Consortium of Chinese smelters and merchants have suspended their previously announced plan to export 200,000 tons of copper back to the London Metals Exchange (LME) warehouses.

After shipping about half of the planned amount, Chinese copper exports are to stop for the month of June because, as one copper smelter manager said “The market situation has changed”.

In Shanghai’s bonded warehouses, premiums on copper are now at $50-60 over cash LME, nearly a double then what it was in April when the exports were announced.

Copper price vs. S$P 500 (black line)

“About 110,000 tonnes have gone out to the LME warehouses. Some of the copper has not been processed warrants and not appeared in the LME stocks,” he said.

Smelters in China are now selling their copper in the local market because exports have improved local prices.

“The export plan has been suspended but there should be flexibility, depending on the LME backwardation,” the sales manager said.

The export announcement was made by Jiangxi Copper, China’s top producer, on April 30 and it was one among several variables that may have contributed to the fall in the copper price from $3.85 to as low as $3.25.

At the time, Jiangxi claimed that the reason for exports was to ease global copper shortage.

China is to release its latest import data this weekend and copper price is expected to be highly influenced by that report.

Any policy easing in the US could also influence copper.

“What all this means for the markets is that we could see an element of strengthening in the days ahead, as policymakers may be getting ready to open up the monetary spigots once again. This will likely weaken the dollar and possibly provide a shortlived shot in the arm for a number of commodities that are badly oversold as it is,” says Edward Meir, an analyst at the INTL FCStone.