China's copper imports are likely to rise in the H2 of 2011 after a fall in past months as the country uses up its domestic stocks.

A breakdown of the May data by the General Administration of Customs showed that imports into the world's top copper buyer in May fell to 149,235 tonnes from April's 160,236 tonnes and by 46.7% from May 2010.

Aurubis said that Chinese copper demand has been met by stocks in warehouses. The level of Chinese copper stocks had now been heavily run down by recent consumption. A level has been reached that makes an increase possible in the H2 2011.

China's May industrial production was also strong. This is considered an indication of good copper demand. The global copper market is also facing disruption from tight electricity supplies in some Asian countries. Energy scarcity has become a significant risk factor. If there should be large scale shortages in the electricity supply in a copper producing country it is highly likely that copper production will also suffer.

Aurubis said that there is a threat of a severe electricity shortage in Japan in the summer, as some local governments are resisting the restart of nuclear power plants following the earthquake disaster in March. Some Japanese copper smelters are close to Japanese regions where major cuts in electricity consumption are being called for.

Energy shortages could thus further increase the loss of volumes in Japan resulting from the earthquake. China is currently experiencing the worst energy shortage in a long time. Because of an extreme drought, there is a special lack of hydropower, which makes up a fifth of the country's energy supply.

Aurubis said that spot copper treatment and refining charges fees paid to smelters by mines and traders to refine copper concentrate into new metal have remained stable in the past month. Spot market TC and RCs are little changed from their levels in mid May at about USD 100 per tonne and 10 cents per lb but are showing a firm trend.

Spot TC and RCs had risen to USD 120 per tonne and 12 cents a pound because of the Japanese earthquake in March which damaged some Japanese smelters from USD 80 per tonne and 8 cents a pound before the disaster. The spot market for copper concentrates barely shows any activity. The smelters are well supplied into the third quarter and are largely accepting only TC and RCs over USD 100 tonne and 10 cents a pound.

For copper scrap, Europe is still the region with the best supply. But scrap copper availability has diminished somewhat due partly to Chinese purchasing. European demand for copper products has temporarily decreased slightly owing to seasonal factors but still remains at a high level.

Source: Reuters