China copper imports likely to surpass output

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    China copper imports likely to surpass output

    By: Reuters

    17th April 2009

    TEXT SIZE HONG KONG - Large copper shipments into China last month are likely to have pushed record imports above China's own production for the first time, as local smelters failed to produce enough to satisfy government buying.

    China has filled a vacuum in world metals demand by buying metals to prop up its own ailing smelters. Although global demand has collapsed and China is a major copper producer, as well as the top maker of aluminium, lead and zinc, it has attracted a flood of metals in recent months.

    But last month China's refined copper output slipped 0,2 percent from February's three-month high to 319 400 t as producers ran short of copper scrap, a raw material, and smelters held back from full production because of weak demand.

    "The main issue for eased copper production is that industrial demand has not recovered," said Zhu Yanzhong, an analyst at Jinrui Futures, a subsidiary of top producer, Jiangxi Copper.

    March refined copper imports, due to be released next week, are expected to make up 320,000 tonnes of a total 374,957 tonnes of unwrought copper and semi-finished products, traders estimated. And April may bring yet more.

    "The tightness in scrap is not going to ease soon, and that may make April's imports bigger than output again," said Jing Chuan, chief researcher at Great Wall Futures in Shanghai.

    Output could rise too, by 10 000 tonnes more this month, as Yunnan Copper is gearing up output, Zhu predicted.

    An official at Yunnan said production would rise gradually from April as prices rose. It had slashed output due to weak demand, with March's 19 400 t and February's 18 500 t far below a typical 30 000 t a month in 2008.

    Jiangxi Copper's March output fell to 61 700 tonnes from 63 400 t in February, while Jinchuan Group's production fell to 27 200 t from 34 800 t, more than offsetting an increase at No. 2 producer Tongling Nonferrous, which raised production from 51 300 tonnes to 56 700 tonnes.

    Local and central governments have asked smelters to resume idle production to help the economy -- China's growth slowed to 6,1 percent in the first quarter -- and Zhu said that would spure output of base metals in coming months, including copper.

    Restarts of idle plants also added 1 percent to primary aluminium output in March but, at 902 300 tonnes, that was still 16 percent down from a year before.

    "Output will surge a lot in May and June," said a trading manager at a large aluminium smelter.


    Lead and zinc output rose much more strongly, with refined zinc output up 30 percent on the month and 8 percent on the year at 344 200 tonnes, the highest since October last year, data from China's Statistics Bureau showed on Friday.

    Lead output surged 64 percent on the month and 46 percent from a year earlier to a five-month high of 335 200 tonnes.

    "All the idle capacity restarted, though demand has fallen a lot from a year ago," said Wang Jianjun, head of international trade at top zinc producer, Zhuzhou Smelter, which also runs a 100 000-ton-per-year lead smelter.

    He estimated refined zinc imports had reached the 100,000 tonne mark last month, a third more than in February.

    "The world is putting hope on China's demand. But China now is seriously oversupplied due to the restarts and imports," Wang said. He expected international zinc prices to fall to the $1 000 level as early in May, from $1 495 per ton on Friday.

    In March, some lead smelters also restarted capacity that was shut in late 2008 after local governments asked them to help the local economy and to steady prices, smelter officials said.

    Nickel production fell to 16,063 tonnes in March from 17 073 tons in February, partly due to repairs at Jinchuan, industry sources said. Tin output leapt 134 percent on the month to 10 614 ton in March, after top producer Yunnan Tin restarted all production capacity.

    Edited by: Reuters

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