Copper Imports by China Tumble to Two-Year Low on Ample Supplies, Prices

Copper imports by China, the largest consumer, tumbled 35 percent in February to the lowest level in more than two years as ample supplies weighed down local prices, making purchases unprofitable.

Inbound shipments of copper and products dropped to 235,469 metric tons from 364,240 tons in January, said the General Administration of Customs website. That was the lowest level since January 2009, according to Bloomberg data.

Copper in China has mostly traded at a discount to London prices since July because of increasing domestic supplies of refined and scrap metal. Since October, the copper market in Shanghai has been mostly in a contango, where metal for immediate delivery is cheaper than contracts with later dates, suggesting ample availability.

“There is plenty copper around, from local output and previous imports, while the high price is deterring buyers,” Ying Haoliang, an analyst at Orient Securities Futures Co., said by phone from Shanghai.

Premiums paid by Chinese importers over the London Metal Exchange cash price dropped to between zero and $50 a ton on a cost, insurance and freight basis to Shanghai, metals consultancy CRU International Ltd. said this month.

Refined copper output rose 12 percent to 4.79 million tons in 2010, the National Bureau of Statistics data showed. The statistics bureau didn’t release January’s production figures.

Delayed Recovery

A recovery in demand will probably be delayed until late March, Dan Smith, an analyst at Standard Chartered Plc, said in a report this week. Smith forecast copper imports to drop 15 percent last month partly because of the New Year holiday and high prices.

“February imports are usually low due to the long Chinese New Year holidays,” Orient’s Ying said. “But it’s a minor factor; persistently lower domestic prices are the main reason.” Chinese markets were shut from Feb. 2 for the week-long holiday.

Copper on the London Metal Exchange hit a record $10,190 a ton last month, after rising 30 percent last year, as demand outpaced supply and the global economy recovered. The three- month contract was little changed at $9,267 a ton by 11:55 a.m. in Shanghai.

Overall demand this year may grow by 7 percent on strong strong economic growth, Li Yihuang, chairman of Jiangxi Copper Co., said on March 5. Consumption may be the highest in at least four years in 2011, as smelters are operating at more than 90 percent capacity, Tongling Nonferrous Metals Group Co. Chairman Wei Jianghong said on March 8. (Bloomberg)