Inc. Prices in London probably will climb 15% to $9,000 a ton in six months, more than double the advance for all of last year, New York-based Goldman said in a Feb. 19 report.
“Copper is the preferred way to play China growth, and it should be very strong,” said John Stephenson, who helps manage C$2.7 billion ($2.7 billion) at First Asset Investment Management Inc. in Toronto. “The commodities that will do well are the ones that China doesn’t have a hammerlock on in terms of their ability to produce, and copper certainly would be that.”
Prices have slipped 1% on the London Metal Exchange this year after a 4.4% rally in 2012. The Standard & Poor’s GSCI gauge of 24 raw materials has advanced 1.4% in 2013, and the MSCI All-Country World Index of equities added 2.9%. Treasuries lost 0.4%, a Bank of America Corp. index shows.
China’s growth in the three months ending in June will accelerate to 8.25%, the fastest pace since 2011, after government stimulus measures helped pull the world’s second- largest economy out of a seven-quarter slowdown at the end of last year, according to a Bloomberg survey of economists. China is the biggest user of copper.
Manufacturing in China has expanded for four straight months, a Feb. 1 government report showed. January exports gained the most since April 2011, and passenger-vehicle sales surged 49% to a monthly record, data released Feb. 7 and 8 showed.