China's copper fabricators are facing a tough second half this year following global economic uncertainties and government efforts to tighten domestic credit, but Chinese copper imports will remain strong, participants at an industry conference said. Demand from the power sector and other rural projects will continue to drive consumption, which is expected to grow 6% annually for the next five years, the participants said. China is the world's largest consumer but imports the bulk of the metal it needs. Demand from China has driven copper prices for the past few years. In February, copper futures on the Comex division of the New York Mercantile Exchange touched an all-time high of $4.6495 a pound after better-than-expected data eased worries that China would try to further cool its economy. "Demand from the power sector is quite firm and…that should provide strong support" to Chinese copper demand, said Zhang Jinfeng, director for strategy at Yunnan Copper Industry (Group) Co., China's fourth-biggest copper smelter by output. Chinese refined copper imports will remain in a range of 200,000 to 250,000 metric tons a month during the rest of the year, Mr. Zhang said on the sidelines of the Metal Bulletin conference. China imported 194,280 tons of refined copper in July, an increase of 8.8% from June, while imports totaled 1.28 million tons in the January-July period, down 28% from a year earlier. Imports slowed earlier in the year after monetary-tightening measures restricted fabricators' access to bank loans, but a recovery in demand from the power sector is expected offset the impact of tighter credit, Mr. Zhang said. China's push to electrify its vast rural hinterlands will drive consumption growth in the next five years, keeping global prices at elevated levels despite neutral market conditions elsewhere in the world, said Zhao Bo, deputy director of China Nonferrous Metals Industry Association's copper department. Going forward, the "average [demand] growth will likely be 6% per year for the next five years, with rural demand [being] the main contributor," he said. China has announced plans to spend 292.5 billion yuan ($45.72 billion) on power grids in the next five years, mainly on rural network upgrades. With the power sector accounting for more than 48% of domestic copper consumption, Chinese demand for the metal is expected to reach 8.5 million tons a year by 2015, Mr. Zhao said. While the overall outlook is positive, there could be some near-term headwinds as demand from the mass-transit sector and highway-related projects take a hit due to tighter credit market conditions, said Chen Hongzhou, vice director at Chinalco Luoyang Copper Co, a unit of Aluminum Corp. of China Ltd. or Chinalco. Moreover, with limited or little growth in the U.S and Europe, Chinese copper exports to these markets may remain under pressure, he said. Copper contained in exports of finished goods accounts for 25% to 30% of China's total copper consumption.

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