China's net copper imports last year fell to the lowest level since 2017. They totaled 3.03 million metric tonnes.

Exports grew dramatically, despite a drop in inbound shipments of only 5% compared to 2024. The largest copper buyer in the world shipped almost 800,000 tonnes.

The counter-flow, which was unprecedented in its magnitude, was a result of the global disruption caused by the threat to impose U.S. tariffs on imports and the high premium that was subsequently charged for delivery by physical means to the United States.

It's also a sign of China's growing processing capacity in the entire base metal spectrum.

According to the World Bureau of Metal Statistics which uses data from China’s General Administration of Customs, exports of refined nickel also reached record levels.

China's metals trading was once a one way street, but this is changing.

BONDED ROUNDABOUT

The U.S. tariffs, which were deferred to June, have opened a gap between the U.S. contract price, represented by the CME, and the international price, traded on the London Metal Exchange.

The arbitrage was exploited by traders who shipped huge quantities of metals to the U.S. from China's warehouse zones.

China's trade statistics show that 203,000 tons of metal left China for the United States in 2010, while U.S. Customs only registered 17 tons of Chinese imports from China through October. This shows that these shipments are non-Chinese brands of metal taken out of bonded storage warehouses.

China's bonded stock is part of its metals ecosystem. Chinese customs classifies metal entering these bonded areas as imported material. It is intended to be released into the'mainland market, rather than being reshipped elsewhere.

This dynamic has been changed by the U.S. trade in tariffs. Last year, copper was sent to Germany, Italy, and the Netherlands to replace units, especially Chilean copper that had been redirected towards the United States.

As LME stocks were also devoid of brands that could be delivered to the United States, some Chinese smelters exported directly to LME warehouses in Hong Kong and Taiwan. Some Chinese smelters export directly to LME stores in Hong Kong and Taiwan.

At the end of December, 79% of LME's warranted tonnage was made up of Chinese-brand copper.

The increase in U.S. tariffs on imports to 50%, in June of last year, has also caused global aluminium flow disruptions.

The U.S. President Donald Trump’s threat of higher tariffs against Canada, which is a major supplier for the U.S. Market, has pushed the premium on U.S. Delivery to an eye-watering 2,177 dollars per ton above the LME Cash Basis Price.

The bonded warehouses in China are experiencing the same gravitational pull as copper.

In the last year, outbound shipments of primary metals reached nearly 300,000 tonnes. In the fourth quarter, the main destinations for primary metal were South Korea and India.

China was a net consumer of primary aluminum last year. However, its exports have reduced the net demand for metals from other countries.

Shipping is a major factor in determining the price of a product.

China also increased exports of zinc and tin in response to recent price increases on the LME.

After a brutal squeeze on the LME contract, in October, the country became a net exporter in November and December.

In the fourth quarter, outbound shipments amounted to 78.500 tons. Taiwan, Singapore, and Hong Kong are the top three destinations, as they all host LME storage facilities.

Exports of refined Tin accelerated to nearly 3,000 tons during the same period, as?the LME contract for tin went on a turbocharged rally.

In fact, China exported soldering metal in net quantities for the first year since 2021 when the Western market was affected by the closure of multiple smelters due to COVID-19.

China's growing dominance in global smelting is reflected in its ability to fill Western supply-chain holes. It has been a long-standing phenomenon for tin, but is now a more recent phenomenon in the case of zinc. This is due to China's aggressive expansion of its processing capacity over the past few years.

NICKEL TWO-WAY TRAFFIC

China has also expanded its nickel-processing capacity by sourcing raw materials in the booming nickel industry of Indonesia.

As Chinese automakers pivot towards non-nickel battery chemistry, what was originally intended to 'feed demand from the Electric Vehicle Battery Sector' has found its way into LME warehouses.

Chinese refined nickel exports jumped 40% on the year to 171,000 tonnes, a record. Exports have pushed LME warehouse inventories to record highs.

Contrary to expectations, Chinese imports increased even faster, reaching 231,000 tons. This is the highest total since 2021.

It is clear that, while commercial operators shipped surplus metal to Western countries, Chinese state entities added to their strategic reserves by sourcing metal from established suppliers, such as Russia and Norway.

China's refined Nickel trade was largely a one-way street until mid-2024 when a new refinery generation entered production and began listing their brands on the LME.

The same can be said for almost every base metal, with the exception that aluminium is a market long dominated China. China has traditionally exported its domestic surplus as semi-manufactured goods rather than primary metal.

Two-way traffic is set to be the new norm as the country replicates the dominance of aluminium in other base metals.

Andy Home is a journalist. His opinions are his. You like this column? Open Interest (ROI), a data-driven, thought-provoking commentary on the markets and finance is available. Follow ROI on LinkedIn, X and X.

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(source: Reuters)