LONDON: China imported 373,000 tonnes of refined copper in June, the highest monthly tally this year. Cumulative imports over the first half of the year came in at 1.87 million tonnes, up by 4.4% on the first half of 2021.
This renewed hunger for refined copper has not been for want of raw materials.
Mined concentrate imports were also up in the first six months of the year to the tune of 8.6% year-on-year. Copper scrap flows were 7.3% higher.
The country’s resurgent demand for imported copper runs counter to the macro picture of stuttering Chinese manufacturing activity and continued weakness in the all-important construction sector.
Yet China’s micro indicators all suggest the country is running short of copper right now.
The June surge in refined copper imports was flattered by almost 50,000 tonnes of metal designated as Chinese-origin.
This suggests a mass movement from bonded warehouses, possibly a turnaround of copper that was “exported” earlier in the year.
Headline exports were up by 27% year-on-year at 167,000 tonnes in January-June. It’s quite possible that some of this metal was shipped only as far as a bonded warehouse by those producers able to bypass China’s refined export tax by tolling imported concentrate.
Even allowing for some tax-defined yo-yo movement in the headline figures, China’s net call on refined copper from the rest of the world was still up by 2.6% on the first half of 2021.
Indeed, cumulative year-to-date net imports of 1.70 million tonnes were the highest first-half count of any of the last five years except 2020, when refined copper imports broke all historical records.
One of the reasons China imported so much refined copper in 2020 was a drastic decline in imports of scrap ahead of a complete ban in 2021 on what the government classified as solid waste.
Beijing policy-makers were persuaded not to cut off such a significant source of copper and reclassified scrap as a recyclable resource as long as it met minimum purity thresholds.
The policy U-turn came too late to prevent recyclable copper imports collapsing to under a million tonnes in 2020. That squeezed domestic metal production at secondary refining plants and forced Chinese product manufacturers to use more refined metal in their mix.
The scrap-impact combination helped generate record-shattering refined copper imports of 4.67 million tonnes that year.
Imports of copper recyclables rebounded to 1.7 million tonnes in 2021 after the reclassification and have picked up further pace to 881,000 tonnes so far this year.
The reclassification was more generous than expected in its tolerance thresholds but the recyclable copper now being imported is still much higher purity than pre-2020 levels, implying higher contained metal content.
There is, in short, no scrap swing effect behind higher refined copper imports this year.
Nor does there seem to be any shortage of concentrates, China lifting imports in the first six months of the year despite a string of production disruptions, particularly in Latin America.
China’s first-half refined copper production was up by between 2.1% and 2.5% year-on-year, according to the state research house Antaike and the national statistics office respectively.
All of which makes the current squeeze on refined copper availability in China something of a surprise.
Shanghai Futures Exchange (ShFE) stocks have returned to the super-low levels seen at the start of January, currently standing at just 37,025 tonnes. The seasonal rebuild over the lunar new year holidays was muted relative to previous years and has quickly reversed.