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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.

Despite the small drop in March copper imports, overall imports of copper to China remain at a high level. This may seem somewhat surprising in the light of the deeply unfavourable arbitrage, a deteriorating short-term consumption outlook and high inventory levels. CRU suggests that much of the material is imported by traders into bonded warehouses, who may be using copper as a financing mechanism to take advantage of arbitrage opportunities in other markets, such as in the RMB and interest rates. Bonded warehouses allow traders to easily re-export material out of China without incurring major costs, such as VAT. This allows them to take swift aversive action in case the outlook on Chinese consumption weakens further, while benefitting from the export-friendly arbitrage window. The slower growth in scrap imports is more reflective of the negative arbitrage and the temporary easing of the concentrates market following outages at PASAR's Leyte smelter and PPC's Saganoseki smelter.

"Copper is losing about 2 percent a year of demand to less costly materials such as aluminum, or about 500,000 tons, London-based researcher CRU estimates. Aluminum is a third the cost of copper and supplies of aluminum in warehouses monitored by the London Metal Exchange are almost 12 times higher."

Aluminum may have been responding to two different events in the week ending July 11 when it hit a succession of all-time price highs , but the market remains divided over the medium-term direction, given that world fundamentals point to weak demand and rising stock levels. \n\nFundamentally, however, analysts and market players were mixed in their impressions of whether the price could be sustained, especially as word emerged from China that the cuts may not be a certainty. \n\nAluminum finished floor trade for the week at $3,318/mt, up $150 from the July 4 closing price of $3,168. Fundamentally, however, analysts and market players were mixed in their impressions of whether the price could be sustained, especially as word emerged from China that the cuts may not be a certainty. \n\nPointed out a US broker, "When you hear producers [in China] are shutting production because demand is weak, that's normally bearish," yet the market saw "insane" price moves. "I hear metal just continues to pour into warehouses, and not all of it reported, obviously, [since] otherwise you'd see it in the stock numbers. A lot is going off warrant," he pointed out. \n\n\n

"There's nothing going on. People have stopped buying and it doesn't look any better for the first part of next year either," said a physical trader. "People don't want to carry too much stock over the year-end but they don't have a lot of choice because of the turndown in demand. If people have got metal the best thing they can do is dump it on warrant and get paid by the warehouses," he said.

China's imports of unwrought copper and semi-copper products were down almost 13% month on month in June and by 18% year on year. This downturn in imports is said to have been expected, as June is traditionally a slower month for copper consumption. It does not therefore necessarily mean a downturn in Chinese demand especially as China has been importing increasing amounts of copper concentrates and scrap over the past few months. Over 1.3 million tonnes of unwrought copper and semi-copper products were imported to China in the first six months of 2008, a year on year decrease of 12%. It is believed that stocks have built up in warehouses following too many imports in 2007. Chinese copper imports are however expected to recover towards the end of July and August and will be assisted also by the running down of the built up stocks in the warehouses.

When Southern California Edison unveiled plans to install 250 megawatts' worth of solar panels on warehouse roofs back in March, it was hailed as a ground-breaking move. In one fell swoop, the giant utility would cut the cost of photovoltaic power, expand the solar market and kick-start efforts to transform untold acres of sun-baked commercial roof space into mini-power plants. There's just one problem: the solar industry is fighting the billion-dollar plan. In briefs filed with the California Public Utilities Commission, solar companies, industry trade groups and consumer advocates argue that allowing a utility to own and operate such massive green megawattage will crowd out competitors who can't hope to compete with a project financed by Edison's ratepayers. (In California, shareholders of investor-owned utilities are guaranteed a rate of return for approved projects, while utility customers bear a portion of the costs in the form of higher rates.) The five-year plan "would establish SCE as the monopoly developer of commercial-scale distributed solar in its service territory," wrote Arno Harris, CEO of Recurrent Energy, a San Francisco company that sells solar electricity to commercial customers. "This would irreparably impair the development of a competitive solar industry."

According to data from Chinese Customs, Chinese final imports of refined copper totalled 238,828t in December, a fall of 4 7% m-o-m from November, and the second lowest reading of 2012. Despite this, full-year imports of refined copper in 2012 surged to their highest year on record, at 3.4Mt, as a result of the large volumes of copper being imported on long term contracts in 2012. While the pickup in imports of refined copper was strong in 2012, demand from downstream users did not match the pickup in imports. According to a report from Reuters, this has resulted in large amounts of cathode sitting in bonded warehouses rather than being absorbed by the domestic market.

Copper and Brass Servicenter Association (CBSA) reported shipments increased by 1.5% month-on-month in July. The association said the increase was a surprise as July shipments historically follow the trend of the previous month. In July, copper and copper alloy shipments decreased by 2.8% year-on-year while average daily shipping rate went down by 7.2%. Total warehouse inventories dropped by 2.8%. The association also said that it is getting more difficult to search for 'positive economic news' as the months go by.

It is believed that a cash crunch is reducing orders in the Chinese power sector, which accounts for 60% of the country's copper demand. Analysts predicted strong copper demand in H1 as the country was eager to repair the damages to power networks caused by the heavy snow in the early part of the year. However, repairs have so far mainly been made to aluminium and fibre-optic cables. Cash flow problems at copper rod and wire plants have occurred following the government's tight credit policy and high copper prices. Some 30% of copper wirerod production capacity is being reported idle. The cash shortages have also delayed copper buying from active copper fabricators, further dampening consumption of the metal. China, a net importer of copper, exported 31,000 tonnes of refined copper in April, up 227% year-on-year, with the possibility that the country might have been re-exporting the metal since late February. China's General Administration of Customs reported that 14,000 tonnes were exported to South Korea, six times that from the same period last year. This perhaps confirms that traders were re-exporting copper it has imported to LME-approved warehouses to take advantage of the discount between Shanghai and LME copper prices.

Neans focuses on "priority markets"

In the past few days world leading cablemaker Nexans has announced one acquisition, one new joint venture and one asset disposal. On the 30th May, Nexans acquired Intercond a leading Italian manufacturer of special cables for industrial equipment and subsea applications. The company had sales of €90m and employs 150. "This [€90m] acquisition fits totally in the Group's strategy by increasing the proportion of its business in high value-added special cables", said Gerard Hauser, Chairman and CEO of Nexans. On the 2nd June, Nexans released a press report confirming that it has formed a joint venture to create a wire and cable plant in Qatar, the country's first manufacturing facility. Qatar International Cable Company (QICC) is owned 29% by Nexans with the balance being owned by Special Projects Company and Al Neama Industrial Co. The new plant in the industrial city of Mesaleed, 40km from Doha, and will employ 210 people. By the end of 2009 it will begin manufacturing low and medium voltage cables for buildings and energy infrastructure as well as special cables for the oil and gas industry. This JV will generate sales of $150m per year by 2010 at current copper prices. Finally, Nexans confirmed that it has completed the pre-announced sale of its copper telecom cable plant at Santander in Spain to the British company B3 Cable Solutions for €17m. These three actions continue to refocus the group's strategy on priority market segments.

According to data released by the General Administration of Customs, Chinese imports of unwrought copper and copper semi-finished products declined by 20.9% m-o-m to 292,096 tonnes in January. It was reported that traders turned to material in bonded warehouses to satisfy local demand. The figure was far lower than earlier expectations and reversed December's rise, which amounted to 27% m-o-m.

Chinese imports of copper and copper semis contracted by 36% m-o-m to 235,500t in February 2011, according to customs statistics. The figure was also down by 27% from the same period a year ago. It was reported that utilisation rates of copper semis makers declined after the Chinese New Year, and therefore copper consumption fell. In addition, some semis fabricators had built stock before the festive season, which impacted imports in February. On anticipation of surging copper prices, imports were very strong in January and that led to high inventory levels in Shanghai bonded warehouses.

According to Aurubis, Chinese copper imports may increase in H2 2011, after the decline seen in H1. May imports contracted to 149,235t in May 2011 from 160,236t in the previous month. The figure was also down by 46.7% from the same period a year ago. Aurubis commented that Chinese copper demand was met by stocks in warehouses, which have been heavily down due to recent consumption. The European copper producer said that the fact that Chinese IP in May was strong is an indication of strong copper demand.