uploads/2016/09/part-6-copper-1-1.png

What China’s Falling Copper Imports Mean for Freeport-McMoRan

By

Updated

China’s copper imports

China isn’t self-sufficient when it comes to its copper needs. It’s the largest copper importer. While copper mining is concentrated in Latin America (ILF), more than half of the world’s copper is consumed in Asia. China is the largest importer of copper ores, anodes, and refined copper. Miners 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.

Article continues below advertisement

Imports fall

In August, China imported 350,000 metric tons of unwrought copper and copper products. This is similar to the imports in the same month last year. However, imports fell on a monthly basis. Notably, this is the fifth consecutive month that imports have fallen on a monthly basis. Also, imports in August are at a one-year low. Falling Chinese imports are negative for copper miners like Freeport.

More concentrate imports

Imports of copper ores and concentrates, which are processed in China, stood at ~1.45 million metric tons in August. Imports have risen more than 25.9% YoY. On a year-to-date basis, copper concentrate imports have increased ~34%. It’s important to note that China’s copper smelting and refining capacity has expanded at a fast pace in the last decade. As a result, the country imports large amounts of concentrates. It processes the concentrates domestically. This helps job creation in China.

Indonesia is also asking copper producers to construct smelters in the country. Freeport’s Indonesia operations have been negatively impacted due to frequent changes in the country’s mining laws. You can read What Issues Does Freeport Face in Indonesia? to explore this more.

In the next part, we’ll see how falling Chinese copper imports impact global inventories.

Advertisement

More From Market Realist