SHANGHAI, Aug. 15 (SMM) –

Scrap Copper
According to China Customs, China's imports of scrap copper in July hit a new high for the year of 430 kt, up 13.60% MoM and a gain of 1.95% YoY. Two main reasons are behind high imports of scrap copper. First, copper prices were low during May and June, so some importers made imports based on an optimistic outlook. Second, importers now prefer to import honey and scrap motor copper, which are experiencing only limited price fluctuations.  As copper prices rose in July, most importers of honey reduced imports, while inquiries for scrap copper increased. In this context, SMM expects China's scrap copper imports to drop slightly in August. 

Unwrought Copper and Copper Semis
According to preliminary data from China Customs, China's imports of unwrought copper and copper semis in July were 307 kt, up 27 kt MoM, and a high for 2011. Based on SMM sources, imported copper premiums during June averaged USD 106/mt, but fell to USD 87/mt in July. The drop in premiums is a sign of an increase in imported copper. Since the SHFE/LME copper price ratio and copper prices, were unfavorable for imports of refined copper, copper semis, and copper alloys, recent increases in imports were mainly due to the arrival of June orders. 

In August, the SHFE/LME copper price ratio improved due to large declines in LME copper prices resulting from US debt ceiling uncertainty. Coupled with strong RMB appreciation, traders have strong incentives to import copper. However, due to the traditional low demand period, as well as a cautious attitude among buyers after recent sharp losses, China's imports of unwrought copper and copper semis will not improve significantly in August, with levels expected at  around 300 kt.