China July Refined Copper Imports 224723 Tons down 23 on Year

SHANGHAI, Aug 23 (Dow Jones)--

China posted a healthy on-month increase in its refined
copper imports in July, with analysts and traders expecting continued strong
appetite for the red metal in the coming months.

A pickup in power grid investment as well as attractive arbitrage
opportunities between Shanghai and London may help the world's largest copper
consumer see more overseas purchases in August and September, they said.

"Cable and wire makers are still the big players in the sector, so with their
healthy order books as well as good performance at some copper tube makers,
demand will remain firm in the fourth quarter," said a Shanghai-based trader
with a major brokerage.

China's refined copper imports in July, though down 23% on year, rose 6% from
the previous month to 224,723 metric tons, the General Administration of
Customs said Monday.

In the January-July period, the country imported 1.78 million tons of refined
copper, down 14% from a year earlier.

The data was within market expectations as the opening of a profitable
arbitrage window in May and June between Shanghai and London, when copper
importers placed orders, brought in shipments last month, analysts said.

"The on-year decline was purely due to the fact that we had a much higher
base number last year. And the arbitrage window kind of offset any effects from
lower operation rates at some copper tube and rod makers last month," said Wang
Zhouyi, an analyst with Shanghai Cifco Futures.

A Shanghai Metals Market survey showed that operation rates at tube and rod
makers declined in July to 74%-75% compared with 80% in June.

Wang also said that seasonal factors may continue to dominate demand for the
red metal in the months ahead and expected August refined copper imports to
remain steady compared with those in July as the Shanghai/London price
differential "isn't that ideal for further arbitrage opportunities."

But the Shanghai-based trader said Shanghai copper prices have been catching
up greatly with their London counterparts, which may allow trading houses and
Chinese copper consumers to see more profits in importing.

"Along with a rising expectation of higher prices in the fourth quarter, I
believe more copper will be brought in."

A Beijing-based trader said he expected demand for refined copper to rise in
the future, given some signs of loosening bank credit recently, as "it is a
practice among Chinese (speculative) investors to use copper imports as a
financing tool."

Analysts also said a shortage of scrap copper, a frequently-used substitute
for cathode, due to stricter monitoring of scrap metal imports since June may
also boost demand for refined copper for the rest of the year.

China imported 378,519 tons of scrap copper in July, down 16% on year and up
7% on month, while imports rose 10% to 2.4 million tons in the first seven
months of the year.