February 12, 2014 / 3:51 AM / 4 years ago

UPDATE 1-China's Jan copper imports surge to record - customs

* Jan imports at 536,000 T, up 21 pct from Dec

* Imports fuelled by tight credit late last year, more term shipments -analyst

* Ample copper inventories may weigh on prices (Adds analyst’s comments, detail of data)

SYDNEY, Feb 12 (Reuters) - Chinese copper imports surged 53.2 percent in January from a year ago to a record high as tight credit conditions late last year encouraged traders to boost shipments, and on restocking ahead of the Lunar New Year, traders and analysts said.

China imported 536,000 tonnes of anode, refined copper, alloy and semi-finished copper products in January, 21 percent higher than the 441,291-tonne total in December, Chinese customs data showed on Wednesday.

“The strength is very surprising - even accounting for seasonality and restocking ahead of the holidays,” said Sijin Cheng, analyst at Barclays in Singapore.

“Financing demand was very, very strong,” Cheng said.

Tight credit conditions in China’s domestic market due to a cash crunch in November that stretched into December fanned import demand, Cheng added.

Importers of refined copper can sell their stocks on the domestic market to raise capital for more lucrative investments elsewhere, often in the real estate market.

China, the world’s top copper consumer, imported 3.2 million tonnes of refined copper last year. Traders typically stockpile ahead of the week long Lunar New Year holiday which this year began on Jan. 31.

The record figure may also reflect an increase in term bookings this year, as traders looked to lock in attractive premiums for shipments, compared to 2013 when more material was booked on a spot basis, Cheng said.

The jump in imports took many in the market by surprise because many end-users of refined metal, alloys and semi-finished copper products such as rod and tubes cut purchases in the domestic market mostly in December.

Companies in China typically pay back loans by the end of the year, reducing their cash flows that could otherwise be used to make the purchases.

However, traders and analysts warned that the high level of imports could feed into domestic stockpiles and blunt demand for the metal going forward, dampening prices.

The most active April contract on the Shanghai Futures Exchange fell to its lowest in more than two months on Tuesday.

“On a seasonality basis, it’s a safe bet that imports would come down a bit in February,” Cheng added. (Additional reporting by Chen Aizhu and David Stanway in BEIJING; Reporting by Melanie Burton; Editing by Muralikumar Anantharaman)

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