8 Aug

China’s July Copper Imports: What They Mean for Freeport-McMoRan

WRITTEN BY Mohit Oberoi, CFA

China’s July copper imports

China isn’t self-sufficient when it comes to its copper needs and is the largest importer of the red metal. Miners (GNR) such as Freeport-McMoRan (FCX) and BHP Billiton (BHP) depend on Chinese metal demand. To cater to China’s copper demand, Rio Tinto (RIO) is expanding the Oyu Tolgoi mine (TRQ) in Mongolia.

China’s July Copper Imports: What They Mean for Freeport-McMoRan

Imports rise year-over-year

In July, China imported 360,000 metric tons of unwrought copper and copper products. That was a YoY (year-over-year) increase of only 3.4%. However, imports declined on a monthly basis. Notably, this is the fourth consecutive month in which imports have fallen on a monthly basis. Furthermore, July imports are at their lowest level since August 2015.

Imports of copper ores and concentrates, which are processed in China, stood at ~1.4 million metric tons in July. Imports have risen more than 42% YoY. On a year-to-date basis, copper concentrate imports have increased ~35%.

What do these figures mean?

We should remember that the increase in Chinese copper imports earlier this year wasn’t exactly backed by end user demand. Eventually, some of the Chinese refined copper imports found their way into the SHFE (Shanghai Futures Exchange). As a result, SHFE copper inventories rose to record highs.

As China’s refined copper imports started to taper down in April, we saw big drawdowns in the SHFE copper inventory. It has fallen ~230,000 metric tons since mid-March.


The current levels of copper imports look more in line with the real demand in the Chinese economy. Meanwhile, Goldman Sachs, which is bearish on base metals, is projecting a “supply storm” in the coming months.

Copper prices could come under pressure if Chinese demand does not pick up and we see an increase in supply, as Goldman Sachs is forecasting. Copper producers such as Freeport-McMoRan could feel the heat if copper prices fall.

That said, Goldman Sach’s projection of massive aluminum overproduction in 2016 hasn’t materialized. On the contrary, aluminum markets were in a record deficit in 1H16.

You can read Why Copper’s Fundamentals Are Different from Steel and Aluminum to explore copper’s long- and short-term outlook.

You can also visit our Copper page for more updates on Freeport-McMoRan.

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