LDo Chinese real estate giants have feet of clay? Are their empires built on sand? These questions become more pressing every day. In turn, the promoters Evergrande or Country Garden have, in fact, revealed the flaws of their formerly powerful financial buildings.
Cracked by abysmal debts, they take on the appearance of fragile houses of cards. Investors are scrutinizing this soap opera with twists and turns, where political issues and financial interests mix.
And the markets are holding their breath. Real estate has been one of the powerful engines of China’s meteoric growth. The return to earth of skyscraper builders could disrupt this dynamic. However, the real estate sector alone absorbs almost a quarter of the copper consumed by China. Even if air conditioners and electric cars sell like hotcakes, the appetite of the world’s largest consumer of the red metal is expected to diminish.
No shortage in sight
This prospect weighs on metal prices. A tonne of copper trades at around $8,100 (€7,690) on the London Metal Exchange (LME). Far from the $10,700 per tonne, the record shattered in March 2022, after the invasion of Ukraine by Russian troops. Certainly down, compared to the 9,400 dollars reached at the end of January, but still at a high level, hesitant to slide further. The price of copper is on edge.
Investors’ eyes sparkle as they imagine the opportunities of the energy transition carried out under the wand of the electricity fairy. But copper is at the heart of the magic crucible, just like lithium, nickel or cobalt. Experts estimate that 10 million tonnes of additional copper will be needed by 2040 to meet this green shift.
For the moment, no shortage in sight. The LME even announced that its copper stocks were at their highest level in two years. It remains to be seen whether Chilean mines, from which nearly 30% of world volumes are extracted, and Peruvian mines will be able to keep up. The race for new deposits is accelerating.
In this context, the red metal arouses desire. The stories of cable raiders would take too long to unfold. Except when they turn into a financial scandal. At the beginning of September, the leading European copper producer, Aurubis, denounced a massive theft amounting to 200 million euros. The copper market is doing well…