China Cu Import Data Analysis in September

SHANGHAI, Oct. 17 (SMM) –

Scrap Copper
According to China Customs, China's imports of scrap copper during September were 420,000 mt, up 9.9% MoM and 2.81% YoY.

Scrap copper imports experienced sharp declines during August, but the rebound in September scrap copper imports was a sign of stable domestic demand. SMM believes scrap copper imports will remain above 400,000 mt during October.

LME copper prices began to fall from above USD 9,500/mt in early August, but the slower rate of price declines for domestic copper prices created great profit opportunities for scrap copper imports, with profit levels reaching as high as RMB 5,000/mt. In addition, continuously falling copper futures prices mitigated importer restocking risks, which also helped scrap copper imports rebound.

In general, domestic demand for scrap copper continues to grow at a stable rate. Importers are expected to replenishment stocks later due to reduced risks from falling copper futures prices and since the SHFE/LME copper price ratio will gradually undergo corrections. In this context, SMM expects scrap copper imports for October to remain above 400,000 mt.

Unwrought Copper and Copper Semis
According to China Customs, China's imports of unwrought copper and copper semis were 381,000 mt in September, up 11.8% from August's 340,000 mt and the highest monthly total for the year.
   
SMM believes the increase in imports of unwrought copper and copper semis came mainly  from increases in refined copper imports, and there were two main reasons for the higher-than-expected refined copper imports in September. First, as SHFE copper prices showed resilience during recent copper price declines, the SHFE/LME copper price ratio remained near or above 7.5, creating slight profits for copper imports, while stimulating importers to increase purchases. Second, companies in Ningbo increased copper imports during September since local banks were not allowed to issue forward letters of credit after September.        

SMM believes China's imports of unwrought copper and copper semis will fall in October due to the week-long holiday factor and since domestic demand showed no significant improvement.