HONG KONG, March 10 (Reuters) - China's imports of unwrought and semi-finished copper products rose 10.3 percent from a month ago in February, surprising traders for the second straight month, due to predominantly favourable margins for spot arrivals.
Imports in February, beating expectations of flat to lower levels from previous month, were also spurred by increased credits, which had seen a drop in January as Beijing aimed to tune its lending pace, causing lower availability of letters of credit for spot copper imports at the beginning of the year.
The world's top copper consumer imported 322,282 tonnes of copper, including anode, refined copper, alloys and semi-finished copper products, in February after a 21 percent drop to 292,096 tonnes in January, preliminary data released by the General Administration of Customs showed on Wednesday.
Imports rose 22.2 percent on the month on a daily basis.
The import figures surprised traders, who had expected inflows of around 282,000 tonnes due to the Lunar New Year holiday in mid-February.
Copper prices responded positively with three-month copper on the London Metal Exchange CMCU3 gaining around $35 after the data to trade at $7,550 a tonne at 0435 GMT, up $40 on the day. Benchmark third-month Shanghai copper SCFc3 also added to morning gains in early afternoon session.
"The high imports number of February is bullish news for the market. We originally thought since February had a long holiday... imports wouldn't rise," said Liu Xu, an analyst at China International Futures, echoing views of other analysts and traders in China.
Attractive arbitrage buying from the London Metal Exchange CMCU0 and selling to the Shanghai market had encouraged spot copper imports, spurring arrivals in early February, said Li Ye, copper analyst at Minmetals StarFutures.
Jinrui Futures analyst Zhu Yanzhong agreed.
Zhu estimated the February imports included 230,000-240,000 tonnes of refined copper, the most popular type in international and Chinese markets. This would be higher than the 190,000 tonnes expected.
"Any upward number would be interpreted as bullish for copper prices, indicating Chinese demand remains firm. February is a short month and even shorter this year because of the Lunar New Year," said David Moore, commodities Strategist at Commonwealth Bank of Australia.
Chinese importers had also reduced term loadings in January and February from Chile due to expected high domestic stocks but that were offset by strong spot imports, also supported by increased credits for copper imports after briefly tighter funding in January.
But February imports of copper scrap, an alternative feed for fabricators, and aluminium extended January's falls because of the holiday.
Copper scrap imports dropped 17 percent to 280,000 tonnes after a fall of 23.5 percent in previous month.
Inflows of unwrought aluminium, including primary aluminium and alloys, and semi-finished aluminium products fell 34.1 percent to 64,356 tonnes, compared to a 16.6 percent decline in January, on poor import margins. MAL3 SAFc3