(For China copper import data, please click CNIVCOPP Index HCP <GO> Adds analyst’s comments in fourth paragraph.)
Oct. 13 (Bloomberg) -- Copper imports by China, the biggest consumer, climbed to the highest level in 16 months in September as lower prices lured traders to place orders and after domestic stockpiles were reduced earlier this year.
Inbound shipments of the refined metal, copper alloy and products rose 12 percent to 380,526 metric tons from 340,398 tons in August, according to data posted on the website of the General Administration of Customs. Imports gained for a fourth month to the highest level since May 2010, and were 3.3 percent higher than the 368,410 tons of a year earlier.
Strong Chinese demand may support London prices, which tumbled 24 percent in September, the biggest monthly decline since October 2008, on concerns that the worsening European debt crisis could lead to another recession. Buying may continue as domestic inventories have slumped 45 percent from this year’s high in March.
“Arbitrage buying should have increased a tad as a result of favorable price differentials between Shanghai and London,” Peng Qiang, an analyst at Cofco Futures Co., said by phone from Beijing. “October imports should be even higher.”
Traders profit by exploiting prices differences between two exchanges, buying in London and selling Shanghai. Inventories at Shanghai Futures Exchange warehouses declined to a three-month low of 97,911 tons at the end-September. Metal in bonded warehouses in Shanghai dropped to about 200,000 tons, Barclays Capital said in a report on Oct. 11. That compared with 600,000 to 700,000 tons in March.
“Better prices encouraged traders to place orders,” said Zhu Lin, an analyst at data provider SMM Information & Technology Co. Still, “even if they wanted to import more aggressively, they don’t have the adequate funds to do so.”
By July, the People’s Bank of China increased interest rates five times and the reserve requirement ratio nine times since the second half of last year to contain inflation. Consumer prices probably eased to 6.1 percent in September from 6.2 percent in August, according to the median forecast of economists in a Bloomberg survey. The data are scheduled to be released tomorrow. Consumer prices rose 6.5 percent in July, the fastest in three years.
“This should impose a cap on imports increase in coming months,” Zhu said.
Imports of unwrought copper and products in the first three quarters this year declined 18 percent from a year earlier to 2.73 million tons, according to the customs.
December-delivery copper in Shanghai was little changed at 54,860 yuan ($8,603) a ton, which includes a 17 percent value- added tax. The metal for three-month delivery in London fell 1.7 percent to $7,399.75 a ton by 12:08 p.m. Shanghai time, after dropping as much as 2.3 percent earlier.
The Chinese import data for copper and copper products were “mildly bullish” for the market, said David Thurtell, an analyst at Citigroup Inc. in Singapore.
Scrap copper imports totaled 420,000 tons in September, compared with 380,000 tons a month earlier. Total scrap arrivals rose 6.7 percent in January-September to 3.43 million tons, customs data showed.
Imports of unwrought aluminum and products totaled 66,163 tons last month, while exports of unwrought aluminum were at 60,715 tons, according to customs.
--Helen Sun, with assistance from Jae Hur in Singapore. Editors: Richard Dobson, Jake Lloyd-Smith
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