July Copper Cathode Imports Decline as Expected: What Lies Ahead? [SMM Analysis]

According to data from the General Administration of Customs, China imported a total of 2.077 million mt of copper cathode from January to July 2024, up 13.31% YoY. Among this, July imports were 276,000 mt, down 3.46% MoM and 3.91% YoY. From January to July, China exported a total of 372,000 mt of copper cathode, up 89.24% YoY. Among this, July exports were 70,000 mt, down 55.62% MoM but up 155.08% YoY.

Import side, July copper cathode imports totaled 276,000 mt, down 3.46% MoM and 3.91% YoY. Of this, copper cathode from Africa totaled 121,400 mt, accounting for 43.98% of total imports, down 11.22 percentage points MoM. The decline mainly came from the Democratic Republic of Congo and Zambia. According to SMM, this period is the seasonal export peak for Africa, and due to prioritizing cold chain shipments, the pace of copper cathode shipments has slowed.

Additionally, due to weak SHFE/LME price ratios from May to June, Yangshan copper premiums were under pressure and fell to their lowest since January 2024 in late June. The willingness to receive goods in the imported copper market in the Shanghai bonded zone was extremely low, with spot purchases significantly reduced, and even some long-term contracts were reduced. Therefore, July copper cathode imports continued the downward trend from June.

Export side, since the export window opened in April, copper cathode exports have continued to increase. As the export window further opened in May, most refineries with export licenses arranged for copper cathode exports, and June saw a record high in copper cathode exports. Entering June, the SHFE/LME price ratio recovered somewhat from May but remained in the loss zone. Some refineries locked in the price ratio at appropriate times and continued to arrange exports. Additionally, due to tight shipping schedules in June, some copper cathode planned for June export was shipped out in July. Furthermore, July copper cathode exports exceeded market expectations, mainly due to the arbitrage needs of some major players. They purchased large amounts of copper cathode when the export window opened and delivered them to LME warehouses when shipping schedules were more flexible in July.

Looking ahead, August copper cathode imports are expected to continue declining. Due to recent logistical constraints in Africa, non-registered copper from Africa will remain scarce in August. According to SMM, with relatively low Yangshan copper premiums, traders indicated that there might be a reduction in long-term shipments of copper cathode to China, with African copper cathode possibly being prioritized for the Middle East, Europe, and other regions. Additionally, delays in long-term shipments of registered South American copper originally scheduled to arrive in August also contribute to the continued decline in August copper cathode imports.

Export side, the export window has completely closed since July. According to SMM, apart from fixed long-term contracts, major domestic refineries have no additional plans to export copper cathode in August, and August copper cathode exports are expected to continue declining MoM.