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China's refined copper imports to pick up in 2023
Release time:
2022-10-19 17:17
Source:
Customs data show that China imported 746,692 tons of refined copper in the first quarter, down 12.6 percent year-on-year, the lowest import volume since at least 2015. The data raised concerns about weak copper demand in China.
China's copper imports are usually associated with the opening of the import arbitrage window, which has mostly been closed this year.
According to the inventory data reported by the exchange, the copper inventory of the Shanghai Futures Exchange is now higher than that of the LME and COMEX.
As time goes on this year, China will consume stocks, the arbitrage window will reverse and copper stocks will come back to China, says Gramm Train, head of metals and minerals analysis at Trahk. The drivers of the arbitrage window in the first quarter had less to do with the strength of Chinese demand and more to do with the very low inventory available outside of China.
Rising refined copper production in China, which hit a record high of 1.05 million tonnes in March, also led to higher inventories in China than in overseas markets.
The Shanghai Yangshan copper premium has fallen by half since mid-March, to $24.5 a tonne at the end of last week. This reflects the cooling of China's demand for imported copper.
Mr. Train says he doesn't think China has a lot of hidden stockpiles. At present, China's inventory has passed the highest point and is constantly decreasing. As inventories continue to fall, the premium for imported copper will respond.
As global interest rates continue to rise, so does the cost of capital to store metals. Given the high interest rates, the metals consumption value chain wants to hold inventories as low as possible. So the visible inventory of these metals is not only low, but we are approaching a point where the inventory of all value chains containing metals is low.Transmitted from Tongyunhui
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