Copper, Product Imports Into China Decline for First Time in Three Months

Copper imports by China, the world’s largest consumer, dropped for the first time in three months, as lower domestic prices reduced the appeal of overseas purchases.

Shipments of copper and products declined 2.9 percent to 368,410 metric tons from 379,527 tons in August, the General Administration of Customs said on its website today.

Chinese copper imports climbed in July and August as traders sought to profit by purchasing the metal in London and selling it in Shanghai. Copper stockpiles monitored by the Shanghai Futures Exchange have mostly been falling since the beginning of May, and were at 94,174 tons as of last week.

“The September arrivals were mostly booked in July, and the arbitrage wasn’t that profitable compared with the previous month,” Bonnie Liu, an analyst at Macquarie Securities Ltd., said by phone from Shanghai.

Arbitrage had been profitable for some of July, according to Bloomberg data. Shipping may take up to two months.

Three-month copper on the London Metal Exchange rose as much as 0.8 percent to $8,415 a ton, the highest level since July 2008, and was at $8,368.5 at 1:42 p.m. in Singapore.

“The high price may not necessarily damp demand,” Peng Qiang, an analyst at Cofco Futures Co., said by phone from Beijing. “It may take some time for users to get accustomed to the high prices. I still expect the consumption to rise in November and December.”

Higher Prices

Copper prices may be more than 10 percent higher on average in the fourth quarter as demand outpaces supply growth, and may continue climbing in the first half of 2011, said Lee Key Man, head of the international goods bureau at the Public Procurement Service of South Korea, Asia’s third-biggest base metals buyer.

The agency, which stockpiles mostly non-ferrous metals, is prioritizing purchases of copper and tin in the coming months because the metals are likely to be in “short supply,” Lee said in an interview today, without elaborating on buying plans.

Diego Hernandez, chief executive officer of Codelco, the world’s biggest copper producer, said yesterday in an interview that he expects a “tighter” copper market next year because of continued demand from China and a lack of new supply.

Imports of aluminum and the metal’s products declined 9.4 percent to 65,772 tons from 72,628 tons in August, customs data showed. Chinese aluminum and steel plants have started to suspend part of their operations in response to Beijing’s plan to meet the goal of cutting energy use per unit of economic output by 20 percent in the five years through 2010.

Aluminum Cuts

China’s Henan province, the country’s largest aluminum producing region, is going to cut output by nearly 20 percent in the fourth quarter, said the Henan Nonferrous Metals Industry Association said on its website on Oct. 9. Three smelters in Guangxi region will shut down about 250,000 tons of annual aluminum capacity before the end of this year, said Wan Ling, Beijing-based analyst at CRU International Ltd. on Sept. 13.

Still, “even taking the energy saving target into account, the demand side may not be affected much, as fabricators consume much less electricity than aluminum makers, so the local government won’t target them as priorities,” Peng said.

China also imported 410,000 tons of scrap copper, up 2.5 percent from 400,000 tons in August, data from the Beijing-based customs showed.