China's imports of refined copper fell 40 percent in October, easing after a sharp surge in the previous month, customs data showed on Monday, sowing fears of weaker demand and a price correction. Copper prices touched $6,980 a tonne on Monday, just $12 short of last week's 13-month high, while Shanghai futures scaled a 14-month peak.
But the slide in imports to 169,374 tonnes in October - a drop of 40.1 percent - from 282,828 tonnes in September, may soon be felt in prices, Yingxi Yu, analyst with Barclays Capital said. "We haven't seen a price reaction to the weak import numbers yet and I would have expected them to dampen prices," she said. "Easing Chinese imports will be an obstacle for prices in the short term. The market is running ahead of itself and there is reason to expect a pullback."
Apparent demand for refined copper fell 20 percent in October to just over 544,000 tonnes Reuters calculations based on the official data showed. Consumption in the first ten months rose 45.6 percent to just over 6 million tonnes, about a third of estimated annual output globally. The calculations do not take into account stockpiling outside exchange warehouses, for example by the State Reserves Bureau or merchants, which traders estimated at anywhere between 500,000 and 1.2 million tonnes.
"People had been expecting a slowing in Chinese imports. Fixed asset investment has held up well but there is some evidence the stimulus effect is less than it was mid-year," said Ben Westmore, commodities economist at National Australia Bank. "Given that the money went to commodity-intensive sectors, it's not surprising to see slowing demand, but I don't see any deep declines in imports."
HOLIDAY RUSH The falls in October may also have been exaggerated by a 28.7 percent surge in September imports as buyers tried to rush material in before week-long National Day holidays that started on October 1. "If you average out both months you get something like 225,000 tonnes - in line with August's imports. I don't read too much into the fall," a dealer in Sydney said. China imported 219,731 tonnes of copper cathode in August.
High inventories as well as unfavourable prices within China have deterred some spot imports and boosted outward flows which totalled 18,505 tonnes in October, the highest since August 2008. "There is talk that we could see more metal leaving China before the end of the year," the trader said. "Some of the people holding copper in bonded warehouses in Shanghai want to move the metal out to deliver to the London Metal Exchange and take advantage of the price rises since they bought it."