UPDATE 1-China's December refined copper imports hit record

(Adds comment, background)

HONG KONG, Jan 22 (Reuters) - China’s imports of refined copper rose 89.4 percent on the year in December, hitting an all-time record, because of higher Chinese prices, bunched term arrivals and possible buying by the State Reserves Bureau (SRB), analysts said on Thursday.

The world’s top copper consumer imported 211,527 tonnes in December, the highest level ever, official Customs figures showed on Thursday.

For a graphic on China'a December copper imports, click: here

But imports for full-year 2008 dropped 2.44 percent from a year earlier to 1.46 million tonnes as domestic consumption fell after the global financial crisis started in October, which reduced overseas buying for Chinese goods.

Analysts said weak prices of the London Metal Exchange copper contract MCU3MCU0 had created attractive margins for spot imports last month and the record-high imports had not reflected domestic demand, which remained weak.

Importers had also brought in more term shipments in December after delaying the imports in the previous few months.

SRB may also have imported copper last month to build a stockpile, Jing Chuan, chief researcher at Great Wall Futures in Shanghai, said.

“Prices and term imports cannot fully explain why December’s imports were so big. A possible reason could be SRB’s imports,” Jing said, without providing an estimate of SRB imports in December.

The SRB is expected to be continue with its plan to boost strategic copper reserves, though it may have postponed another ad-hoc plan to buy copper as a commercial reserve to help support loss-making Chinese smelters and boost the domestic economy, industry sources said. [ID:nSP348764]

The state body may be buying from small Chinese copper smelters and importing because large smelters do not hold much metal available for spot selling and are not keen to sell to the SRB without attractive premiums over spot prices, they said.

An senior executive at Jiangxi Copper 0358.HK600362.SS had said this week SRB probably would purchase copper on the international market because domestic copper smelters had limited stocks to sell to the government.

Last week, market sources said SRB had invited large smelters and trading houses for a 200,000-tonne bidding round out of a 500,000-tonne purchase plan in December.

One source said the state body might have already placed a contract to buy 300,000 tonnes of physical refined copper cathode from a Chilean producer with monthly delivery of 25,000 tonnes and the delivery had been started.

To see a table of China’s December and 2008 copper imports, click [ID:nPEK254392]. (Editing by Ben Tan)