China imports at nine-month high buoy copper prices

LONDON: Copper prices rose on Monday as dwindling inventories and signs of strong demand in top consumer China triggered a flurry of buying.

Benchmark copper on the London Metal Exchange was up 0.5% to $13,593.5 a metric ton at 0937 GMT.

Traders said import data showing China’s imports of refined copper hitting a nine-month high in June boosted sentiment for the metal used in the power and construction industries. Part of the reason for higher imports is declining domestic supply due to smelter maintenance.

A gauge of China’s appetite for importing metal, the Yangshan copper premium, jumped to a 14-month high of $100 a ton on July 17, data from consultancy Shanghai Metals Market showed. The premium has soared 133% this year.

At 79,909 tons, stocks of copper in warehouses monitored by the Shanghai Futures Exchange are at their lowest since August last year and down more than 80% since the middle of March.

Meanwhile, copper inventories in LME-approved warehouses have dropped 24% since end-May to 295,275 tons.

Cancelled warrants, or metal earmarked for delivery, at 56% indicate another 166,025 tons is due to leave the LME system.

Much of the copper that has left the LME system since February last year, when U.S. President Donald Trump first mooted import tariffs on the metal, has been shipped to the United States.

“We expect the ex-U.S. copper market to remain tight near term, with the continued U.S. import pull on tariff expectations drawing units away from an already thin ex-U.S. market, and low Chinese inventories and limited scrap substitution cushioning the downside,” analysts at Goldman Sachs said in a note.

Worries about copper availability on the LME have created a backwardation or premium for most nearby contracts against longer-dated forwards.

In other metals, aluminium firmed 0.2% to $3,158 a ton, zinc rose 0.5% to $3,542, lead slipped 0.3% to $1,876, tin advanced 0.3% to $53,375 and nickel advanced 0.4% to $17,030.