Chinese Copper Imports Reach a Monthly High in November 2022 as the Import Window is Wide Open in October

SHANGHAI, Dec 22 (SMM) - According to the customs, China imported 358,300 mt of copper cathode in November 2022, up 43.95% on the month and 10.07% on the year, hitting a new monthly high. The imports totalled 3.32 million mt from January to November, up 9.36% YoY.
According to the SMM data, the import window remained open from late September to mid-to-late October 2022. After the National Day holiday, the spread between the SHFE front-month and next-month contracts soared to around 2,000 yuan/mt in the backwardation structure because of the short squeeze, and the import profits once reached above 1,500 yuan/mt, which stimulated the import declaration, and at the same time boosted the imported copper premiums to hit a new high amid the low inventory.
The imports from Russia reached approximately 41,000 mt, up 347.7% month-on-month and 24.87% year-on-year, accounting for 11.5% of the total imports in a single month, up 7.8 percentage points. LME once considered prohibiting Russian metal delivery, while Russian copper accounted for a relatively high proportion of LME copper stocks, mainly distributed in delivery warehouses in Hamburg (Germany), Rotterdam (Netherlands) and Kaohsiung city (Taiwan, China). As of October 19, 2022, the copper stocks in the above-mentioned three warehouses stood at 61,000 mt, accounting for about 44% of the total LME copper inventories. Under normal circumstances, the main destinations of LME copper are China, the Netherlands, Germany, etc. However, some Russian copper was shipped to China because of the intensified relationship between European countries and Russia at that time, tightening the copper supply in Europe.
SMM believes that in December 2022, China’s imports of copper will drop to around 320,000 mt. Since November, the import window has rarely been opened. The SHFE/LME price ratio dropped greatly, and the export window once opened, giving some smelters chances to export. With the closing of the import window, the import market remains sluggish approaching the year-end, and the traders mainly trade long-term orders. In addition, the efficiency of import customs clearance is reduced near the end of the year, which is aggravated by the COVID-19 outbreaks. Judging from the copper supply-demand balance in December, the supply is still relatively tight, and the domestic inventory is hovering at a low level, pushing up the spot premiums. But the operating rates of the processing companies have not declined significantly, hence the spread between the SHFE 2301 and 2302 copper contracts may be maintained at a small backwardation structure.