According to China Customs, Chinese primary imports were 40kt in January, down slightly from 42kt in December but still rising 133.7% y-o-y. Primary exports were 9100t, down from the 27.3kt recorded for December 2009.

Net imports were 30.9kt in January, up from 14.8kt in December 2009. With China’s domestic smelter production recovering quickly and capacity use rate continuing to improve through to the end of 2009, the Chinese market has swung back into oversupply.

This is illustrated by the underperformance of the SHFE relative to the LME since Q3 last year. In the last two months, the difference between the SHFE and LME widened further, indicating that China’s imports may continue to decrease.

Source China Metals e-mail