As the year comes to a close, corporate liquidity shortages have triggered an unusual surge in copper imports for financing purposes. Despite rising import losses, more copper continues to flow into bonded area warehouses. Currently, copper stockpiles in these zones have reached 1 million tons—nearly double the inventory levels from March this year. This trend is raising concerns across the industry, as it's estimated that hundreds of billions of yuan in copper could be tied up over the years.
If banking regulations tighten, the risk of copper exposure could skyrocket. Meanwhile, the Federal Reserve’s recent launch of QE4—expanding monthly purchases of mortgage-backed securities and U.S. Treasury bonds—failed to act as a catalyst for commodity markets. Instead, non-ferrous metals saw a slight decline due to the Fed’s accommodative policies.
On the London Metal Exchange (LME), copper stocks have surged dramatically, leading to a sharp drop in LME copper prices. Domestic and international price ratios have fallen further, with import losses widening. While global copper prices have risen, domestic prices have not kept pace, increasing pressure on the market.
According to China’s General Administration of Customs, 235,300 tons of copper and copper products were imported in November—an increase of 13.5% compared to October’s 329,900 tons. Scrap copper imports also rose to 470,000 tons, up from 390,000 tons the previous month. The bonded area now holds 1 million tons of copper, showing no signs of decline.
“Many companies are using copper as short-term collateral, not just those in the copper sector,†said an internal manager at a major domestic smelting company. “Some firms aren’t even involved in copper production.†It’s estimated that less than 1% of the total copper stored in bonded areas is actually used for physical consumption.
In November, China produced 531,000 tons of refined copper, marking a year-on-year increase of 11.6%—a record high. As of December 7, LME copper stocks hit a record 255,200 tons, far exceeding the previous average of around 200,000 tons.
Despite the losses from importing copper, trade remains profitable due to credit constraints. Last year, copper-related financing boomed. Analyst Zhou Xiaobo from Shenyin Wanguo predicts that the accumulated copper volume could reach 100 billion yuan, shifting from a simple “letter of credit + collateral†model to a riskier “letter of credit + repeated mortgage†approach. This method provides high leverage and low-cost capital but increases unmanageable credit risks.
With banks reporting higher non-performing assets and stricter supervision, the risk of copper exposure is rising. If enforcement tightens, it could significantly impact copper prices. Liquidity issues and weak fundamentals remain unresolved, making the current environment riskier than opportunity-driven.
Additionally, weak demand from end-user industries has limited copper consumption. In November, the non-ferrous metal rolling industry’s PMI fell to 49.49%, down 1.37 percentage points from the previous quarter. While overall manufacturing PMI improved, demand for non-ferrous metals stayed sluggish. The power sector, a key copper consumer, faces challenges due to winter weather, while air-conditioning output has slightly increased, and refrigerator production is in its off-season. Copper demand for home appliances remains flat, and copper smelters’ operating rates dropped to 60.96% in November.
Carriage Bolt DIN603,stainless steel Slotted bolt, white Square bolt,carbon steel Carriage Bolt
Hebei Quanfang Fastener Co., Ltd , https://www.quanfangfastener.com