SHANGHAI, Nov. 8 (SMM) – China reported sharp declines in imports of unwrought copper and copper semis in October.
The drop, rather than the result of poor downstream demand, is due mainly to nearing negotiation over next year’s copper term premiums, SMM explained. Overseas copper smelters and traders are holding back goods in an effort to gain bargaining chip during upcoming talks over next year’s term premiums.
Besides, import arbitrage window has been closed in recent months, another reason behind lower imports, SMM added. Despite recent high SHFE/LME copper price ratio, import activities remain in losses due to yuan’s depreciation.
In fact, downstream consumption in China was strong in October compared with a year ago. SMM survey showed operating rate at domestic copper wire rod producers was 71.85% in October, though down 3.51 percentage points from September, up 3.64 percentage points from a year ago.
Moreover, copper stocks on the LME, SHFE, COMEX and Shanghai free trade zone all declined recently, suggesting consumption worldwide and in China is not as poor as expected.
SMM data showed Yangshan copper premiums have begun rising after hovering at lows for over three months, trading at USD 80-90/mt as of November 4, almost doubled from early June.
Customs data showed China imported 290,000 tonnes of unwrought copper and copper semis in October, down 14.7% from September and 31% from a year ago. Imports during the first ten months of this year were up 6.57% year-on-year, though.
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