China’s copper imports likely to moderate in coming year

Last month, China’s copper imports declined throughout every import channel, following strong imports recorded in the first quarter. Scrap, refined and concentrate imports all declined on a month-on-month basis. In Q1 2016, a slight rise in FAI spending, along with seasonal demand and a supportive arbitrage window, helped boost copper imports higher. Soft imports in April indicate slowdown in China’s copper market, said Barclays in a research report.

Copper imports dropped 29% m/m to 309kt in April. The decline was due to an increase in exports of refined copper that rose 39% on a sequential basis to 32kt. Meanwhile refined copper imports declined 34% m/m to 341.6kt. Imports of scrap stagnated in April, declined 9% m/m to 272kt. This is 12% y/y drop from the earlier April imports of 309kt. The constant fall in scrap imports is because of three factors: scraps’ key producers, western markets, continue to signal a tight market; concentrate and refined copper’s availability, given weak external demand softens the requirement of scrap; and the domestic production of scrap in China will increase.

Imports of copper concentrate continue to be strong, declining 8% sequentially in April to 1,260kt, but growing 21% on an annual basis. Larger availability of copper concentrate, due to spreading out of Peru’s copper industry, along with growth of China’s smelting capability, has resulted in increased imports of copper concentrate.

“We think that copper imports will continue to moderate over the coming year and see weaker prices ahead”, noted Barclays.