According to Khabar Online News Agency, Bloomberg wrote: China is the largest consumer of copper in the world, and the increase in the price of copper in the domestic market of China has caused many producers to postpone the purchase of raw materials to the time of receiving orders in order to avoid losses. In this way, companies no longer buy raw materials to produce and store products as before, and buy copper only when they have a firm order.
Zhang Benben, a sales engineer at Ningbo Shimao Copper Industry Co., which supplies cables used in solar panels and electric motors, says: “We actually only operate on the basis of firm orders, and after receiving a sales order, we purchase copper cathodes.”
He explained that the increase in the cost of raw materials has forced the company to change the way it operates.
Why is China facing a shortage of copper?
The increase in the cost of energy and metals in the world, under the influence of the Iran war and the large spending by companies in the field of artificial intelligence, has been one of the factors of pressure on the copper market. However, in Bloomberg’s report, he considers another factor to be effective in aggravating the copper shortage: the American government’s trade and tariff policies.
In recent months, part of the copper shipments went to the American market instead of China; Because the traders have preferred to transfer their shipments to the American market in anticipation of the imposition of more import tariffs by the Donald Trump administration.
As a result of these developments, China is facing difficulty in renewing its copper reserves.
On the other hand, the high cost of ore and reduced profit margins have forced Chinese copper smelting companies to reduce production. At the same time, the amount of refined copper sent to China has also decreased this year.
Record-breaking copper prices and increased factory costs
Copper prices have set new records several times this year. According to data published in the Bloomberg report, the price of copper per ton on the London Metal Exchange rose 0.8% to 13,788 dollars and 50 cents at 10:21 a.m. Singapore time.
Also, the additional cost that buyers pay for importing and buying copper in the Chinese market has reached its highest level in recent weeks.
This price increase occurred in a situation where many Chinese manufacturers do not have much power to pass on higher costs to customers. The production capacity in various sectors of China’s industry exceeds the demand, and customers can choose the cheapest option among different suppliers. As a result, the profit margins of these companies are very limited.
Double pressure on solar panel manufacturers
One of the sectors affected by the copper shortage is China’s solar energy industry. Demand in this sector is still relatively strong; Because the companies active in the field of solar energy are trying to achieve the production and implementation goals of their projects by the end of the year.
However, the increase in the price of raw materials has aggravated the financial problems of producers.
Yang Shun, sales manager of Zhejiang Baichuan Conductor Technology Co., Ltd., says his company has to pay the cost in advance to buy copper cathodes, while its customers buy products on credit. This time difference between paying for raw materials and receiving sales money has put a lot of pressure on the company’s liquidity.
223223
