China Copper Import Data Analysis in October 2012

SHANGHAI, Nov. 19 (SMM) –

Scrap Copper 
According to China Customs, China’s scrap copper imports during October were 390,000 mt, down 15.03% MoM, but up 3.32% YoY. Most scrap copper traders chose to import scrap copper ahead of China’s National Day holiday in early October, which negatively affected customs clearances and caused a significant MoM drop in scrap copper imports in October. The slight YoY increase of 3.32% in scrap copper imports during October was in line with the steady growth in imports seen since early in the year.

According to SMM sources, scrap copper importers are generally upbeat about copper prices during the upcoming New Year holiday period and are likely to increase purchase volumes, which will help scrap copper imports increase marginally for the foreseeable future. 

Unwrought Copper and Copper Semis
According to China Customs, China’s imports of unwrought copper and copper semis during October were 322,000 mt, down 18.5% MoM and 16.1% YoY, and down on a yearly basis for the first time this year.

The drop in imports was in line with SMM’s expectations. Some long-term contracts were executed during September, ahead of China’s National Day holiday in early October, causing copper imports to surge in September and fall during October. However, China’s imports of unwrought copper and copper semis still averaged 358,000 mt for the two months and have been near 350,000 mt/month since June.

The SHFE/LME copper price ratio rose slightly during November as SHFE copper prices proved more resistant to declines than LME copper, helping losses on imported copper narrow to around RMB 1,000/mt. However, spot premiums for imported copper have remained between USD 40-60/mt. In addition, discount rates for RMB Letters of Credits (L/Cs) have moved between 4-5% since July, and have lessened the advantage of using RMB L/Cs as a financing vehicle, depressing imported copper demand except for long-term contracts. SMM believes imports of unwrought copper and copper semis during November will not likely return above the 400,000 mt/month seen during the first half of this year, but likely be around 350,000 mt. Since imports grew rapidly during 4Q 2011, imports for the remainder of this year will show YoY declines.