COLUMN-China still hungry for copper, but not in refined form – by Andy Home (Reuters U.S. – April 27, 2017)

LONDON, April 27 China’s imports of refined copper slumped by 28 percent year-on-year in the first quarter of 2017. Factoring in exports, now a regular feature of the country’s trade picture, the slide in net metal imports was an even more dramatic 35 percent.

The net draw on units from the rest of the world was 699,000 tonnes in the first three months of the year, a decline of 368,000 tonnes on the same period of 2016. Look no further to understand why copper’s early-year bull run to over $6,200-per tonne, basis three-month metal on the London Metal Exchange, has stalled. The price is today trading around $5,720.

Even while production disruptions have accumulated, any impact on refined metal availability has been muted, witness the near 185,000-tonne build in global exchange stocks in the first quarter. However, it’s not as if China has lost its appetite for imported copper. It’s just that it has shifted to other forms of the metal.

First and foremost copper scrap. Imports of scrap seemed to be in long-term decline having fallen in each of the last four years. Volumes last year were 3.35 million tonnes (bulk weight, not metal contained), compared with 4.86 million tonnes in 2012.

That steady downtrend, however, has gone into sharp reverse over the last few months. Imports accelerated by 22 percent to 907,000 tonnes in January-March, the highest first-quarter level since 2013.

This is part and parcel of what seems to be a global surge in scrap supply occasioned by the sharp jump in the copper price from under $5,000 in the fourth quarter of last year.

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