Construction demand fuels Chinese imports

China, the world's biggest consumer of copper, more than doubled imports of the metal in March as the peak demand period for the construction industry began.

Imports of refined copper and alloys rose to 208,014 tonnes, 142 per cent more than a year earlier, according to data issued by the Beijing-based customs office today. That's the highest since at least January 2004, according to Bloomberg data.

China's year-on-year imports of copper, used in electrical wiring and pipes, have risen every month since December, as the country stopped running down its domestic stockpiles. The price of copper has gained 26 per cent so far this year.

"The high level of refined copper imports was expected, reflecting rising seasonal demand and high profitability of importing in the past months,'' said Wang Xiaodan, an analyst at Minmetals Star Futures Co.

Demand for refined copper in China may rise 10 per cent this year, faster than in 2006, as the nation builds more electricity generation capacity, according to CRU International.

Imports of copper concentrate rose 2.3 per cent to 313,407 tonnes last month, the customs' statement said. Exports of refined copper and alloys fell 93 per cent to 3,097 tonnes, it said.

China may slash imports of the metal by half from April and throughout the second quarter because of soaring prices, said traders and analysts, including Li Zhifeng at China Minmetals Nonferrous Metals Co.

Traders in China increased imports in the first quarter as the ratio of domestic prices to the London Metal Exchange global benchmark made it profitable. The ratio, which was around 9.5 in February, fell as low as 8.8 in early April and stood at less than 9 on April 20.

For imports from Chile, where a free trade agreement allows exemption from import duty, a reading above 9.2 indicates profitability. For other countries, a reading above 9.4 is conducive to imports.

China may consume 4.3 million tonnes of copper, mainly to meet power industry demand, compared with 3.9 million tonnes last year, London-based metals consulting CRU said on April 17.

The country's output of copper fell 2.5 per cent to 220,000 tonnes in March and gained 4.2 per cent to 702,000 tonnes in the first quarter, according to data from the National Bureau of Statistics issued on April 20.

Copper stockpiles monitored by the Shanghai Futures Exchange rose 10 per cent last week to 67,016 tonnes. Stockpiles of the rival lightweight metal aluminium fell 21 per cent to 61,644 tonnes.