Something odd is happening with Copper

Something odd is happening with Copper. China's traders imported 397,459 tonnes of refined copper in January, short of the record 406,937 tonnes in December 2011, and up 63.5% on January 2012. This is odd, given that industrial activity appears to be contracting and that copper stockpiles in Shanghai hit a nine month high. One explanation is that Chinese Banks commonly accept copper contracts and inventories as a basis for extending credit. January's uptick of copper importing is a strong sign that liquidity has dried up and cash for copper is what's really going on. Chinese industrial consumption of copper accounts 45% of global production. An unwinding of this trade or a faster than expected slowdown in Chinese industrial activity could leave a glut of supply in the market. This would be grim news for copper producing nations such as Chile and Australia.