A 20 percent jump in copper imports in December from the previous month was not nearly enough to push imports into the plus column for 2008, which saw the global recession slash imports by 13 percent. Data from the United States International Trade Commission on Wednesday showed copper imports jumped nearly 21 percent to 61,667 tonnes in December from 50,992 tonnes in November.
This followed a slight uptick in November imports. Larry Young, senior trader at Infinity Futures Inc in Chicago, said the back-to-back monthly increases were nothing more than investors and end-users taking advantage of a more than 40 percent price decline in the metal from September through the end of November.
"They're just taking advantage of the price action. We're not always going to be in this position where demand for copper is low, so why not buy it when it's at rock-bottom prices relative to where it has been?" For the year however, imports plunged 12.7 percent to 723,585 tonnes versus 828,992 tonnes in 2007. The yearly slowdown in copper imports was just one piece of a shrinking US trade deficit, a US Commerce Department report showed on Wednesday.
The trade deficit contracted 4 percent in December, with imports of goods and services down 5.5 percent for the month after an 11.9 percent decline in November. US exports of goods and services fell nearly 6 percent to their lowest levels since October 2006 as the financial crisis took a huge bite out of foreign demand.
"This is not just a US problem, it's global," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey. "We saw China's imports of copper and copper products down, so I think this is reflective of challenged demand for base metals."
China's imports of unwrought copper and semi-finished copper products fell 19 percent in January to 232,701 tonnes, China's customs authority said on Wednesday. Analysts have forecast that January's refined copper imports to match or exceed December's all-time high of 211,527 tonnes. But if the proportion of refined copper within the total remains at Decembers' level, January's refined imports are likely to be much lower, at 173,000 tonnes.
China is the world's largest consumer of copper, accounting for around 25 percent of global demand. "For some reason there has been some optimism that the situation has bottomed and turned around and I think these numbers put that in question," O'Neill said.
Copper at the COMEX division of the New York Mercantile Exchange shot up to $1.6550 a lb last week, the highest level in more than two months, amid talk that China had begun purchasing copper from domestic bonded warehouses and overseas markets. The country was said to be seeking enough copper to gradually triple its state reserves to about 1 million tonnes.
Edward Meir, analyst with MF Global, called the latest Chinese import figures a disappointment after the hype about a possible Chinese demand rebound after a period of destocking. Looking ahead, analysts expect imports of the metal into the US to remain sluggish this year.
"I think we have a ways to go before we'll see the numbers improve and in fact, I think they will get worse before they get better," LOGIC Advisors' O'Neill said. "We'll know more at the start of the fourth quarter, and see then if things look like they have bottomed." Michael K. Smith, president of T & K Futures and Options Inc in Port St. Lucie, Florida, took a more positive approach.
"The fact the copper market has quit going down and is starting to go sideways tells me that most of the bad news is factored in already," he said. "But just because the market has flattened out does not mean the economy is going to turn around any time soon.
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