Copper winding Earth 105 times shows supply lacking

China Imports

The country needs to import copper because domestic production of 6.541 million tons will fall short of demand by 2.168 million tons, Barclays Plc said in a Feb. 15 report.

More than 21 million Chinese -- almost the population of Australia -- left their rural homes for jobs in cities in 2012, according to China’s National Bureau of Statistics. The migration creates greater demand for housing, new appliances, cars and electricity transmission lines, all requiring copper.

Vehicle sales in China, including trucks and buses, will probably accelerate this year and surpass 20 million for the first time on a rebound in economic growth and urbanization, according to estimates by the China Association of Automobile Manufacturers. The transportation industry accounts for about 11% of the country’s copper use, according to data from Bloomberg Industries.

China will rebuild 3 million homes for rural residents in 2013, the official Xinhua News Agency reported Feb. 10, citing the Ministry of Housing and Urban-Rural Development. New-home prices rose in December in the most Chinese cities in 20 months, according to a government report on Jan. 18.

‘Electric Grid’

“China is planning on urbanizing 100 million people over the coming decade, and the No. 1 usage for copper in China is the electric grid,” John Goldsmith, who help manage C$5.2 billion at Montrusco Bolton Investments Inc. in Toronto, said in a telephone interview. “That’s a boatload of copper they’re going to need.”

Accelerating inflation may prompt the government to reign in growth. The People’s Bank of China drained a record 910 billion yuan ($146 billion) from the financial system last week. The government told local authorities on Feb. 21 to “decisively” curb real-estate speculation and take steps to cool the property market after January prices rose the most in two years. Builders account for about 9.4% of Chinese copper demand, compared with 50% in the U.S., where about 400 pounds of the metal is used in the average home.

Stockpiles of the metal monitored by the Shanghai Futures Exchange have climbed 49% since the end of June, data from the exchange show.

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