October 9, 2015 / 6:03 AM / 5 years ago

LMEWEEK-China base metal demand to inch up next yr, may pick up in H2

* China appetite for base metals hit by slowing economy

* Seen edging up in 2016, but gains likely to be tepid

* State-backed research firm sees copper demand up 4-4.5 pct

* Aluminium could offer bright spot for demand -analyst

By Polly Yam

HONG KONG, Oct 9 (Reuters) - Most base metals will face tepid demand in China in 2016 as the economy slows in the world’s largest consumer of the commodities used in everything from jet engines to cooking utensils, although there is some hope appetite will strengthen later in the year.

Twelve metals producers, users and analysts contacted by Reuters see Chinese appetite for most base metals rising just slightly in 2016, but four said it could strengthen in the latter part of the year and one said demand for aluminium would be stoked by the country’s expanding transport networks.

“Domestic demand won’t be very good next year, as Beijing’s steps so far have not been enough to fire the economy in the short term,” said an executive at a firm that makes aluminium and copper products, declining to be identified due to company policy.

Slowing growth in the world’s No.2 economy has hit commodity markets hard this year despite a steady stream of government stimulus measures to boost consumption.

Chinese copper demand will rise about 2 percent this year and in 2016, said a manager at a large producer of copper tubes and rods. He added that high stocks of air-conditioners could mean fewer orders for tubes next year.

A senior executive at a large copper smelter said demand-growth would be 3-4 percent in 2016, though government projects to improve old towns would offer some support.

Those 2016 forecasts compare with preliminary growth estimates of 4-4.5 percent by Yang Changhua, senior analyst at state-backed research firm Antaike, which sees 2015 demand rising 5.3 percent from 2014 to 9.18 million tonnes of refined copper CU-1-CCNMM.


Appetite for nickel has faltered on plunging markets for stainless steel, which it is often used to produce.

“Demand for stainless steel has been bad and stocks are high. That will limit production next year, and the demand for nickel,” said a manager at a medium-sized nickel producer.

“There is no big new driver for nickel demand. Car batteries are using more but the amount is small,” said senior Antaike analyst Xu Aidong.

Xu’s preliminary forecast is for nickel demand to rise 1 percent to 980,000 tonnes next year, compared to about 2 percent seen in 2015.

Slowing car markets are likely to continue to weigh on markets for lead, often used in vehicle batteries.

“The situation may only start changing in the second half of next year (when the economy may improve),” said a senior executive at smelter Anyang Yubei Gold & Lead in Henan province.

Antaike senior analyst Feng Juncong said growth in lead consumption would likely be unchanged in 2016 versus a 4-percent rise this year.

She also said zinc demand would climb 2-3 percent in 2016, from 3 percent this year.

Analyst Yang Xiaofei at Antaike said consumption of tin could actually decline. Growth in appetite for the solder material is expected to rise 2 percent in 2015.

But aluminium could offer a ray of hope, with Xu Hongping, analyst at China Merchants Futures saying consumption may climb as much as 8 percent to 32.4 million tonnes in 2016, compared to 7.5-percent growth expected this year.

She said that would largely be driven by appetite from the transport sector, with Beijing building more high-speed railways and industry bodies pushing for usage of the light metal in trains and cars.

She also noted that aluminium demand would get a continued lift as consumers switched to cheaper aluminium-based cables and wires from copper-based ones. Xu said that may add 100,000 tonnes of aluminium demand in 2016, while cutting 200,000 tonnes from copper.

The executive at a copper and aluminium firm said growth in aluminium demand could reach 10-15 percent next year compared to 10 percent seen for 2015 if the economy expanded more quickly in the second half. (Reporting by Polly Yam; Editing by Joseph Radford)

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