Copper Imports by China Climb to Highest Level in 20 Months

  • Purchases by China jumped 33 percent on month due arbitrage
  • Copper inventories, production are seen falling in China

China imported the most copper in 20 months in September, while ore and concentrate purchases expanded to the highest since March as a domestic premium spurred traders to buy more from the world market.

Inbound cargoes of the metal and its products jumped by 33 percent to 460,000 metric tons from August, customs data showed Tuesday. Shipments of ore and concentrate rose 5 percent to 1.21 million tons. Premiums have risen as maintenance and an equipment failure cut domestic supply, according to Xu Maili, an analyst at Everbright Futures Co. in Shanghai.

“The increase was due to arbitrage and the inflows eased supply pressures on the domestic market,” Xu said by phone. Domestic production has been cut by routine smelter maintenance and after Jinchuan Group Co., the fourth-largest processor, cut output because of an acid-system equipment failure.

For an arbitrage transaction, traders buy copper from the London Metal Exchange and sell it domestically. The LME contract for three-month delivery averaged about $5,200 a ton in September compared with about 39,771 yuan ($6,244) a ton for benchmark futures in Shanghai. Traders still need to pay value-added tax and other fees.

Copper stockpiles in China’s bonded warehouses fell to the lowest in more than three years in late September, signaling that metal had been transferred to the domestic market, while inventories monitored by the LME were drawn down by 13 percent last month.

While imports of products climbed in September, they were down 5.5 percent in the first nine months from a year earlier at 3.39 million tons, customs data showed. Ore and concentrate purchases rose 9.3 percent in the period to 9.33 million tons.

LME copper prices fell as much as 1.2 percent on Tuesday as total Chinese imports slumped 17.7 percent in yuan terms from a year earlier for the worst streak of declines in six years, indicating weak domestic growth.

— With assistance by Alfred Cang

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