China's refined copper imports, the world's biggest, may have topped 100,000 metric tons in May for a seventh straight month even as high prices deterred buying and the economy showed signs of slowing, traders and analysts said.
``Last year was exceptional for copper imports into China, and we don't expect May's levels to be very different from a year earlier,'' Li Jingyuan, analyst at Haifu Futures Co. in Shanghai, said. Imports could be as much as 120,000 tons, compared with 121,383 tons a year earlier, Wang Fei, analyst at Maike Dickson Investment Management Co., said by e-mail today.
Copper prices in London have rallied 18 percent this year, as demand from China and supply disruptions helped to shrink global stockpiles by more than a third. China's manufacturing growth slowed last month, raising concern that use of the metal for wires and pipes may decline.
China imported 127,977 tons of refined copper in April, up from 126,421 tons in March, according to revised data issued by the Beijing-based customs office on May 22. Preliminary trade data for May are scheduled for release early next week.
``There's money to be lost importing copper at these prices, yet we're not going to see import numbers fall much because most material coming in is from long-term contracts signed when price conditions were favorable,'' Pang Ying, an analyst at Shenzhen Rongtuo Trading Co., said.
Copper futures in Shanghai have risen only 3.7 percent this year, lagging behind benchmark London Metal Exchange prices. The Shanghai contract should be trading at more than 65,000 yuan ($9,386) a ton for imports to be profitable, Zeng Chao, chief metals analyst at Everbright Futures Co., said.
Traders in China normally use the ratio of domestic prices to the LME to gauge whether imports are profitable, after taking into account costs including taxes, duties and freight charges.
The most-active contract on the Shanghai Futures Exchange traded at an average 62,935 yuan a ton in May. LME copper for delivery in three months, which reached a record $8,880 a ton on April 17, averaged $8,247 a ton.
Global stockpiles of copper tracked by the LME dropped 38 percent this year to 122,900 tons as of yesterday, while Shanghai inventories climbed 85 percent to stand at 44,554 tons last week.
``Spot orders are few and far between these days, and with the approach of the slow summer season and ample domestic stockpiles, there's no real urgency for imports to hit the physical market,'' said Jia Zheng, an analyst at Southwest Futures Co. in Shanghai.
Average prices of copper for immediate delivery in Changjiang, Shanghai's biggest cash market, have fallen 4.6 percent from a year ago.
Chinese copper imports may be on a gradual decline as domestic production increases, said traders and analysts. China's copper output was 329,400 tons in April, up 23 percent from a year ago, the National Bureau of Statistics said on May 14.
``Imports of refined copper may fall but imports of copper concentrate will continue to increase as fabricators and processors have to keep production going,'' said Yang Zhenqiang, chief analyst at China International Futures (Tianjin) Co.
China's imports of copper concentrate, the main raw material, were 1.87 million tons in the first four months of this year, up 23 percent from the same period a year ago.
Still, ``China is a net importer, and will remain a net importer of copper, no matter how unfavorable the conditions,'' Lin Yuhui, research manager at China International Futures Co. in Shenzhen, said.
Gross domestic product in China, the fastest-growing major economy, expanded 11.9 percent last year and 10.6 percent in the first quarter of 2008.
Manufacturing growth in China eased in May, the CLSA China Purchasing Managers' Index showed on June 2. The gauge declined to a seasonally adjusted 54.7 last month from 55.4 in April, raising concern that the country's copper consumption for appliances and other goods may slow and lead to lower prices.
China's copper exports may rise as importers re-route metal to neighboring countries until local prices improve, said Shenzhen-based Huang Shoufeng, an analyst at Jinrui Futures Co.
``Importers lose less if they export the metal to a nearby LME warehouse, than if they were to bring it in now,'' Huang said. Inventories in exchange-registered warehouses in South Korea, the nearest location to China, rose 24 percent in May to 75,000 tons.