Why China Refined Copper Imports Keep Falling Year-on-Year? SMM Reports

SHANGHAI, Nov. 28 (SMM) – China’s imports of refined copper tumbled by 44.7 per cent year-on-year to 189,812 tonnes in October, a new low in three and a half years, according to China Customs. 

Despite a year-on-year drop in October, imports totaled 2.99 million tonnes from January to October, up 3.32 per cent year-on-year. 

Supply in China’s domestic copper market has been falling with continuous declines in recent months’ imports, and demand, on the other hand, is moderate. SHFE copper inventories dropped to 103,000 tonnes by the end of October due to depletion of domestic goods and falling imports. Low inventories, which approached to a historic low level, also give a strong boost to domestic copper prices.  

SMM attributes the following factors to declines in October’s refined copper imports.  

First, First, the profitable import window has been almost closed for recent months, therefore ,the demand for imported copper waned. The price ratio has improved recently, but the sharp depreciation of Chinese yuan has offset the rising ratio’s impact, leaving imports still in losses. 

Second, foreign copper smelters and traders hold back sales to support spot premiums due to nearing annual negotiations for 2017 copper premiums for term shipments. As a result, shipments of refined copper to China have reduced.  

Third, China’s imports of refined copper were high in October 2015. China’s copper imports stage a scissor-shape movement in 2015 and 2016, changing from a low to high in 2015 and from a high to low in 2016.  

Inbound shipments of copper to China are up in November on a monthly basis with the opening of import window. In November, LME copper inventories are down, while SHFE copper inventories are up. SMM data also show that supply of imported copper is growing in November in China’s domestic spot market. Moreover, copper inventories in Shanghai bonded zone stabilize around 470,000 tonnes in November. Hence, SMM expects China’s imports of refined copper to grow in November on a monthly basis. 

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