Barclays: China’s Feb. Copper Imports Hit Second-Highest Level Ever

Preliminary Chinese data for February showed a strong rebound in unwrought copper imports to the second highest level on record at 484,569 metric tons, says Barclays Capital. The monthly increase of 17% came as a surprise given weakness in physical indicators, Barclays says. “There are many theories in the market as to why February’s imports were so strong, including financing deals and arrival of delayed shipments. But looking forward, what’s most important is putting these volumes into perspective. Certainly the percentage increase in imports in February is large and suggests there has been another build in merchant/bonded warehouse stocks. But when looked at in the context of a longer period to try and smooth out month-to-month volatility, the increase is a much more sedate 5%.” Barclays says the most recent restocking took place “at far higher price levels than we have ever seen.” The bank believes overall Chinese inventories are still below year-ago levels, with metal held by end-users still low. “So what does this mean going forward? Certainly it is normal for cathode inventory to build at this time of year and because the level of Chinese demand is higher, the amount of inventory needed for the market to function efficiently has also gone up,” Barclays says. The key is the impact of the stock build on future imports, which in turn will depend on second-quarter end-use demand. “Interestingly, there was also a strong rebound in copper scrap imports to 400Kt, up 74% m/m and 60% y/y, which are not typically used for import financing,” Barclays notes.


Source:Kitco