China's latest trade data reveals a continued decline in copper imports, with unwrought copper volumes falling 11.5% year-on-year to 424.6kt in July, resulting in a 6.2% decrease in year-to-date volumes [1]. Copper concentrate imports also showed weakness, attributed to tighter mine supply pressures [1]. In contrast, iron ore imports increased by 3.3% year-on-year to 108.1mt, although demand was tempered by lower steel margins and ongoing maintenance activity [1].
On the export front, shipments of unwrought aluminium and aluminium products surged 18.6% year-on-year to 640kt, as producers took advantage of supply disruptions and trade dislocations related to the Middle East conflict [1]. Steel exports also rose by 2.9% year-on-year to 10.1mt [1].
Despite the weakness in physical copper imports, speculative sentiment in the copper market has turned more bullish. Money managers increased their net long positions in COMEX copper by 11,306 lots to 77,796 lots, marking the highest level since February 2021 [1]. This shift is attributed to tight physical markets and low inventories, which have supported copper prices [1].
ING strategists Ewa Manthey and Warren Patterson note that while China's import data signals softness in physical demand, the market's speculative positioning reflects optimism about future price movements, driven by supply constraints and inventory levels [1].
CONCLUSION
While China's copper imports remain weak, the market is seeing increased bullish positioning on COMEX, driven by tight supply and low inventories. This divergence suggests that, despite current demand softness, market participants anticipate potential upward price movement. The overall market sentiment is cautiously optimistic, with medium impact expected.