Sept. 27 (Bloomberg) -- Copper demand growth in China, the world's biggest consumer of the metal, may slow to 5.6 percent this year, as record prices prompt makers of cables, wires and air conditioners to switch to cheaper substitutes.

Consumption may be 3.8 million metric tons, Yang Changhua, senior analyst at Beijing Antaike Information Development Co., which advises the government on industry policies, said today at a conference in Nanjing in eastern China. The estimate is lower than his March prediction of consumption of 3.86 million tons and last year's growth of 9 percent.

China's imports of copper, which rose to a record price of $8,800 a ton in May, fell 24 percent from January to August from a year ago, the customs office said Sept. 12. Imports have been dropping year-on-year since October 2005.

``Copper use in household air-conditioners, electric wires and cables shrank due to soaring prices,'' Yang said. ``Some copper processors that were unable to bear the higher cost have closed down.'' Copper has been substituted in air-conditioners, wires and cables by aluminum, he said. Yang has followed the market since 1998.

The increase in production of copper products such as tube, wires and rods slowed to less than 7 percent in the seven months to July, Yang said. Air conditioner production growth fell to 1.1 percent in July from 15 percent early this year, he said.

Electric wire and cable production growth slipped to 0.34 percent in June from 10 percent earlier this year, he said.

Biggest Buyers

Copper tube, wire and rod producers are the biggest buyers of refined copper. Tube is used in air-conditioners and wires are used in electric equipments.

Copper processors have used up about 250,000 tons of copper that was stockpiled at their plants or warehouses this year, Yang said. Inventories at plants are now close to zero, he said, a signal that the country may increase imports.

``Exports of refined copper are likely to drop and net imports may rebound in 2007,'' he said.

Copper demand may be 4 million tons in 2007, as China will maintain strong economic growth as it builds more power grids and infrastructure facilities in rural areas, Yang said.

Production may rise to 3.2 million tons in 2007 from 2.95 million tons this year, he said.

Limited supply of copper concentrate, the raw material to make refined copper, will restrict increases in refined copper production in China next year, Yang said.

To contact the reporter responsible for this story: Xiao Yu in Beijing at yxiao@bloomberg.net

Last Updated: September 26, 2006 23:52 EDT