Bloomberg News

Copper Imports by China Climb to 16-Month High on Prices

October 24, 2011

(Adds analyst comments in fourth paragraph; for China trade data see FDM CHME <GO>.)

Oct. 24 (Bloomberg) -- Refined-copper imports by China, the world’s largest user, climbed to the highest level since May 2010 as tumbling prices in London increased arbitrage opportunities, prompting traders to place orders.

Inbound shipments climbed 17 percent to 275,499 metric tons last month from 235,509 tons in August, according to the General Administration of Customs. The arrivals were 14 percent higher than a year earlier.

Arbitrage trade, or buying the metal in London and selling in Shanghai, increased in September as the benchmark price in London slumped 24 percent. Stockpiles in Shanghai fell 4.3 percent in the month, while London Metal Exchange inventories increased 2 percent.

“The preliminary PMI today was good, signaling solid downstream demand, so imports should remain steady,” Wang Mingyi, an analyst at Galaxy Futures Co., said from Beijing.

China’s manufacturing may expand in October for the first time in four months, as a preliminary index of purchasing managers rose to 51.1. The so-called Flash PMI released by HSBC Holdings Plc and Markit Economics today was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion.

Copper concentrate imports fell to 562,506 tons last month from 675,928 tons in August, the second highest in history, today’s customs data showed.

Lower Inventories

Copper stockpiles monitored by the Shanghai Futures Exchange fell 11,935 tons to 87,726 tons in the latest week, the lowest since June, bourse data showed.

“The inventory level is very low, so the attractive prices lured buyers,” Wang said.

Three-month copper traded on the LME tumbled to $6,635 a ton on Oct. 3, the lowest since July 2010. Futures have since recovered to trade at $7,376 a ton at 4:45 p.m. Shanghai time. The contract has lost 23 percent this year.

Canceled warrants on the LME, or orders to draw copper from the warehouses, jumped to 60,275 tons on Oct. 21, the highest since May 2009, bourse data showed. Refined copper output fell to 479,000 tons in September from a record 518,000 tons in August, as smelters slowed production after operating ahead of schedule before September.

--Helen Sun. Editor: James Poole

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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