China Copper, Products Imports Jump to Record in May

BEIJING, June 12 -- Copper imports by China, the world's largest consumer of the metal, climbed for a fourth month to a record in May, beating analyst expectations.

    Inbound shipments advanced by 6 percent from the previous month to 422,666 metric tons, the Beijing-based customs office said today, citing preliminary data. A decline to a level above 300,000 tons had been expected, Minmetals Starfutures Co. said.

    China's urban fixed-asset investment surged 32.9 percent, more than estimated, in the first five months from a year earlier as the government pumped money into building railways, oil pipelines and low-cost housing. Imports of copper and copper products soared as scrap supply plunged and the State Reserve Bureau probably boosted inventories.

    "We were caught by surprise" by the figure, Edward Fang, an analyst from China International Futures (Shanghai) Co., said today. "We assume these shipments were from arbitrage trading earlier this year, as the arbitrage has already turned bad."

    The premium of Shanghai copper over London prices fell to around $600 at the end of May, down from a high of around $1,293 on April 13, according to data compiled by Bloomberg.

    Inbound shipments of copper, bolstered by China's $586 billion stimulus package, were likely to be sustained through May, and fall from June or July, according to traders and analysts surveyed by Bloomberg in May.

    Scrap Supplies

    China's scrap imports slid 17 percent to 330,000 tons in May from a month earlier, and were 39 percent down from a year ago, customs data shows.

    "We heard customs in the Guangdong area recently started its annual crackdown on scrap metals smuggling," Chen Yisheng, a Minmetals Starfutures analyst, said from Shenzhen today. "It should tighten scrap supplies in the next couple of months."

    The State Reserve Bureau contracted to take between 300,000 tons and 400,000 tons of refined copper into its stockpiles from overseas this year, according to Macquarie Group Ltd. analysts.

    China's imports of aluminum and products in May declined to 331,740 tons from April's record of 439,900 tons, customs said.

    "The fall is within expectations but the amount is still big," Liang Zhigang, head of research at Minmetals Starfutures, said. "The supply and demand prospects can't really justify the rebound in aluminum prices."

    The State Reserve Bureau has also bought 590,000 tons of aluminum from domestic smelters this year for strategic reserves, according to traders. A phone call to the bureau seeking comment today wasn't answered.

    (Source: Bloomberg)