Iron Ore Imports by China at Record, Copper Gains

SHANGHAI, Oct. 15 -- Iron ore imports by China jumped to a record last month while copper shipments gained unexpectedly, adding to evidence that a recovery in the world's third-largest economy is underpinning increased demand for commodities.

    Shipments of iron ore, used to make steel, reached 64.6 million metric tons in September, the nation's customs office said today. That compares with 49.7 million tons in August and July's 58.1 million tons, according to Bloomberg data. Copper purchases increased 23 percent compared with August.

    China's 4 trillion yuan ($586 billion) stimulus spending and state stockpiling have boosted imports and buoyed global metals prices, helping the world economy to recover from its worst recession since World War II. Copper futures in London advanced today and have more than doubled this year.

    "The gain is a bit of a surprise," Edward Fang, an analyst at China International Futures Co, said of the increase in copper shipments. "Yet it's not that unreasonable given the low summer production season is over."

    China is the world's largest metals user as well as the top steel producer, and trends in the nation's raw-material imports help to determine the direction of commodity prices. Separately today, the customs bureau said that China's exports declined at the slowest pace in nine months.

    Rio Tinto Group, the world's third-largest mining company, said today that third-quarter iron ore production rose 12 percent from a year earlier to a record 47.5 million tons on demand from steelmakers in China. Rio also raised its full-year iron-ore output forecast by as much as 7.5 percent.

    Copper Trade

    Imports of copper and copper products increased to 399,052 tons last month, the Beijing-based office said. Scrap copper imports were 410,000 tons in September, compared with 392,121 tons in August. The base metal is used to make pipes and wires.

    China's manufacturing expanded at the fastest pace in 17 months in September, according to a Purchasing Managers' Index released on Oct. 1. That figure compares with a record-low of 38.8 in November, when recessions in the U.S., Europe and Japan had sent export orders plunging and Premier Wen Jiabao had just announced the country's stimulus package.

    The lower iron ore imports in August led to the surge in September, said Hu Kai, a Shanghai-based analyst at Umetal, an industry publication. Still, "iron ore imports have probably peaked this year" because falling steel prices will force mills to cut output, he said.

    Steel Prices

    Steel prices in China have fallen 25 percent since reaching a 10-month high on Aug. 4. Prices aren't likely to rebound for the rest of year because of oversupply, Wuhan Iron & Steel Group's General Manager Deng Qilin said yesterday.

    Iron ore imports for the first nine months rose 36 percent to 469.4 million tons from a year earlier, the customs office said. Imports have exceeded real demand by 50 million tons, the China Iron & Steel Association said Oct. 12.

    Copper for delivery in three months on the London Metal Exchange rose as much as 1.4 percent to $6,227 a ton, and traded at $6,222 a ton at 11:15 a.m. in Singapore. The metal's price also gained as the dollar fell to a 14-month low against six major currencies.

    China's economy will grow 9 percent in 2010, the International Monetary Fund said on Oct. 1, raising its estimate from a July call of 8.5 percent. Domestic demand was "relatively robust, particularly in China and India," the Washington-based fund said then.

    (Source: Bloomberg)