China's Copper Demand Comeback


"China's copper imports snapped two months of decline in June."

Reuters, Fayen Wong

China's copper staged a strong comeback in June, but the outlook was marred by falls in a list of other key commodities, showing that Beijing's cooling measures were weighing on the economy.

Copper imports in China, the world's leading copper and aluminum consumer, snapped two months of decline to rise 9.9% to 280,009 tons in June, data showed.

From a year ago, however, June's volumes were still down 14.7% and total copper imports of 1.7 million tons for the first six months of 2011 remains down 23.8% from a year earlier.

"June's arbitrage ratios were attractive for imports," Zhuo Guiqiu, an analyst at Minmetals Futures said, adding that some of the imports may have been delivered from the LME warehouses in Singapore and South Korea, the nearest LME warehouses to China.

"Demand was not bad in June and should be able to absorb increased imports."

Zhuo said he expected imports in July to be flat or fall slightly from June since the arbitrage between the cash LME and Shanghai copper contract SCFc1 turned around in the beginning of July.

Imports of unwrought aluminum, including primary, alloy and semi-finished aluminum products, fell by 13.9% to 64,491 tons. China had shipped in 74,880 tons in May.

"The spread between LME and Shanghai local prices lately does not support imports or exports into China. The Chinese market is in a supply-demand equilibrium now and people are waiting for international prices to fall much more before buying," said CRU analyst Wan Ling.

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