The impact of the US-China trade war on copper production and demand

According to Mining News Pro,A list published by the US Trade Representative on July 10 showed that most copper and copper products shipped by China to the United States would include a 10 percent increase in import tariffs in the Copper section. Although public statements and public hearings have not yet come to an end, the announcement has already cautioned the downstream manufacturers in China.

The CRU has conducted surveys on major copper winding wires, power cords, copper pipes and household goods to identify market reactions and the potential impact of this trade tension on demand for copper.

The result is that trade tensions between China and the United States have not had much effect on the current production of final producers, but different sectors have different views on this situation.

For the wiring and cable sector, it seems that if new tariffs are applied, a major blow to copper wiring manufacturers will be. However, a senior executive at a copper coil manufacturing unit said: "North American markets are not one of the company`s target markets, and so the price increase will have a small effect on their sales." This view is shared by market actors and managers of other sectors It also points out that the US copper coil market is mainly supplied by domestic manufacturers. Given that the newly introduced tariff list targets mainly wires with a voltage less than 1 kilowatts, it does not present a threat to electrical cables, especially high-voltage cables.

For the copper tube section, the poll`s response was "very good," although this response was mainly due to the warm season in China and the growth of sales of air conditioners.

It should be noted that copper pipe manufacturers and exporters have faced anti-monopoly practices in the past in the past, and they have already set up their units in the United States or in neighboring countries such as Vietnam, in order to deal with this problem. In this regard, investments outside the country protect the Chinese copper pipeline from any threat posed by increased tensions.

Although the direct effect of tariffs may be limited to domestic producers, its potential impact on Chinese manufactured goods needs to be addressed more seriously.

According to a source of information on Chinese goods, the US is the largest Chinese export market for air conditioning systems, refrigerators and freezers. In 2017, China exported 13.5 million air conditioners and 6.8 million refrigerated refrigerators to the United States, accounting for more than 22.5 and 19.2 percent of total exports of the two products, respectively. Given that China is the world`s largest producer of cosmetics, the question is whether other countries in the world will be able to afford US supplies. In the worst case, and if China is permanently deprived of the market for air conditioners and refrigerators in the United States, roughly 100,000 tonnes of copper demand for these two products will be lost, which accounts for less than 1% of its total copper consumption.

In the washing machine sector, the United States accounted for only 2.1% of total exports of Chinese products, and in addition, the consumption of copper is not high, and so the impact of new tariffs on domestic copper consumption is negligible.

However, copper wipers manufacturers of washing machines reported a sharp decline in new orders, as production companies lowered their production due to new tariffs.