Why We Can't Write Off Chinese Copper Demand Just Yet

But Sijin Cheng at Barclays writes that grid spending could "help dispel" concerns about Chinese copper demand.

China's grid companies invested 40 billion yuan (about $6.4 billion) in the first two months of the year, up 22% year-over-year. This comes "despite a high base; in January-February 2013, [when] investment rose 44% from a soft 2012."

While some cable providers reported "sharp slowdowns" in the Jan-Feb period, Cheng attributes this to "the temporary mismatch in investment and orders. ...As orders are executed, however, copper demand could begin to improve sequentially."

Cheng says "two major gridcos both expect to invest 13% more than last year. It's unclear if he's referring to China Southern Power Grid Company Limited and the State Grid Corporation of China. "Energy regulators have been urged to accelerate the approval of ultra-high voltage networks, which could boost investment."

"If gridcos meet these targets, we expect the growth from the power sector, which accounts for more than 40% of China's total copper consumption, to help offset headwinds from other sectors such as property," Cheng writes.