Copper inventories at bonded warehouses in Shanghai probably climbed to a record as import premiums dropped to a four-month low, signaling demand in China may not be improving as much as expected after a summer lull. Reserves were 650,000 metric tons, according to the median of nine estimates from traders, analysts and warehouse managers, compiled by Bloomberg. Five said that this was a record. The amount compared with an estimate of 550,000 tons by Macquarie Group Ltd. on Aug. 20. Fees paid by importers over the London Metal Exchange cash price are about $40 to $60 a ton on a cost, insurance and freight basis, the lowest since May. Rising stockpiles and a shrinking appetite for imports may cap prices in London that have gained 8.2 percent this year. The economy in China, the world’s largest user, grew 7.6 percent in the second quarter from a year ago, the slowest pace since 2009. Expansion may be about 7 percent in 2013, according to Pacific Investment Management Co., the slowest in 23 years. “What we’ve heard is that inventories along the industry chain have been rising, from smelters to trading firms, to downstream users,� Jia Zheng, head of nonferrous metals research at East Asia Futures Co., said by phone from Shanghai. “Market participants have placed high hopes on government stimulus policies and this spurred some traders to stockpile a bit, leading to a higher level than the first half.� Warehouses in Shanghai’s free-trade areas, where products are exempted from a value-added tax and import duties, don’t release data on inventories. No Improvement “Short-term signals from the Chinese market offer little to inspire,� Barclays Plc said in a report on Sept. 21. “Combined with unchanged premia for spot cathode, there are no signals of an imminent pick-up in activity.� Copper for immediate delivery on Shanghai’s Changjiang Nonferrous Metals Market was quoted at a discount of about 70 yuan ($11) to 80 yuan yesterday to the front-month futures contract, compared with a premium of about 300 yuan a month ago. The most-active contract on the Shanghai Futures Exchange has gained 6.8 percent this month, while its counterpart on the LME has risen 8 percent, and traded at $8,223 at 3:01 p.m. in Shanghai. SHFE copper inventories climbed to 166,829 tons last week, the highest level in four months, bourse data showed. “People are now saying ‘do not count on the demand,’� said Ren Gang, general manager of metals trading firm Qingdao Youbangyuan Trading Co.’s office in Shanghai. “If you look at the equities market, it tells you how people view the situation, and I think things may not improve until the first quarter.� Lack of Funding The benchmark Shanghai Composite Index (SHCOMP) fell by as much as 1.1 percent to 2,005.26 yesterday, the lowest since February 2009, and is set for a third yearly decline. None of the companies and traders surveyed had seen any impact from the stimulus on the ground and all were extremely skeptical on funding for the plan, Barclays said in a separate report yesterday. The comments are in line with those of Song Guoqing, an adviser to China’s central bank, who said the slowdown may persist into next year on a lack of funding for approved infrastructure projects. The government approved plans for 2,018 kilometers (1,254 miles) of roads, as well as sewage plants, port and warehouse projects and subways in early September, which were estimated at 1 trillion yuan by Moody’s Investors Service. China’s refined copper imports jumped 58 percent from a year ago to 2.39 million tons in January to August, according to customs data. Arrivals will probably remain steady in the next couple of months, underpinned by financing demand, said Pang Juan, an analyst at Jiangxi Copper Co.’s unit Jinrui Futures Co. on Sept. 21, referring to companies buying the metal from overseas to use as collateral for financing. To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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