China's strong metal imports not as bullish as they seem: Andy Home
By Andy Home
LONDON (Reuters) — China's appetite for base metal imports appears to be growing.
Refined copper volumes hit a year-to-date monthly high in August and primary aluminium imports were the highest since November 2021.
The country has also fully reverted to being a net importer of unwrought zinc after flipping to net exporter in 2022.
Rising imports are flowing through an open arbitrage window resulting from Shanghai Futures Exchange (ShFE) prices outperforming the London Metal Exchange (LME).
While LME forward curves are in contango, cash is commanding a premium in Shanghai due to low visible exchange inventory.
Higher imports would seem to fit the bullish narrative that the Chinese government's piecemeal stimulus programme is gaining traction and the world's largest buyer is recovering its metallic mojo.
However, robust copper and aluminium imports come with important caveats and the broader metals trade picture is far more mixed.
FROM RUSSIA WITH LOVE
China's imports of primary aluminium surged to a near two-year high of 153,000 metric tons in August, bringing the year-to-date count to 755,000 metric tons. Last year's equivalent tally was just 298,000 metric tons.
However, just about all the metal being imported is Russian-brand. Imports of Russian aluminium accounted for 87% of the total in the first eight months of 2023.
Is the headline acceleration in imports down to demand pull or supply push?
Russian aluminium is not officially sanctioned but the U.S. market has been effectively closed by penal 200% import duties and many Western consumers are self-sanctioning by opting for different origin metal.
China is clearly soaking up a large part of this displaced metal and it appears to be doing so at
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