Copper price jumps as Chinese imports surge

Copper rebounded on Friday after a recovery in Chinese metal imports suggested that the country’s manufacturing and construction sectors may emerge from the Covid-19 slump faster than expected.

Copper trading in New York rose more than 2% in early afternoon trading to $ 2.43 a pound ($ 5,355 a tonne) and closed at an eight-week high. Bellwether metal briefly traded below $ 2.00 in March, which was most recently during the global financial crisis of 2008-2009, but has now recovered more than 20%.

Customs data released on Thursday showed that China’s refined copper imports rose 14% yoy in April to just under 442,000 tonnes as factories and construction continue to grow.

Copper imports rose 10.4% in the first four months of the year. This has also benefited from inventory reduction in warehouses monitored by the Shanghai Futures Exchange and arbitrage opportunities for traders between LME and SHFE prices.

China consumes more than half of the world’s copper, and last year the cargoes totaled just under 5 million tons, a decrease of 6% from a record high of 5.3 million tons in 2018.

Imports of copper concentrate recovered in April and only exceeded 2 million tons for the third time. Freight costs for the month rose 22.5% year-on-year as deliveries from South America recovered after production stops and logistics problems.

In the first four months of 2020, imports totaled 7.58 million tons, topping the previous year’s record figure of 22 million tons.

Argonaut Securities analyst Helen Lau told Reuters there may be supply issues for copper concentrates as Chinese demand grows:

“Smelting facilities in South America and Africa will be affected by the pandemic, so certainly I think going forward, demand in China will continue to improve but there will be some supply risk for unwrought copper as well as for concentrate.”