China Copper Demand Not so Bad in 2015?

SHANGHAI, Nov. 17 (SMM) – China's copper demand may not be as bad as expected in 2015. 

Chinese companies had expected a $20-per-tonne fall in term premiums for copper shipped to China next year, citing little prospect of a turnaround in demand in 2015.

However, a recent report said Chile's Codelco offered a term premium of $133 per tonne for 2015 deliveries to China, only 3.6% lower than 2014’s $138. The slight cut is considered a sign that the world’s top copper producer is not as pessimistic as Chinese firms about demand from the largest copper consumer.

China’s refined copper imports in the third quarter fell sharply from a year ago as banks turned more cautious towards lending to metal traders after the Qingdao scandal. But the inbound shipments began to recover heading into the fourth quarter, with 400,000 tonnes of unwrought copper and copper semis shipped to China in October, up 2.60% from September. This allowed the January-October volume to grow 9.35% to 3.99 million tonnes.

Cash-starved companies stepped up imports and sold actively in China’s local markets to raise cash by year’s end. Banks kept a tight grip on lending to metal traders, but this caution has eased some from earlier. As such, demand for finance-drive copper is unlikely to fall sharply in 2015.

As for demand from downstream sectors, 64 railway projects have been approved in October, and construction of UHV power grid and power stations will start soon. Moreover, investment will pick up pace in 2015 – the final year of the 12th Five-Year Plan Period, heralding a more promising copper market. 

Another thing worth noting is that tight cash which caused some smelters to put off some commissioning schedules this year may continue to constrain smelting capacity expansion in 2015. This means China will need to import copper in large amounts to feed domestic demand.

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