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February 28th, 2009
- Market Stats
Shanghai China - China copper demand draws down LME inventory and provides floor price support
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China is sucking in thousands of tonnes of copper from across Asia, but rather than representing an explosion in demand, the flow could just be Beijing filling its storehouses with metal at bargain prices.
Attractive margins are encouraging Chinese investors and merchants to import refined copper cathode, drawing down stocks at London Metal Exchange warehouses. The State Reserves Bureau (SRB) is believed to have nearly finalized orders to import 300,000 tonnes of refined copper cathode in coming months, taking advantage of a 60 percent fall in prices since the metal hit a record $8,940 in July. Reuters report that SRB placed a 40,000-tonne order to a Chinese copper smelter last week, smelter and trading sources said. Strong import demand from the world's top consumer of copper has reduced the availability of the metal in LME warehouses in South Korea and Singapore, driving up premiums. Traders said premiums for LME copper in Singapore had risen from around $80 last week to $95 this week and may hit triple digits in the near future.
China is not the only buyer, Indian demand is also rising. "Unlike China, where the government is doing a lot of the buying, we are seeing a real pick-up in demand from India. India copper imports have probably risen to 7,000 or 8,000 tonnes a month in the past three months," a Singapore trader said. Typically India has been a net exporter. But China remains the big influence and the big concern experts say.
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