?

Development Status and Trend of the Copper Processing Industry in China

The overall status of the copper processing industry in China: stable economic operation index, slight increase in profit, low overall profit margin (despite YoY increase), decrease in debt ratio, gradual increase in yield, increase in yield by variety, long-term net import, slow import substitution, net import of strips, foils, rods and wires, and net export of copper pipes and copper-clad plates.

Copper strips show gradual increase in annual yield and low industry concentration. The yield of top 20 enterprises in the industry totals at 1.08 million tons, accounting for 39.7% of national yield, the industry concentration is relatively low, and the leading enterprises are Anhui Truchum Advanced Materials & Technology Co., Ltd. and Ningbo Xingye Shengtai Group Co., Ltd., both with yield of over 100,000 tons. Import volume shows increase in recent 3 years, all the varieties belong to net import, and the import substitution of copper strips is not optimistic. The capacity expansion is moderate and high-end oriented. In the coming 3-5 years, the copper strips industry in China is expected to usher in the development climax of a round of transformation and upgrading, reach the global advanced level, and incubate a number of international advanced players to participate in international competition.

Copper foils show gradual increase in annual yield, and high industry concentration. In 2017, the yield of copper foils reached 406,000 tons, including 337,000 tons of cathode copper foils; the yield of copper foils of 10 enterprises in China reached 264,000 tons, accounting for 82.5% of national yield. The import volume in recent 3 years shows annual increase. In 2017, the import volume of copper foils reached 138,000 tons, including electronic copper foils of 118,400 tons, with 84,000 tons imported from Taiwan, China and 19,000 tons from South Korea. The new capacity shows rapid increase, the market share of high-end domestic copper foils is very low. Many copper foils enterprises in China began to switch the focus to lithium battery copper foils. However, the market share of high-end and high-performance special electronic circuit copper foils of foreign peers is increasing to up to 90%. China imports high-end copper-clad plates and exports low-end copper-clad plates, with net import in volume of trade. Despite of the net export of copper-clad plates since 2012, the export volume shows annual decrease and import unit price shows annual increase (far exceeding the export unit price), with trade deficit.

Copper rods show gradual increase in annual yield and low industry concentration. Ningbo Jintian Copper (Group) Co., Ltd., the only leader in the industry, had a yield of 163,000 tons, with low competition level. Copper rods have always been net import, and brass rods had the largest import volume. In 2017, copper rods had an import volume of 62,000 tons and an export volume of 9,000 tons, including imported brass rods and profiles of 55,300 tons.

Copper pipes show gradual increase in annual yield. Golden Dragon Precise Copper Tube Group Inc. and Hailiang Group, the two industry leaders, had a total yield of 920,000 tons, accounting for 35% of national yield, with high industry concentration. Copper pipes realized net export. Among the import of various types of copper pipes, refined copper pipes with outer diameter of over 70mm realized net export of 10200 tons in 2017 with gradual increase in import volume, and its export volume showed reduction over the 3 years.

Copper wires show gradual increase in annual yield. The total production capacity of the top 20 enterprises is 7.28 million tons, with yield of 5.28 million tons, and 7 enterprises realized yield of over 700,000 tons, with average comprehensive capacity utilization rate of 72.5% and monopolistic competition type. Copper wires realized net import with gradual decrease over the 3 years and increase in export volume.

Based on the status and trend of industry development, the following matters are highlighted. First, prevent enterprise financial risk, carry out prudent investment and avoid reciprocal guarantee, and National Development and Reform Commission has proposed to give priority to the risk prevention of enterprise bonds in 2018. Second, implement the system of one-vote veto in terms of environmental protection and pay great attention to environmental protection; the import of scrap copper was restricted, a series of environmental regulations were introduced, and accountability of environmental accidents is strengthened. Third, global trade protectionism emerged again, core electronic components in copper processing and raw materials of copper strips and foils are dependent on import, copper pipes encountered anti-dumping and independent innovation should be strengthened. Fourth, the industry reorganization is accelerated; as a capital and technology-intensive industry, copper processing has high financing cost; large-scale enterprises will usher in international development trend, and SMEs will embrace specialized and characteristic development. Fifth, partial copper processing industry is shifting to central China and western China. With the implementation of the develop-the-west strategy, western China shows the advantages in workforce, cost, land, materials, policy and market, attracting some copper processing enterprises to construct sites in western China. Sixth, the emergence of emerging industry opens new development direction for copper processing industry. Basically in the incubation stage of the emerging industry, the copper industry should take the initiative to serve the emerging information industry, bioindustry, new energy, high-end equipment manufacturing industry, new materials and energy saving and environmental protection industry by developing relevant copper products and increasing added value of products, in order to seize the high-end market in the emerging industry.

Presently, the industry mainly shows the following problems: high-end product development has no breakthrough; the implementation of import substitution is slow; high-end equipment and testing equipment are dependent on import; the international comparative advantage of China’s copper processing is weakening due to rigid constraints of domestic resources, energy resources, environment and cost; some products have high homogeneity, resulting in price vicious competition and poor profitability of enterprises; the rise in copper price will have certain impact on the long-term development of copper processing industry.

For the above problems, the following countermeasures and suggestions are proposed: encourage independent innovation, strengthen technology research and development, drive the copper product production into high-quality development to catch up with the international advanced level; improve the local manufacturing level of equipment to avoid dependence; facilitate the integration of IT application with industrialization, and improve the modernization level of copper processing industry; deepen the supply-side restructuring, encourage the acquisition and reorganization of copper processing industry to eliminate excess capacity.