Industrial metals: China's copper imports continue to weaken in July

Industrial metals prices also came under pressure due to the firmer US dollar on Friday (see precious metals). This morning, Chinese import data released over the weekend weighed additionally on prices. A ton of copper at times cost less than USD 9,400, nickel slipped below USD 19,000 per ton. China's customs authority, for example, reported that according to initial data, copper imports in July fell month-on-month for the fourth month in a row. At just over 424 thousand tons, imports of unprocessed copper and copper products were just under 1% below the previous month. However, the decline was not really surprising, as the high prices of recent weeks and the sales from state reserves have slowed the demand for imports. Price support was provided by the faltering wage negotiations in the world's largest copper mine Escondida in Chile, which is responsible for about 5% of world production. After months of negotiations, an agreed mediation phase ends today, which could either be extended or result in a strike.

Chinese iron ore imports, on the other hand, weighed more heavily: they also fell for the fourth month in succession in July and at 88.5 million tons were down a further 1% on the previous month. As a result, the most heavily traded forward contract for iron ore on the DCE fell to a 4-month low of CNY 845 per ton (equivalent to USD 131.7 per ton), and that in Singapore to USD 160.7 per ton. On the iron ore market, prices have been under strong pressure since mid-July because China plans to curb steel production in the second half of the year after it probably increased by more than 10% in the first six months (see also the Daily Info of Aug. 5). According to China's Iron and Steel Association, output at China's steel mills had already been cut by 3% at the end of July.

Source: Commerzbank Research, Photo: Fotolia