Why China Copper Imports Nosedive in H1 2017? SMM Reports

SHANGHAI, Jul. 13 (SMM) - China’s copper imports fell sharply in the first half of 2017, according to China Customs. China imported 2.23 million tonnes of copper in H1 2017, a drop of 18.4% on a yearly basis. 

China’s imports of unwrought copper and copper semis were 390,000 tonnes in June, flat on the month and down 7.14% on a yearly basis. 

Why China’s copper imports declined sharply in H1 2017?

Three reasons may explain this, SMM said. First, imports were high in the first half of 2016 and fell in the second half of the year. High cardinal number pushed down year-on-year growth in the same period of 2017. Second, spot copper imports were in losses most of the time in the first half of 2017. The import profit window opened shortly for only a few times. Consequently, demand weakened for copper imports, which are used for arbitrage.

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Third, increased copper scrap supplies squeezed demand for copper cathode. The expanding price spread between copper cathode and copper scrap stimulated demand for copper scrap early this year. Domestic supplies thus increased noticeably, and copper scrap imports also jumped in the first half of the year. China imported 1.51 million tonnes of copper scrap during January-May, up 17.6% on a yearly basis.

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Nonetheless, copper cathode utilization then improved with shrinking price spread between copper cathode and copper scrap, SMM added. Besides, the utilization of substandard wire in Xi’an subway also hurt copper rod producers which use copper scrap as raw materials.

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