By Allen Sykora Base metals are broadly weaker after preliminary Chinese trade data showed that imports of unwrought copper and products fell by another 3% from a weak April to 254,700 metric tons, which represented a 36% year-on-year fall, say analysts with Barclays Capital. “This result is not totally surprising, given that the SHFE/LME price differential remained closed throughout April and most of the imports are likely to be contract tonnages,” Barclays says. However, with anecdotal evidence of robust demand, Barclays says the weak import numbers suggest that domestic inventories fell, as partly reflected from the downtrend in Shanghai Futures Exchange warehouse stocks. Meanwhile, copper scrap imports came in around 400,000, up by 5%. Exports of primary aluminum and alloys fell by 5% year on year, while imports of primary aluminum, alloys and products fell 21% year on year to 74,880 tons, lowest since last October. “Rather than signaling a weak market, we think this is a contributing factor to the tightening domestic market, where SHFE aluminum stocks have fallen consecutively since mid-March and fell by some 50kt in May, while the cash-3M SHFE contango has narrowed significantly,” Barclays says. “Meanwhile, we note other signals that domestic demand is holding up well, including a 40% y/y fall in coal exports and a healthy 53.3mt of iron ore imports.”

Source