Copper end-users in China are likely to start building stocks of the metal next week as the spot market will close during the week-long Lunar New Year break in early February, trading sources said on Monday.
Demand strength was driving up Chinese copper prices and that could underpin world prices, which have risen 3 percent over the past two weeks, at $7,130 a tonne on Monday. That was spurring importers to bring copper into Shanghai. About 20,000 tonnes of imported copper were scheduled to arrive this week and another 30,000 tonnes would come in late January, traders said.
Traders also noted cancelled warrants - metal earmarked for delivery from London Metal Exchange warehouses - stood at 22,200 tonnes, some 12 percent of the total available, and just under half of that was concentrated in South Korea, the closest LME delivery point to mainland China.
"We will start buying more copper from next week to build stocks for the Lunar New Year holiday," a purchasing manager for one large copper tube plant said. The Lunar New Year falls on February 7 this year, while Chinese markets will close between February 6 and 12.
Copper traders usually close their shops during the official break, but large and medium-size fabricating plants maintain operations for export orders, demanding higher stocks. But availability of spot copper in Shanghai has stayed low this month as a result of repairs at two major Chinese copper producers and slow customs procedures for imports in December.
Jiangxi Copper Co Ltd, the country's top integrated producer of the metal, completed its repairs in mid-January, and Yunnan Copper Co, the third-biggest smelter, would finish repairs in early February, company officials said. Traders said supply of imported copper was rising in Shanghai but it was not sufficient to meet demand.
"Supply of imports is not as much as many have expected," a trader at one large copper producer said. The supply could rise faster in the coming two weeks as many importers are looking to take copper from the LME warehouses in South Korea to cash in on high Chinese prices.
"We are clearing customs for bonded copper in Shanghai and thinking of buying some from South Korea," a manager at one large trading firm said. At least 30,000 tonnes of imported copper were stored in one bonded warehouse in the Waigaoqiao Free Trade Zone in Shanghai, a warehouse source said.
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