Singapore 14/07/2016 - The latest Chinese June copper import data has sparked mixed views on the state of copper demand in China.
Chinese customs data published Wednesday showed China’s June unwrought copper imports falling 1.7 percent month-on-month to 420,000 tonnes, though imports still rose 22 percent to 2.74 million tonnes in the first half of the year.
The interpretation of Chinese demand strength from the import data differed among market participants.
Chinese June copper imports were up 20.3 percent year-on-year, indicating that consumer demand remains robust amid declining import arbitrage trades between Shanghai and London, ANZ Research said in a report on Wednesday.
Copper imports into China up till March had largely been supported by earlier import arbitrage opportunities between the two locations – the import window has closed since late-January.
The strength in China’s January-June copper import growth shows that Chinese import demand remains strong, China’s Ruida Futures said on Thursday morning. The Xiamen-headquartered futures brokerage recommends staying long on the metal on Shanghai Futures Exchange.
But there are others who disagreed.
“The 'beautiful' import data does not represent improved supply-demand in the Chinese market,” said Minmetals Jinyi Futures on Thursday morning, noting a surge in outflow of Chinese refined copper to overseas markets in January-May this year.
The futures brokerage also noted that the copper import data included copper blister imports - which increased 75,800 tonnes in January-May this year – that has helped lift the supply of refined copper in the country. "It does not represent an increase in demand," it said.
Shanghai-based Dalu Futures said: “Some analysts think that the latest Chinese copper import data shows that demand remains strong. On this view, we reserve our opinions.”
“But the fact that LME copper price had retreated after hitting above $5,000/tonne [on Wednesday] shows that the market is not blindly optimistic,” the broker said.
The London Metal Exchange three-month copper price surged to a ten-week high of $5,032 per tonne during Asian trading hours on Select on Wednesday but prices subsequently fell away during London trading to close at $4,938. The price was last at $4,940 on Thursday, up $2 from the previous day’s close.
Some also noted that Chinese copper imports have declined for the third straight month in June on a month-on-month basis and could continue to do so as demand shrinks further in the near-term due to the summer lull and heavy rains in the country.