China imported 379,000 mt refined copper in February, down 29% from January but up 27% from February 2013, General Administration of Customs data released Monday showed.
Industry analysts Tuesday attributed the month-on-month fall to currency devaluation and a narrowing gap between London Metal Exchange and Shanghai Futures Stock Exchange copper prices.
China's currency stood at Yuan 6.145 to the US dollar at end February, up from Yuan 6.05 at the start of January.
The LME official cash price for copper stood at $7,097-7,097.50/mt February 28, while the Shanghai Changjiang Nonferrous Metals Market averaged Yuan 50,395/mt ($8,214/mt). On January 2, the LME had stood at $7,439.00- 7,439.50/mt and the Shanghai price at Yuan 51,399/mt ($8,377/mt).
"The losses derived from the imported copper trade widened in February, discouraging imports," a copper trader in southwest China said. "Demand by the downstream copper processing sector hasn't been very good," she added.
Other market participants said the narrowing gap between LME and SHFE copper prices was increasing losses for Chinese importers.
China's copper imports incurred a loss of Yuan 1,470/mt ($240/mt) in mid-February, Star Futures said in a commodity report at the time, up from an average loss of Yuan 1,274/mt in January, according to another industry source.
"The weaker Renminbi has resulted in more risks in hedging, cutting February import volumes," said Jack Yeung, business professor at the City University of Hong Kong.
"China's structural reform has advocated retaining the bigger enterprises while eliminating the smaller ones and letting them go bankrupt or merge. This, plus the tightening monetary reins, has discouraged copper import trading by the collateralized borrowing sector," he said. "Chinese economic growth is slowing down as the country stresses structural reform instead of GDP growth."
Chinese metals consultancy Beijing Antaike last October forecast China's refined copper imports were unlikely to rise in 2014 as domestic copper output growth would outpace the anticipated rise in domestic consumption.
Antaike forecast China's domestic refined copper output to rise 7.4% year on year to 6.8 million mt in 2014, and its refined copper consumption to rise 6.5% to 8.7 million mt.
