China Cu Imports Data Analysis

SHANGHAI, Aug. 16 (SMM) – 

Scrap Copper
According to China Customs, China’s imports of scrap copper were 380 kt in July, up 7.51% MoM, and were up 41 kt from the monthly average over the past six months, or up 12%.  The increase was mainly from higher interest from traders in importing scrap copper.  China’s YTD imports of scrap copper were 2.41 million mt, up 10.2% YoY.  China’s scrap copper imports were 2.03 million mt during 1H 2010, with an average monthly import volume of 339 kt.  
 
SMM believes China’s higher scrap copper imports in July were due largely to copper price corrections in May and June, and the re-opening of arbitrage windows for imports, both which significantly boosted trader enthusiasm for importing scrap copper.  Although the implementation of new customs regulations on imported scrap copper has increased importer costs and narrowed profits, most importers complying with rules have been little affected.

Although the low ratio resulting from strong LME and weak SHFE market is leaving no incentive for imports, scrap copper imports often experience a time-lag effect.  In this context, SMM expects China’s scrap copper imports will remain between 350-380 kt in August. 

Refined Copper
According to preliminary data from China Customs, China’s imports of unwrought copper and copper semis were 342.9 kt in July, up 14.7 kt, or 4.47%, from 328.2 kt in June.  China’s average monthly imports were 367.8 kt during the first seven months of 2010, a sign that China’s imports of unwrought copper and copper semis in July stayed low, failing to improve greatly from June levels.  SMM believes supply shortages of imported goods and weak domestic weak consumption are to blame for the low volume of imports during July.

The SHFE/LME copper price ratio generally stayed above 8.0 during July, reaching as high as 8.2 for over several consecutive days.  However, rising premiums for imported copper from tight supply reduced the price advantage of imported goods, despite the higher price ratio.  In addition, weak domestic consumption lowered operating rates at domestic copper smelters, and higher copper prices during a traditional low demand period resulted in a strong wait-and-see attitude, with low buying interest at higher price levels. 

Although it is expected that a number of shipments of imported copper will arrive at domestic ports in August, LME copper prices will remain stronger than SHFE copper prices, reducing incentives for imports.  SMM believes that China’s imports of unwrought copper and copper semis will remain low, with levels in August expected between 330-360 kt.

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