David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Could the commodities slump be over?

China's imports of copper rose in December to the highest level since 2008 and zinc shipments hit a six-and-a-half-year record, according to customs data Tuesday, driving futures on the London Metal Exchange up at the fastest pace in more than five weeks. If the world's biggest metals consumer is buying again, perhaps there's hope for the likes of Freeport-McMoRan, which is ready to sell any of its assets -- including the world's second-largest copper mine -- to cut a $20 billion debt load.

The problem is knowing how much of China's metals demand is actually metals demand. As Bloomberg Intelligence analysts Kenneth Hoffman and Sean Gilmartin have pointed out, a large but unquantifiable share of China's copper consumption isn't being sent to factories to manufacture wires, pipes and circuit boards but is sitting in warehouses as collateral for loans. A weaker yuan and higher global interest rates threaten to damage the economics of that carry trade, and dump as much as $2 trillion of metal onto global markets.

Happy New Year
Year-on-year growth rates for some copper-consuming sectors of China's economy have picked up
Source: China Customs General Administration, Bloomberg Intelligence, National Bureau of Statistics of China, China National Energy Administration

The good news is that there does seem to be some real activity out there. China's car sales rose 20 percent in December from a year earlier, to a record 2.8 million vehicles, thanks to a cut in sales taxes. A midsized car contains about 22.5 kilograms of copper, according to the International Copper Study Group, so that industry alone could in theory account for some 63,000 metric tons of the 423,000 tons of refined copper imported during the month. Spending on the country's electricity grid rose about 12 percent in the same month. State Grid, the government-owned company that consumes about 40 percent of China's copper, will invest 28 percent more over the next five years than in the previous period, the company said last week.

Zoom out a little bit, though, and the picture looks more mixed. Car sales seem close to stagnant on a six-month moving average, to iron out some of the year-end seasonal spike and the lull that preceded it. Building construction and goods exports, two of China's other major copper-consuming sectors, are in a similar state, and only the spending on the electricity grid comes close to matching the growth rate of metals imports.

Copper-Bottomed Numbers?
Annual growth rates in Chinese copper-consuming sectors, six-month moving averages
Sources: World Bureau of Metal Statistics, Bloomberg Intelligence, National Bureau of Statistics of China, China Customs General Administration, China National Energy Administration

Another thing to bear in mind is that refined copper imports tell only one part of the story. China also imports ore, concentrates and scrap copper, but its refineries are operating at close to capacity, meaning the country is going to lean more heavily on the refined metal for any incremental growth in shipments.

Full Up
China is importing more copper ores, concentrates and scrap as its refineries hit capacity limits
Source: Bloomberg data

Add in China's copper production and its own exports of the metal to total import volumes, and you get the country's apparent copper consumption, a more comprehensive picture of how much metal it's using. That indicator suggests that any pickup in consumption over the past few months has been much more subdued than in previous years.

Leading Indicator
China's apparent copper use has led import growth in the past. Not this time
Source: Bloomberg data
Note: Shows six-month moving averages of annual growth rates

When apparent copper consumption growth last hit a cyclical low in March 2013, the recovery was rapid, with the moving average rebounding 19 percentage points within five months. This time around, apparent use is up just 1.7 percentage points since its trough in June. Until that leading indicator starts showing a more rosy picture, you'd be bold to assume that fresh imports aren't disappearing into the metals-financing black hole.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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David Fickling in Sydney at

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Paul Sillitoe at