Copper wirerod accounts for ～75% of refined copper consumption and ～13% of direct scrap consumption. - Global wirerod production saw a slight increase during the third quarter, with growth of 0.8% y/y, yet World-ex China output was effectively flat. - Chinese output increased by 1.5% y/y. In the rest of the world, European output was particularly weak but overall growth was marginally positive. We estimate that Chinese wirerod production increased by 1.5% y/y during the third quarter of 2019, with wirerod consumption also seeing growth of 1.1% y/y. This growth was slower than expected because of weak downstream demand, especially from the automotive and construction sectors and state grid. The Chinese automotive sector in particular appears to be weakening further. In the third quarter, Chinese total vehicle output decreased by 6.23% y/y, according to CAAM (China Association of Automobile Manufacturers), and this has been a key reason for weak domestic demand for copper winding wire and low-voltage energy cable. Although the new energy vehicle segment remained strong on a year to date basis, growth slowed in the third quarter. Production and sales saw growth of 20.9% and 20.8% y/y respectively from January to September according to CAAM. However, this slowed to 17.7% and 19.9% y/y respectively in the third quarter which was below expectations. It should be noted that new energy vehicles still only account for approximately 5% of light vehicle builds in China.
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