China Copper Imports Gain as Local Prices Strengthen

Source:

"China may increase imports to as much as 200,000 metric tons a month. . ."

Refined copper imports by China, the world's largest consumer, rebounded in November from an 11-month low as domestic prices strengthened on rising demand.

Shipments increased to 194,388 metric tons last month, the customs office said today. That's 15% more than October's level, which was the lowest since December 2008, according to data compiled by Bloomberg.

Copper reached the highest price since September 2008 this month as manufacturing in China expanded at the fastest pace in five years. The country is targeting 8% growth in 2010 and an 11% gain in industrial production, industry minister Li Yizhong said yesterday.

"Domestic prices have strengthened noticeably against London, narrowing losses on imports," Fu Bin, an analyst at Jinrui Futures Co. said from Shenzhen. "We may see profits again if the trend continues."

Copper for delivery in three months on the London Metal Exchange fell 0.6% to $6,895 a ton by 3:21 p.m. in Shanghai. It reached $7,170 on Dec. 2, the highest in almost 15 months. Shanghai copper was down as much as 0.8% to 55,260 yuan ($8,092) a ton.

Break Even

Buying the metal from overseas to sell in the Chinese market almost breaks even after accounting for China's 17% value added tax, according to Bloomberg calculations.

"The chance is big that some 200,000 ton copper stocks may be released from bonded zones and drag down Chinese prices," Fu said. "Traders will expedite imports before that happens." A bonded zone holds imported goods before duty has been paid.

China may increase imports to as much as 200,000 metric tons a month in the first quarter of 2010 after higher domestic prices made purchases from overseas cheaper, according to Macquarie Group Ltd.

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