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Metal Miner

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China's Manufacturing Slowdown Hits Global Copper Prices

  • In the first half of 2023, China registered a 12% drop in refined copper imports compared to the previous year, the lowest since 2019.
  • Elevated global copper prices and reduced demand within China's economy have contributed to the decline.
  • Despite the drop in refined copper imports, China continues to see an increase in copper raw material imports, reflecting a surge in domestic refined metal production.
Copper

Via Metal Miner

In the first half of 2023, China’s intake of refined copper saw the biggest drop in four years. The news underscores the current deceleration of the nation’s manufacturing sphere. China is one of the world’s largest buyers of refined copper. Still, it seems the country’s appetite for imports is waning. According to a report by Reuters, this not only casts doubt on China’s ongoing recovery from COVID-19 , but on the future of global copper prices as well, most of which are featured on MetalMiner Insights.

The slide in copper imports also continued through July. According to recent customs data, China registered a 2.7% decline in copper imports last month as compared to the previous year. The General Administration of Customs indicated that the July import volume of unwrought copper and copper products amounted to 451,159 metric tons.

Analysts attribute this reduction to lackluster demand within the struggling economy and elevated global copper prices. Meanwhile, China’s overall manufacturing activity also contracted for the fourth consecutive month in July. Moreover, its industrial profits extended this year’s double-digit pace of declines into a sixth month, hammering copper demand.

China’s Appetite for Copper Continues Dependent on Type

Experts following the China copper situation believe the market requires a governmental stimulus to recover. Indeed, many see this as the only way to invigorate internal demand and counterbalance feeble export markets. But on the other side, copper raw material imports continue to pour into China, spurring unparalleled domestic refined metal production, as covered in MetalMiner’s Monthly Metals Outlook report. And though China continued to import surplus Russian aluminum, the copper import dynamics remain unchanged since Russia began its invasion of Ukraine in February 2022.

At the start of this year, China procured 1.65 million metric tons of refined copper, registering a 12% contraction compared to the corresponding period of the previous year. This also marked the lowest first-half import level since 2019. Meanwhile, the net import gauge dwindled by 13% year-on-year to 1.48 million metric tons.

China’s inbound shipment of refined copper from Russia receded by 20% in 2022. This has thus far dropped an additional 10% in 2023. In short: while China’s imports of refined copper continues to fall, the import of copper raw materials continue to move in the opposite direction. That said, the import patterns of refined copper from both Russia and Congo have shown minimal alterations. 

Copper Prices Decline on China News

The reports of reduced demand were partially responsible for a decline in copper prices earlier this week (get weekly updates in MetalMiner’s free weekly newsletter). Indeed, three-month futures for copper at the London Metals Exchange decreased by 0.7%, settling at $8,511.50 per ton. Similarly, the September futures for copper at the Shanghai Futures Exchange displayed a 0.5% dip, reaching 68,930 yuan per ton.

Analysts say traders continue to exercise caution regarding the demand for metals in China, as recent stimulus efforts had yet to significantly impact growth. Meanwhile, the Shanghai metals projects that refined copper production will hit a record high in August, at 986,100 tons. Over at the London Metals Exchange, aluminum also underwent a 0.4% decline, settling at $2,224.5 per ton.

By Sohrab Darabshaw 

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