SHANGHAI, Jan. 16 (SMM) –
According to China Customs, China's imports of scrap copper were 450,000 mt in December, a new record high for 2011, and up 3.81% MoM and 3.51% YoY. December's imports of scrap copper were in line with earlier SMM predictions of imports greater than 400,000 mt. The increase in scrap copper imports during December was due largely to strong Chinese investor bargain buying when LME copper prices slid below USD 7,000/mt in late September and mid-October. New stricter environmental protection approval processes for solid wastes in 2012 were also worrying importers and caused many to replenish stocks before the year's end. Since some importers have delayed the necessary approval to import, scrap copper imports will slow. Chinese New Year is also depressing copper imports, so January import volumes should be down near 300,000 mt.
Unwrought Copper and Copper Semis
According to preliminary data from China Customs, China's imports of unwrought copper and copper semis during December were 508,900 mt, up 56,900 mt from November, and another new monthly high for 2011. As SMM previously predicted, China's imports of unwrought copper and copper semis during December would remain high due to large amounts of imported copper arriving at ports, but also due to the following reasons. First, the SHFE/LME copper price ratio during December was still beneficial to imports. Second, since long-term contract commitments would be due as the year ended, large amounts of imported copper arrived at ports in December. Third, some traders chose to use the remaining of Letter of Credit (L/C) quotas to import copper in order to ensure the same L/C limits would be available in 2012. All these factors had little to do with end-user consumption, with most copper semis producers surveyed planning to suspend production up to two weeks throughout the Chinese New Year holiday period on account of poor orders. In this context, pre-holiday stockpiling did not materialize as markets expected and resulted in increases in imported copper stocks at SHFE bonded warehouses, which will likely drag down spot copper prices.