ROI-China's copper import slump marks a shift in market power: Andy Home

By Andy Home

LONDON, April 9 (Reuters) - A two-week ceasefire in the Iran war has dispersed some of the macroeconomic gloom enveloping the copper market, but there may be an even bigger problem for copper bulls.

China, the world's largest user of the metal, has demonstrated it is not prepared to pay for physical metal at the sort of elevated prices seen in January, when London Metal Exchange (LME) three-month copper CMCU3 jumped to an all-time nominal high of $14,527.50 per metric ton.

The country's net imports of refined copper slumped to 125,350 tons in February, the lowest monthly tally since April 2011, according to the World Bureau of Metal Statistics, which collates trade data from official customs figures.

This is a natural buyer reaction to high pricing in any commodity, but China's leverage over copper pricing is steadily increasing, thanks to the country's rising domestic production capacity.

IMPORT SLUMP, EXPORT SURGE

China's imports of copper have been decelerating since September, when the LME copper price first broke the $10,000 level and started building towards its January peak.

Inbound shipments slowed further to 454,000 tons in the first two months of 2026, a 25% drop relative to the same period of 2025.

At the same time, Chinese smelters have been stepping up exports into the price strength. Outbound shipments jumped to 172,000 tons in January-February from 49,000 tons in the same period of last year.

China's net draw on copper from the rest of the world was just 283,000 tons in January and February combined, the weakest start of any year since 2006.

Some exports, particularly those to Europe and the U.S., have likely come from China's bonded warehouse stocks as traders filled supply-chain gaps left by last year's U.S. tariff trade, which sucked metal into the United States.

But Chinese metal has been flowing straight to LME warehouses in South Korea and Taiwan as well.

The amount of Chinese-brand copper on LME warrant grew from 87,475 tons at the end of December to 155,600 tons at the end of February, according to the LME's monthly report.

Indeed, the big shifts in China's copper trade go a long way to explaining why LME stocks of 385,275 tons are now above their 2018 peak and back at levels last seen in 2013.

HOLIDAY HIGH

What's remarkable, given the sharp drop in imports, is the scale of the seasonal build in Chinese domestic copper stocks this year.

Shanghai Futures Exchange (ShFE) inventory always rises around the Lunar New Year holiday period but this year's increase was much more pronounced than usual.

Exchange stocks peaked at 433,500 tons in early March, compared with a holiday high of 268,300 tons last year. The previous seasonal record was 380,000 tons in 2020, when the holidays coincided with COVID-19 lockdowns in China.

Chinese buyers are now back in the game and ShFE stocks have fallen to 301,000 tons. But that's still a lot of metal to get through before turning to imports.

The Yangshan copper premium SMM-CUYP-CN, a closely watched indicator of spot demand for imported units, has had its usual post-holiday bounce.

Local data provider Shanghai Metal Market assesses the premium over the LME base price at $65 per ton, up from $20 in January, but some way off the $89 trading this time last year.

Chinese manufacturing activity has been expanding for four straight months but the impact on the copper market has been mitigated by high inventory cover.

GROWING POWER

China's growing resilience to high pricing is predicated on the continuing expansion of domestic smelting capacity.

The country's output of refined copper grew by 9% year-on-year in 2025, translating into an extra million tons of metal, according to Macquarie Bank.

Chinese smelters have consistently outbid Western peers to secure raw material in a tight copper concentrates market.

Macquarie estimates that global mined production grew by a modest 1.8% year-on-year in 2025. Yet China's imports of copper concentrate increased by 7.8% over the same period.

Imports of recyclable copper - another potential refinery feedstock - rose by 4% year-on-year.

China's ability to secure sufficient raw materials to fuel its rising self-sufficiency in refined copper has come at a cost for everyone else. Western smelter production shrank by 5.1% in 2025, according to Macquarie.

This ongoing shift in production power enhances China's ability to resist higher prices, both by being able to scale down imports and to scale up exports.

If the Iran war really does de-escalate, the copper bulls will be back in full cry. But don't expect China to perform to bull script.

(The opinions expressed here are those of Andy Home, a columnist for Reuters.)

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