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The Chinese government announced that it will terminate its old-for-new home appliances subsidy scheme on 31st December 2011. The subsidy, which was introduced on 1st June, provides consumers in Beijing, Shanghai, Tianjin, Fuzhou, Changsha and the provinces of Jiangsu, Zhejiang, Shandong, and Guangdong with a 10% discount on a selected group of appliances. These include televisions, refrigerators, washing machines, air-conditioners and computers. All of these appliances are major end use segments for copper semis products.

Yunnan Copper blamed lower copper prices, high energy and raw materials costs and a 45-day machine overhaul for a 29.5% year-on-year drop in profit, to RMB546 million (US$80 million), in the first six months of the year. "The sluggish economy led to a slowdown in copper consumption, causing a corresponding drop in cathode prices. Meanwhile costs of energy and raw materials increased in the first half year, which also curbed our profits," said the company. These results come in stark contrast to the 35% increase in H1 profit seen at Jiangxi Copper, another big Chinese smelter. Market sources put the difference down to the varying cost of copper production between smelters, as Yunnan's profits fell despite a 21.7% y-o-y increase in cathode output to 875,000t.

H1 reports from China's metal companies have revealed difficult operating conditions as rising energy prices, investment in environmental protection and an increase in resource tax have squeezed margins. Shares in the metal index fell 58.6% in the first half of the year, underperforming the SSE Composite Index which saw a 48% decrease. Copper companies fared better than most as the copper price remained at historically high levels and prices of sulphuric acid - a byproduct of the copper treatment process - soared. Jiangxi Copper, China's biggest producer, reported strong results with a 55% surge in revenues year-on-year. Net profit grew at the slower rate of 32.8%, reducing the company's profit margin to 10.4%, from 12.1% in the first half of 2007. The company has a slightly bearish outlook for the rest of this year, as the continued slowdown in the global economy takes its toll on copper demand and the appreciation of the dollar puts downward pressure on copper prices. However, it suspects copper supply will remain tight, which should support prices on the downside. Yunnan Copper Company struggled in the first half as revenue fell 18.9% and net profit plunged 29.5% y-o-y. The companies profit margin was cut to 3.8%, from 4.4% in the first half of 2007. A 45-day machine overhaul was blamed for the poor sales figures as output remained flat, whilst high energy prices pushed up production costs. Tongling Nonferrous Metals saw similar problems to Yunnan as rising raw material prices and fluctuations in the copper price cut the gross margin in the firm's copper unit to just 0.59%. Company-wide results were improved greatly by the strong performance of sulphuric acid, where gross margin increased to 71.6%, bringing Tongling's profit margin to 2.9%, up from 2.0% in H1 2007.

Basic resource (in this case water and energy) availability is a growing concern for governments, businesses and consumers worldwide. It seems logical that there will be increased use of designs in consumer goods which use relatively less resource.

According to the Chinese Ministry of Commerce, the home appliances 'trade in' policy realized RMB121.1B of sales income in 2010. Sales income and sales volume amounted to RMB16.6B and 3.6 million sets respectively in Q4 2010. Value was up by 142.7% and volume 147.7% from the same period a year ago. A joint programme of the Ministry of Commerce, Ministry of Finance, and Ministry of Environmental Protection stated that effective from June 2010, the policy would be launched in 19 additional provinces and cities, in addition to the existing nine. The time period of the policy was extended to the end of 2011. Home appliances covered by the programme include television sets, refrigerators, washing machines, air conditioners and computers.

Antaike reported that sales income from the 'traded in' home appliances policy reached 150B yuan by the end of 2nd March 2011. In addition, volume of new and old appliances amounted to 40M and 41M sets respectively. Appliances included in the policy are TV sets, refrigerators, washing machines, air conditioners and computers. The scheme has triggered a considerable consumption volume of copper semis, such as copper commercial tube used in the manufacturing of refrigerators and air conditioners.