Monthly: China's Sept air-con copper consumption analysis

1. Sample description

Mysteel surveyed samples of air conditioner companies of major Chinese brands, accounting for about 80% of China's total air conditioner production capacity, and their output accounted for 78-85% of China's total. Copper consumption data is based on measuring the consumption of copper tube and brass in various household air conditioners, as well as in the major models of commercial air conditioners, then through scientific calculation. The degree of agreement with the actual consumption is more than 85%. The production forecasting model is obtained by the weighted average of the scheduled production of major air conditioner enterprises and the production plans of air conditioner refrigeration parts and copper tube enterprises.

2. China air conditioner production

According to Mysteel survey, China's major brand air conditioner companies produced 11.5 million units in September, with an increase of 5.27% month on month and 12.3% year on year. In September, pressure on some firms' inventories eased after running down in July and August, strengthening expectations that they would boost production. The current market demand is slightly insufficient. The pessimistic expectations of the macro environment and the weakness of the terminal consumption will make the air conditioner enterprises difficult to have a large increment.

                    Data Source: Mysteel

3. Air conditioner copper consumption of major brands in China

According to Mysteel survey, the production of main brands' air conditioner in China used 106,000 tonnes of copper in September. The total consumption of red copper tube was 70,200 tonnes, and the total consumption of brass was 35,800 tonnes. Household air conditioner red copper tube and brass consumption was 48,400 tonnes and 29,000 tonnes respectively, increased by 5.98% and 5.53% month on month. Commercial air conditioner red copper tube and brass consumption was 21,800 tonnes and 60,800 tonnes respectively, increased by 1.65% and 1.92% month on month. In 2022, H1 air conditioner copper tube consumption decreased by 20%-30%, and this data is still likely to decrease in the fourth quarter of the year. In September, the demand of copper tube increased slightly from the previous month, but the recovery was relatively limited. Traditionally, demand in the terminal cooling market will gradually emerge in October. But due to the weak economy recently, the peak season may be delayed to November.

                    Data Source: Mysteel

                    Data Source: Mysteel

                    Data Source: Mysteel

                    Data Source: Mysteel

4. Main air conditioner brand scheduled production of October

According to Mysteel survey, scheduled production of major brands air conditioner in China was expected to be 10.08 million units in October, 12.3% less than the total production of September, and the overall growth rate was 3-5 percentage points lower. At this stage, the recovery of enterprise supply is limited. Air conditioner sales fell significantly in the second half of September, with limited support for production from demand. Therefore, after October, some air conditioner enterprises took the initiative to reduce production or overhaul. Production and sales data for November are expected to show growth, but the extent remains limited, and the strength of the actual release of demand still remains to be seen.

                   Data Source: Mysteel

5. China copper tube and rod price trend

The market environment of this year's peak season is more complex than that of the same period last year. Enterprises said September's market performance was within expectations and they were generally accepted that the peak season would be delayed and less than expected. Terminal enterprises remained cautious, so, they were difficult to have a large reserve demand of raw material.

From a macro point of view, the Federal Reserve meeting minutes showed a hawkish stance and the US PPI data also remained high. So, inflation is expected to be hard to restrain. The macro is in a news vacuum period, so supply and demand will continue to dominate price trend. The overall low inventory and the expansion of SHFE copper back made the market in a state of strong reality and weak expectation. Copper prices are expected to be limited upside under future macro pressure.

                    Data Source: Mysteel

                    Data Source: Mysteel

For queries and more information/data/reports access, please contact Paula Xu at xuzhongping@mysteel.com