SHANGHAI, Jan. 18 (SMM) --
According to China Customs, imports of scrap copper were 440 kt in December, up 46.09% from 300 kt in November, while imports were up 16.04% YoY. In the report issued in November, SMM predicted China's scrap copper imports would increase due to the improved ratio, and less strict customs clearance, but the volume increase was beyond expectations. SMM believes market optimism and the unwillingness to move goods before the Chinese New Year were the two primary reasons behind the surge in imports.
During January, imports ordered previously will continue to flow into China's markets. The SHFE/LME copper price ratio remains positive for imports, so imports are expected to remain high. However, some traders will likely turn cautious towards imports, since the VAT refund on scrap copper will fall to 50% in 2010. In this context, SMM believes China's imports of scrap copper in January will be between 350-400 kt.
Refined Copper Imports
According to China Customs, China's imports of unwrought copper and copper semis were 369.3 kt in December, up 27.30% MoM, and up 28.89% YoY. SMM predicts China's imports of refined copper will likely return to around 250-260 kt, and would be the second consecutive month of increases in refined copper imports after falling to 169 kt in October. The improved price ratio, which was in line with SMM's prediction in October, stimulated the use of more long-term contracts and trader arbitrage, and the main reason behind rising imports was strong demand in China and low inventories at downstream producers.
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