China's January refined copper imports fall

China's refined copper imports fell almost 18 percent in January, official data showed on Tuesday, in line with preliminary figures, and analysts said imports were likely to stay weak to March despite monetary easing. London copper prices rose on Monday by nearly 1.5 percent on Monday, breaking a six-day losing streak, after China's central bank cut on Saturday the amount of cash banks must hold in reserves, a step that is expected to boost lending capacity by more than $50 billion.
Analysts, however, said the reserves cut was unlikely to affect copper imports this quarter, but could help a seasonal pick up in manufacturing from April, which is then likely to boost purchases. "We probably won't see an impact on copper demand from the RRR cut in the coming one to two months," said Yang Xiaoguang, analyst at Jinrui Futures.
"But the extra liquidity may help increase manufacturers' orders in April as orders from power cable makers and home appliance makers rise," he added. Jing Chuan, chief researcher at CITIC Futures said large banks tended to lend to large, state-backed companies while most manufacturers of copper products are smaller, private firms.
The reserves cut is also likely to make copper less attractive as a financing tool. Investors have since late 2010 imported copper to skirt tight bank lending, using letters of credit to buy the metal which they then resell in the domestic market or store to use as collateral for further loans. Jing said domestic demand for spot copper had stayed weak this month and price differentials for much of January and February had made imports unattractive.
Refined copper imports fell to 335,480 tonnes in January from a record of 406,937 tonnes in December, according to a breakdown of data from the General Administration of Customs, as the week-long Lunar New Year holiday slowed purchases. Preliminary figures released earlier this month by the same authority indicated an 18.7 percent drop in imports of anode, refined and semi-finished copper products from the world's top copper buyer in January compared to December 2011.
But the January refined copper figure was 36.6 percent higher year-on-year, as importers bought more copper in December, for January delivery, to use up their annual credit lines for trade and to take advantage of arbitrage opportunities between Shanghai and London prices. China is the world's biggest consumer of copper, which is used in power and construction, but manufacturers' appetite for the metal has waned since late December as demand for products fell due a weaker domestic economy and the economic woes in Europe.