Import Data News
- Copper imports slowing, may decline
Date: 26-Nov-2007 Sources: (Shenzhen Daily)
CHINA'S copper imports slowed in October from this year's record pace and will probably decline in 2008 as domestic smelters ramp up production, underscoring concerns about a global surplus.
Refined copper and alloy imports fell 4.6 percent last month to 103,080 tons, compared with September, a customs office said Thursday. Net imports next year may drop to 1.1 million tons from this year's 1.3 million tons, according to the median estimate in a Bloomberg survey of five analysts.
Lower Chinese imports may weigh on prices as the fastest-growing major economy accounted for almost all copper demand growth this year, according to the International Copper Study Group. A global surplus of the metal, used in wires and pipes, will more than double to 249,000 tons in 2008, it said Oct. 2.
'Chinese refined copper imports may fall further in the months ahead due to slower demand and rising domestic production,' Li Rong, metals analyst at Great Wall Futures Co. in Shanghai, said by phone Thursday.
Copper has fallen 26 percent since reaching a record US$8,800 a ton May 11 last year. The contract for delivery in three months traded at US$6,546 a ton at 5:04 p.m. Beijing time Thursday.
China's copper buying has boosted prices more than fourfold in the past five years. Its imports of the metal and its alloys rose 88 percent from a year earlier to 1.3 million tons in the 10 months to Oct. 31, customs data showed. That takes no account of exports and beats 2005's record 1.28 million tons for the year.
Government efforts to stop the economy overheating and curb expansion of factories that are heavy polluters and energy consumers have not yet had much impact on production. The central bank has raised interest rates five times this year as the economy has had three quarters of growth of more than 11 percent.
'Chinese production is expanding very fast,' said Jiang Changwu, managing director at JCC Jinrui Futures Co., the brokerage arm of Jiangxi Copper Co., China's second-largest producer of the metal.
'Growth in demand may not be sustained because of the slumping U.S. housing sector and China's credit tightening may hobble end users,' Jiang said. Demand for copper for tubes and home appliances such as air-conditioners might slow if the United States woes spread to other countries such as Japan and Europe, he said.
China might see its demand growth slow to between 5 percent and 7 percent annually next year from the estimated 12 percent this year, the analysts surveyed by Bloomberg this week said.
China's output of copper cathodes, a finished form of the metal, might rise to 3.8 million tons in 2008, from an estimated record 3.4 million tons this year, said Shen Haihua, general manager of Shanghai Maike Dickson Investment Management Co.
To be sure, some smelters might be losing money as domestic prices fail to cover costs of buying and importing the metal from overseas, and miners seek to lower fees paid for processing concentrates, the raw material, JCC Jinrui's Jiang said.
'Everything hinges on whether Chinese smelters continue the production levels we see this year,' he said. 'If some of them decide to cut production, imports will definitely have to rise.'
China might increase smelting capacity to as much as 4.2 million tons next year from an all-time high of 3.8 million tons in 2007, Shen said in an interview Nov. 20.
Actual production might be lower because there's 'too much smelting capacity chasing too little concentrate,' Macquarie Bank Ltd. said in a report Oct. 31.
Some analysts, including Macquarie's Bonnie Liu, said smelters might have to accept a reduction in so-called treatment and refining charges, which usually fall when concentrates are in short supply and smelting capacity is rising.
'I doubt they will cut production even if they lose money,' Liu said. 'Industrial scale is more important than industrial profitability,' she said.
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