MARKET TALK: China Copper Imports At Risk As Spreads Change

There are risks to a strong performance of Chinese copper imports with the spread between prices on the Shanghai Futures Exchange and the LME hovering around parity amid rising SHFE stocks, says Calyon's Michael Widmer. "If prices on the LME rise above those on the SHFE and stay there, it is likely that copper imports will be hit," he notes. The recent rise in China's copper imports has been supported by a positive differential between SHFE and LME prices, making it cheaper for Chinese consumers to import metal. LME copper trades at $6,340/ton, +1% on the day, while the benchmark May '07 SHFE copper contract rose CNY780 to settle at CNY58,680/ton.