China Cu Import Data Analysis in January

SHANGHAI, Feb. 20 (SMM) –

Scrap Copper
China Customs data revealed China's scrap copper imports during January were 230,000 mt, down significantly by 48.53% MoM and 37.20% YoY. The sharp decline was due largely to three reasons. First, the New Year and Chinese New Year holidays created difficulties in clearing scrap copper at ports. Second, since most traders failed to gain the needed Environmental Protection Approval by the end of 2011, many were forced to cut orders to avoid risks, causing arrivals at ports to fall sharply. Third, profits for importers have been falling along with declines in the SHFE/LME copper price ratio, so scrap copper importers were taking a wait-and-see approach toward imports. SMM expects China's imports of scrap copper will improve and rise above 380,000 mt during February as traders obtain Environmental Protection Approvals.

Unwrought Copper and Copper Semis
According to preliminary China Customs data, China's imports of unwrought copper and copper semis during January were 414,000 mt, down 18.66% or 94,900 mt MoM, but up 13.65% YoY. There were only 17 working days in January due to the New Year and Chinese New Year holidays, so an import volume of 414,000 mt was still considered high. LME copper prices surged throughout January, but SHFE copper prices failed to match LME gains, causing the SHFE/LME copper price ratio to slide and losses for copper importers to grow to nearly RMB 3,000/mt in late January, up from around RMB 1,000/mt early in the month. Interest in copper imports fell sharply, so SMM believes the 414,000 mt imported were mainly from goods ordered earlier. The SHFE/LME copper price ratio tends to fall in early February, so heavy losses incurred will only further dampen importer interest in quoting prices. As a result, SMM expects China's imports of unwrought copper and copper semis will fall to around 350,000 mt in February.