Chinese Copper Imports Fall

The month of May saw a large decrease in Chinese imports of copper. Decreasing to 396,712 metric tons, this was a decrease of 9.1% since April and 6.1% vs. a year ago. Year to date imports, however, hover at 8.2% above the level one year ago. Commodities demand in China has been slowing as of late, reflecting a slowdown in the broader economy as officials attempt to tighten monetary and fiscal policy. Iron ore/steel imports fell as well, but this was largely a result of higher prices increasing Chinese producers to ramp up their production. Dahlman Rose and Co. analysts saw this is a positive factor, as it will slightly reduce the country's "reliance on the seaborne market." The higher prices may also be linked to the broader slowdown in steel production. The same analysts stated that they believe that "higher iron ore prices coupled with lower steel prices is forcing smaller, less efficient steel mills to shut down." With China being such a big player in the global commodities market, this could have large ramifications for commodity-backed ETFs and mining companies. Freeport-McMoran Copper and Gold Inc. FCX, for example, is up almost 5% on the day as of 11:29AM. Those looking to purely speculate on base metals prices could look to PowerShares DB Base Metals DBB.