Copper Cathode Imports Unexpectedly Rose in March, but Net Imports Remained Tight in Q2 [SMM Analysis]

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>According to data from the General Administration of Customs, China imported a total of 842,600 mt of refined copper from January to March 2025, representing a cumulative YoY decrease of 7.06%. In March alone, imports reached 308,800 mt, up 15.24% MoM and 4.5% YoY. From January to March, China exported a total of 117,500 mt of refined copper, marking a cumulative YoY increase of 156.25%. In March, exports stood at 68,000 mt, up 109.44% MoM and 191.98% YoY.

>On the import side, March saw an unexpected increase in copper cathode import data, with imports exceeding the originally forecasted volume by approximately 50,000 mt. This was primarily due to an unexpected rise in Russian copper cathode imports. However, from the perspective of imports from other countries, the import volumes from the DRC and Chile still declined YoY. According to SMM's analysis, the current situation of tight balance in copper concentrates and low treatment charges (TCs) has begun to affect the global supply of copper cathode. Meanwhile, influenced by the expected US tariff policy, the shipment volume of ocean freight has significantly weakened, with a large amount of copper cathode flowing to the US, leading to a certain degree of increase in the CIF B/L premium for copper cathode globally.

>On the export side, the export window for 2025 opened earlier compared to previous years, with a significant YoY increase in copper cathode exports in March. The main exports were concentrated in three sectors: 1. Domestic smelters increased export volumes due to the substantial profit margins from copper cathode exports, with most shipments going to LME delivery warehouses in South Korea, Taiwan, and Singapore. 2. China's re-exports to the US have increased in scale since March, with a large number of CME-registered brands arriving at ports and B/Ls being shipped to the US. 3. The supply of copper cathode in Southeast Asia has seen a gap due to the shutdown of the PSR smelter, with high premiums attracting some domestic shipments for arbitrage in other locations.

>Looking ahead, SMM expects that from April 2025 onwards, both YoY and MoM copper cathode imports will continue to decrease for the following reasons: 1. Copper cathode from South America and Africa will continue to be diverted to the US. Following the shutdown of the Altonorte copper anode smelter in Chile, there has been a gap in South American copper cathode production, and China is expected to only maintain basic long-term contract import volumes. 2. The significant increase in Russian copper cathode imports is unlikely to be sustained. According to SMM, most of the Russian copper imported in March was canceled from private warehouses in Rotterdam, with limited stock available. The re-export activities between China and the CME will continue on a certain scale in April. On the export side, re-export activities from China to the US will continue on a certain scale in April, but spot order volumes for domestic smelters transferring to delivery warehouses and shipping to Southeast Asia will decrease. Overall, net imports are expected to continue to decline, and the tight supply expectation for imported copper in Q2 will remain unchanged.