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COLUMN-Booming lead imports the surprise in China's H1 metals trade: Andy Home

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

* Raw materials imports: http://tmsnrt.rs/2h2cBVj

* Copper scrap and concs imports: http://tmsnrt.rs/2h2KXat

* Aluminium product exports: http://tmsnrt.rs/2h2FOzi

LONDON, July 26 (Reuters) - China's appetite for imports of refined industrial metals was generally subdued in the first half of the year.

Those of copper, for example, fell by 26 percent, or over 500,000 tonnes, relative to the first half of 2016.

In part that was due to strong imports of both copper scrap and mine concentrates. Ample availability of both raw materials meant higher domestic production of refined copper and less demand for imported metal.

A similar pattern played out in both the zinc and nickel sectors despite expectations that a lack of raw materials in each would feed through to higher refined imports.

The stand-out exception was lead, which saw concentrate imports slide and China flip from net exporter to net importer of lead in refined metal form.

Graphic on imports of raw materials:

http://tmsnrt.rs/2h2cBVj

LEAD STEALS THE ZINC SHOW

China's net imports of refined lead totalled 50,300 tonnes in the first half of 2017 - which may not sound like a lot of lead but it was the first time China has been a consistent net importer since 2012 and you'd have to go all the way back to 2009 to find it importing equivalent tonnage.

The imports largely came from just two countries, namely Australia (32,000 tonnes) and Kazakhstan (18,600 tonnes).

What has caused the flip from net exporter to net importer? This being lead, a notoriously opaque market even outside of China, it's a little hard to say.

But it's noticeable that imports of lead concentrates dropped in the first six months of 2017, also defying the broader trend.

At 644,000 tonnes (bulk weight) they were four percent lower year-on-year and, indeed, the lowest quantity for any first half period since 2013.

All of which is somewhat ironic since this is what everyone was expecting to happen to lead's sister metal zinc.

But zinc concentrate imports were a robust 1.3 million tonnes (also bulk weight), up 31 percent on the first half of last year despite a tightening raw materials market.

Conversely, imports of refined zinc slid 38 percent, or 111,000 tonnes, to 180,000 tonnes.

China's zinc trade so far this year has not conformed to this market's bull narrative of raw materials crunch translating into refined metal crunch.

For how long that remains the case will be a key test of that narrative.

Graphic on imports of copper scrap and concentrates:

http://tmsnrt.rs/2h2KXat

COPPER AND NICKEL RAW MATERIAL IMPORTS SOAR

Imports of refined copper and refined nickel were both lower in the first half of the year, while imports of raw materials were higher.

In the case of copper, the big change was the pick-up in imports of scrap, which surged by 19 percent to 1.9 million tonnes (bulk weight).

That broke a downtrend that had been running for the last four years and was part and parcel of a global surge in scrap availability occasioned by the sharp jump in the copper price at the end of last year.

Imports of mined copper concentrates, by contrast, have been steadily rising over the past five years and that trend was extended in the first six months of 2017 to the tune of a further four-percent increase.

This reflects a structural shift caused by China's build-out of smelting and refining capacity, albeit one accelerated by the cyclical abundance of scrap metal.

The impact on refined copper imports was a cumulative 533,000 drop over the January-June period, or a 500,000-tonne drop in net terms due to slightly lower exports.

Nickel raw material imports have also boomed this year, reducing net import demand for refined nickel by 61 percent, or 139,000 tonnes, to 87,500 tonnes.

Flows of nickel ore from the Philippines have been picking up steadily so far this year after being hit by a combination of the rainy season and the clamp-down on nickel mining initiated by former environment secretary Regina Lopez and now suspended by her replacement Roy Cimatu.

Imports of ore from Indonesia have also now resumed in earnest after that country part-reversed a ban on the export of unprocessed minerals.

The ban was intended to coerce miners down the value-add processing chain, a policy which has borne fruit in the form of a new stream of nickel pig iron (NPI) flowing from Indonesia to China.

Confusingly lumped in to the ferronickel category by China's customs department, imports of Indonesian NPI totalled 563,000 tonnes in the first half of 2017, up 78 percent year-on-year.

It is this shifting dynamic at the nickel raw materials stage of the supply chain that has confounded nickel bulls and kept the nickel price under sustained pressure so far this year.

Graphic on aluminium semis exports:

http://tmsnrt.rs/2h2FOzi

ALUMINIUM EXPORTS ACCELERATE

Imports of aluminium were, along with lead, the only ones to rise at a commodity metal level.

But the 44,000-tonne year-on-year jump to 64,000 tonnes is but a drop in the aluminium ocean and dwarfed by the country's exports of semi-manufactured products.

Semis exports totalled 2.1 million tonnes in the first half of the year, up six percent.

Rather ominously in light of the current political heat around China's role in the global aluminium market, exports were 400,000 tonnes or above in both May and June, a level that has only been seen twice before, once in June 2015 and once in December 2014.

The continuing rotation between different types of products is also worth noting.

Those of bar, rods and profiles fell by 184,000 tonnes in the first half, while those of plate, sheet and strip jumped by 225,000 tonnes and those of foil rose by 69,000 tonnes.

TIN EXPORTS PENDING?

China remained a net importer of refined tin, albeit a fairly minor one with cumulative net imports of just 1,800 tonnes in the first half of the year.

Imports have been declining for a couple of years now, a trend that has coincided with a relatively new import flow of raw materials from Myanmar which has allowed China's smelters to lift production.

Concentrate imports from Myanmar dropped 45 percent in January-June, but that headline figure may be overstating the true picture. Tin industry association ITRI has suggested that the drop in tonnage terms may be disguising a rise in quality as Myanmar processing technology improves.

Certainly, there appears to be no shortage of refined tin in China. Stocks registered with the Shanghai Futures Exchange continue to rise and now stand at 7,315 tonnes.

There is potential for some of this material to leave the country now that the tin export tax has been removed.

Actual exports were a negligible 550 tonnes in January-June, very much in keeping with levels over the last few years.

However, that may yet change given the widening gap between a comfortably supplied Chinese market and the persistent low stock levels on the London Metal Exchange. (Editing by Mark Potter)