December 9th, 2011
03:28 AM GMT
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(CNN) – If the Chinese economy is slowing down, why is the country buying so much copper?

China has posted a weaker economic growth of 9.1% in the third quarter, in line with the "soft landing" of the white-hot economy Beijing touts.

Also, China missed its expected oil consumption targets according to a report by Platts, an energy consultancy.

According to the report, the estimated oil demand for the third quarter of the year has been this year's lowest, at 8.99 million barrels a day. A decrease compared with 9.33 million during the first three months of this year.

True, there has been spike in orders from the U.S. but that is symptomatic of "a restocking process, whereby companies are starting to produce more and inventories to rise," Frederic Neumann, Co-head of Asian Economics at HSBC, told CNN.

"This is a little bit at odds with economic growth slowdown," Neumann said, "but probably has to do with a pickup in economic activity is the U.S."

Yet other signs point towards more growth, not a soft landing.

China is the world's largest buyer of iron ore and copper. Purchases of these minerals, "are consistent with a strong economic expansion," Mario Nigrinis, Principal Economist at BBVA Bank Hong Kong told CNN. He also noted that the government is concerned with bringing the economy to a soft landing, and the current growth below 10% also coincides with that policy.

Over half of shipper CCNI-Agunsa's business is shipping copper from the world's largest exporter, Chile, to China. While the reference price for this metal slid around 20% since the beginning of the year, the shipper still sees growth, said Sebastián Santa Cruz, director of  CCNI-Agunsa in Hong Kong.

"Demand increases every month," Santa Cruz said. The company only handles containerized copper ore and has carried around a third of the million tons that crossed the Pacific Ocean this year from Latin America to China.

Growth in copper purchases by China grew at a 38% in the third quarter, while during the first half of the year the increase was of 15%, according to figures compiled by BBVA.

China's appetite for commodities like copper grows as manufacturers that use it to produce consumer goods increase their productions.

International institutions like the OECD predict that China's growth will slow down to 8.5% in 2012, but the country's so-called soft landing may well only be a short break in its breakneck growth.

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Filed under: BusinessChinaGlobal Exchange

soundoff (6 Responses)
  1. zhaobin

    December 9, 2011 at 3:17 pm |
  2. TD

    My guess would be, that it is the chinese military industrial complex that is purchasing the bulk of the copper and iron.

    December 9, 2011 at 6:35 pm |
  3. Karl

    More mistruths from CNN. WSJ reported yesterday that copper is indicating potentially significant weakness.

    I will take WSJ over CNN any day. Stick to the tabloids, CNN.

    December 9, 2011 at 6:55 pm |
  4. EA Marco Polo

    Now Mainland China's GDP and trade both are quite big.

    So even 7% growth rate that is huge positive news for the world commodities.

    7% is slowdown, or not? It depends on various viewpoints. In my opinion, 7% is a high and good growth rate.

    December 10, 2011 at 10:08 am |
  5. Dernell

    That\'s more than snseible! That\'s a great post!

    December 21, 2011 at 1:27 am |
  6. odmkgajg

    Vbicrt qnqnhilospvn

    December 21, 2011 at 8:44 am |

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