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China 2010 Copper Imports, Consumption To Slow -StanChart
Jul 7,2010 13:09CST
industry news

BEIJING, Jul 06, 2010 (Dow Jones Commodities News via Comtex) -- China's refined copper imports are expected to significantly decrease this year to 2.3 million metric tons, down 28% from last year's 3.19 million tons, Standard Chartered said in a note late Tuesday.

The slowdown reflects destocking activity and the improving availability of scrap copper, commodities analyst Judy Zhu said in the note.

China's refined copper imports in the first five months have fallen 4.3% on year, which suggests there is substantially more leeway for imports to slow in the second half.

Shanghai copper prices have been quoted at a premium to London Metal Exchange copper for most of June, encouraging profiting on imports.

But this hasn't translated to copper flowing into China's domestic market because a significant amount of copper was tied up in financing deals, Zhu said.

"This copper will not be released in the near term but might be released to the market gradually over time," she wrote. "This will exert downward pressure on local copper prices and could be a drag for future buying by China on spot demand, in our view." 

Copper demand in the second half would likely remain mixed, Standard Chartered said.

China's copper consumption is forecast to fall to 6.75 million tons from 6.85 million tons last year.

Copper demand typically slows in the third quarter, since the second quarter sees peak air-conditioner output from manufacturers ahead of the hot season.

Also, the number of new real estate projects is expected to significantly fall in the coming six to eight months in response to sluggish home sales, following the government's measures to cool the property sector in April. The real estate sector accounts for about 10% of copper consumption, mainly in the form of underground cables for power transmission, Zhu noted.

"On one hand, a slowdown in growth is expected in the automobile, real estate and home appliance sectors--the latter two are the key copper consumers," Zhu said.

"On the other, observers believe the current pessimism is overdone, as development of the power grid continues and this is the largest consumer of copper."

State power grids account for around 17% of China's copper consumption.

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