Weak demand pushes up China's copper stocks at bonded wareWeak demand pushes up China's copper stocks at bonded warehouses
Lackluster domestic demand was driving up copper inventories at Chinese bonded warehouses, industry observers said Friday. And this at a time when traditionally it is a boom time for copper sales in China.
In its commodities report issued Friday, Huaxin Futures referred to Macquarie Bank's report saying that as of the end of February, China's bonded copper stocks hit 750,000 mt, up 50% from January.
"So far this year, we haven't done any copper trades. Due to weak demand, a lot of copper stocks are lying idle in China," a South China-based trader said. "Due to the lack of copper business opportunities, we're now looking to trade in other products."
In southwestern China, a copper trader with a smelter, said: "Due to poor market sentiment, Chinese smelters send their cargoes to the warehouses in various cities, such as Tianjin, Shanghai and Guangzhou, instead of selling in the domestic market."
She noted that although March-June was usually boom buying season for copper in China, current consumption by the downstream processing sector was low.
"A lot of Chinese copper demand is from the collateralized borrowing sector, instead of from the downstream processing sector," the trader from southwestern China said.
Meanwhile, although industry analysts have said that China might export some of its surplus copper in the coming months, the trader said that this would depend on the gap between London Metal Exchange and Shanghai Futures Exchange prices.
In its 2014 forecast issued in October last year, Chinese metals consultancy Beijing Antaike said that although the economy had improved, export demand was expected to stay poor. It forecast China's 2014 copper consumption to grow 6.5% year on year to 8.7 million mt.
Hong Kong Mar 7, 2014
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