Chinese imports of refined copper rose 18.3 percent in December on the month to a record high due to improved arbitrage and increased use of copper for financing purposes, but inflows fell 3 percent in 2011 from 2010 on low imports in the first half.
China, the world's top consumer of base metals, imported 406,937 tonnes of refined copper in December, up 77.9 percent from a year earlier and exceeding the previous monthly record of 378,943 tonnes in June 2009, data from the General Administration of Customs showed on Saturday.
"The record figure reflected that merchants used adhoc opportunities to boost imports," Xiao Jing, an analyst with Beijing Capital Futures, said. She was referring to arbitrage, buying at London Metal Exchange copper prices and selling at Shanghai prices. Analysts said merchants and investors had increased imports of spot refined copper, the most popular in the Chinese and international market, as collateral for short-term loans to get around tight yuan lending rules last month to meet rising demand for cash before the year-end.
They also attributed the record imports to firms rushing to use up their 2011 credit lines in December because they were afraid that they would not receive the same amounts in 2012 if they did not use up the 2011 allotment. Traders said investors had booked large amounts of refined copper in October when the arbitrage window opened and the bulk arrived in November and December.
But the arbitrage closed for much of January and imports would fall this month, Xiao said. She added that New Year holiday and the coming week-long Lunar New Year holiday also would cut arrivals. China's markets will close between January 22 and January 28 for the Lunar New Year holiday.
Investors raised financing imports of copper in the second half after many Chinese firms dried up their own channels to finance their projects in the first half, but the imports in the full 2011 fell after the first half inflows dived 30.4 percent on the year. Yearly imports of refined copper dropped 3 percent on the year to 2.84 million tonnes in 2011 after a fall of 8.4 percent in 2010 from record 3.19 million tonnes in 2009.
Like copper, financing demand and improved arbitrage boosted imports of primary aluminium, refined zinc and nickel last month, even as domestic consumption of the metals weakened as cash-strapped fabricators and building projects slowed operations before the year-end, analysts said. Primary aluminium imports surged to 50,943 tonnes in December, up 133.3 percent from a month earlier and 164.9 percent from December 2010, the data showed. Traders have expected China's primary aluminium imports to stay firm until March with investors and merchants ramping up purchases.
China, the world's top producer of aluminium, remained a net importer of the metal in 2011 and imported 225,044 tonnes in the year, down 2.1 percent on the year after posting a 85 percent fall in 2010. Yearly exports of primary aluminium dived 57.7 percent to 81,871 tonnes in 2011 after a surge of 322 percent in 2010. Refined zinc imports surged 111 percent on the month and 53 percent on the year to 54,118 tonnes in December.
In 2011, yearly zinc imports rose 7.5 percent on the year to 348,020 tonnes, reversing a 52 percent fall in 2010. Imports of refined nickel and alloys inched up 2.1 percent on the month and surged 22 percent on the year to 19,028 tonnes in December. Yearly imports rose 18.9 percent on the year to 217,500 tonnes in 2011, compared to a 27 percent fall in 2010.
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