China's Copper Import Orders Fall as LME Prices up

BEIJING, May 6 -- China's appetite for refined copper imports is easing from recent record levels after a 12% price rise on the London Metal Exchange in the past week, traders said on Tuesday.

    Reduced orders could cut the country's inflows from June after March's record imports and what is expected to be continued high arrivals last month and this month.

    Premiums paid by Chinese importers for spot imports have fallen by more than a third in the past two weeks to about USD 150/mt over cash LME prices for delivery to Shanghai in the coming two months and around USD 100/mt for further forward months, traders said. Offers were at USD 250/mt two weeks ago.

    "Few people want to place new orders for spot copper," an executive at a trading firm in Shanghai said. "There is not much profit now, unlike last month when imports earned up to RMB 5,000/mt (USD 733) a tonne."Benchmark three-month LME copper rose 12% in the past week to USD 4,665/mt on Tuesday on hopes that demand will rise if the global economy recovers.

    In the same week the third month Shanghai contract, often used by Chinese importers for arbitrage imports, rose 9%.

    It was at RMB 37,590/mt at the close of trade on Tuesday, but still lower than the cost of imports at about RMB 38,380/mt yuan to a Shanghai port, based on a premium of USD 150/mt and including a local 17% value-added tax.

    It is in a contrast to huge profits pocketed by importers in April, when spot prices had surged as some importers waiting for a delayed Chilean copper shipment had to cover contracted orders, traders said.

    A ship carrying around 20,000mt of copper due to arrive Asia in late March from Chile has been delayed to late May because of unexpected repairs, the traders said. Chinese buyers have more than 3,000t on board.

    "Importing copper for spot selling is still profitable but the risk is high given the low season is coming," a manager at a large Chinese trading house said. Fabricators in China usually cut production from late May through the summer.

    Traders noticed demand for physical copper was already easing. Spot copper only rose 5% in the past week to RMB 40,000 on Tuesday, and margins for spot copper over Shanghai's nearest contract, now May, narrowed to about RMB 500 versus over RMB 3,000 last month, making spot imports less attractive.

    "Demand started weakening last week. It is hard to sell at above RMB 40,000/mt," the Shanghai trading firm executive said. A trader at smelter Baiyin Nonferrous said fabricators had built stocks in the past month and were unwilling to buy more on fears of lower copper prices.

    (Source: Mining Journal)