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The International Wrought Copper Council (IWCC) expects the growth rate for copper demand in China to fall from a double digit increase in 2010 to 7% this year. The council also said that the short term demand outlook was unclear due to the influence of high copper prices on end-user inventory levels. Furthermore, the IWCC commented that some industry participants see shrinking stock levels at the Shanghai Futures Exchange (SHFE) as a sign of increasing Chinese demand, while others believe that it is indicative of China's rising export levels. SHFE stocks contracted to 82,309t, down 54% from a peak level of 177,365t in March.

Aluminium prices at LME and SHFE have stopped slumping at a low level since mid October, after major aluminium enterprises reduced production on the market downturn. Under the current economic recession and financial crisis, outputcut is not big enough to reverse the situation of surplus supply, said market analysts here, adding that it is hard to improve aluminium price in a short period. Currently, the whole aluminium industry is losing money

The Shanghai Futures Exchange announced that it will begin delivery of copper and aluminium futures contracts at warehouses at Yangshan port. Settlement will be in RMB without tax and that will reflect international prices. The Shanghai Yangshan port bonded zone has been approved by the State Council and was officially put in operation on 10th December. The area is also home to a number of trading houses and logistics companies.

According to Chinese customs figures, imports of copper reached 508,942t in December, up 18% m-o-m. This is the seventh consecutive month which saw a m-o-m increase in the level of copper imports. The growth has been accredited to the arbitrage between the LME and the SHFE. Nevertheless, China's total imports of copper in 2011 were down 5.1% y-o-y, reaching 4.07Mt.

According to the General Administration of Customs, Chinese imports of copper and copper products registered a 6.7% y-o-y and 2.0% m-o-m decline to 344,558t in December 2010. The November figure had seen a 21% y-o-y increase. The fall in imports is partially attributed to soaring copper prices, which discouraged downstream buyers from stocking copper. In addition, the negative arbitrage window between SHFE and LME did not trigger Chinese imports. However, imports may rebound in Q1 2011 on anticipation of increased domestic demand after the Chinese New Year.

Figures released by the General Administration of Customs indicate that Chinese imports of refined copper rose by 8.8% m-o-m in July to reach this year's monthly peak level of 192kt. However, July's imports still represent a decline of 13.5% y-o-y and a year-to-date contraction of 30%. The month on month rise is attributed to the favourable SHFE/LME arbitrage during May and June. However, it remains to be seen whether the import figure indicates stronger Chinese copper consumer demand. Imports of copper scrap rose to 432kt in July, up by 14.2% y-o-y, which brought the total year-to-date figure up to 2.63Mt, up by 9.1% y-o-y.

Figures released by the General Administration of Customs indicate that total imports of copper blister, cathode, alloys and semis amounted to 280kt, down by 15% y-o-y but up sequentially by 9.9% in June 2011. Over the period from January to June 2011, copper imports contracted to 1.7Mt, down by 24% y-o-y. The rise in copper imports over the previous month is thought to be attributed to a narrowing price gap between the SHFE and LME cathode spot markets as well as the use of copper imports as collateral for credit.