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China Cu Imports and Exports in February 2011 

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Inmet Says Copper Price Decline Shows Flaw In Rival Lundin Bid

SHANGHAI, Mar. 14 (SMM) &ndash;&nbsp;
Scrap Copper 
According to China Customs, China&rsquo;s imports of scrap copper were 250 kt in February, down 31.48% MoM, and down 9.63% YoY.&nbsp; China&rsquo;s imports of scrap copper hit their lowest level since March 2009 and were down due to the following factors.&nbsp; First, the Chinese New Year holiday reduced the number of working days in February.&nbsp; Most importers of scrap copper brought forward customs clearances to January, reducing customs clearances in February.&nbsp; Second, LME copper prices hovered at high levels during December and January, keeping demand low, so importers generally chose to reduce imports to minimize financial risks.&nbsp;
Following Chinese New Year, demand recovery in domestic copper markets failed to meet market expectations.&nbsp; Downstream producers generally stood on the sidelines and were purchasing raw materials cautiously.&nbsp; In addition, importers were not enthusiastic since the&nbsp; price ratio was unchanged.&nbsp; In this context, SMM believes China&rsquo;s imports of scrap copper in March are expected to be around 350 kt.&nbsp; 
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Unwrought Copper and Copper Semis 
According to China Customs, China&rsquo;s imports of unwrought copper and copper semis were 235.5 kt in February, a drop of 128.8 kt from January&rsquo;s 364.2 kt.&nbsp; Imports were down 35.35% MoM and down 26.94% YoY, and due to the following reasons.&nbsp; First, the Chinese New Year holiday in February caused overall operating rates at copper processing enterprises to fall,&nbsp; reducing demand.&nbsp; In addition, copper processing enterprises had generally built up stocks before the holiday, further restricting imports.&nbsp; Second, importers were generally closed for the holiday, negatively affecting imports.&nbsp; Third, an optimistic outlook for copper prices helped imports hit 354.2 kt in January, increasing copper inventories in Shanghai bonded areas.&nbsp; These high inventories depressed market enthusiasm for imports.&nbsp; Fourth, the SHFE/LME copper price ratio moved between 7.4-7.5 in February, creating no incentives for imports and leading downstream producers to purchase domestic goods for production instead.&nbsp;
Downstream demand for copper should improve as production resumes at downstream producers and with the arrival of the traditional peak demand period.&nbsp; In this context, China&rsquo;s imports of unwrought copper and copper semis should rebound in March from February&rsquo;s lows.&nbsp; However, imports will not increase significantly in March due to the existing high inventories, with stock levels expected between 300-350 kt.
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