China Copper Imports May Drop as Much as 46%, Pan Pacific Says

TOKYO, Oct. 26 -- Copper imports by China, the biggest consumer, may drop as much as 46 percent next year as higher prices increase scrap metal supplies and curb demand growth, said a senior executive at Pan Pacific Copper Co.

    Imports of refined copper may decline to 1.5 million metric tons in 2010 after surging to an estimated 2.7 million to 2.8 million tons this year, Yoshihiro Nishiyama, director and executive officer at the Tokyo-based company's marketing department, said in an interview yesterday. Imports were about 1.4 million tons in 2008, he said.

    Declining overseas purchases may curb a climb in copper prices driven by China's economic expansion and government stockpiling. The nation may be preparing to reduce monetary stimulus after an 8.9 percent economic expansion in the third quarter from a year earlier, boosted by a 4 trillion yuan ($586 billion) package and record lending growth.

    "This year China has bought copper and other commodities from overseas well beyond its actual needs," Kazuhiko Saito, chief analyst at Tokyo-based commodity broker Fujitomi Co., said today by phone. "If the country returns to a normal import growth pace, we will see a technical correction in copper as well as other commodities."

    Copper for delivery in three months on the LME rose to $6,665 a ton on Oct. 21, the highest since September last year. The metal traded at $6,620 a ton at 11:40 a.m. Tokyo time.

    Import Pace

    China's refined copper imports more than doubled to 2.3 million tons in the first eight months from a year earlier, according to customs data.

    Imports soared in the first half on infrastructure investment and increasing sales of electronics and cars following the stimulus package as well as arbitrage demand between Shanghai and London amid tight copper scrap supplies, Nishiyama said.

    Copper exports by Pan Pacific, Japan's largest smelter of the metal, jumped 61 percent to 219,841 tons from January to September from the same period a year earlier, while its domestic sales fell 33 percent to 216,697 tons, according to company data. Exports accounted for 50 percent of total sales compared with 30 percent last year.

    The company's overseas shipments slowed to 14,388 tons in September after touching a record 36,364 tons in March, Pan Pacific data showed. Total production is forecast at 584,800 tons in the year ending March 31, according to an output plan released this month, down from 590,700 tons in the previous year.

    China Growth

    China's third-quarter economic expansion, reported by the government yesterday, exceeded the 7.9 percent in the previous three months.

    The nation's State Council said Oct. 21 that policy focus in coming months will need to "balance" the need to aid growth with "the need to better manage inflationary expectations."

    Copper cathode fees charged by producers for Asian customers may gain by as much as 23 percent in 2010 after this year after slumping because of the global economic recession, Nishiyama also said yesterday.

    Codelco, the world's biggest copper producer, last year cut the 2009 surcharge for sales to Asia by more than 30 percent to the lowest level since 2003 as the global slowdown cut the outlook for demand.

    Pan Pacific Copper is 66 percent owned by Nippon Mining & Metals Co., a unit of Nippon Mining Holdings Inc., and 34 percent by Mitsui Mining & Smelting Co.

    (Source: Bloomberg)