Stocks of copper cathode are rising in China, swelled by a large amount of imports from earlier this year when the price differential between the London Metal Exchange copper and the Shanghai Metal Exchange encouraged buying of copper by China.

Since the narrowing of LME and Shanghai prices for copper in recent weeks, imports into China have dried up, a trader said. As copper inventories continue to build, refineries will probably slow production by such strategies as lengthening periods for maintenance, but they will not stop completely, traders said. China is scrambling to obtain concentrate to keep the smelters operating, a trader said. At the same time treatment and refinery charges have fallen and were currently around $50 per tonne,five cents per lb or possibly below.

"This would be an opportune time for China to close down some operations and upgrade maintenance," he said. The low prices for copper and weak demand are likely to translate into big losses for China's copper companies, one trader said.

"I think the copper industry will suffer a huge loss," he said. Some traders say China may not be rushing to re-export much of the stockpiled copper that was imported earlier this year because it would mean the buyer would have to book a loss. Another complication was that some of the imported metal was smuggled into China and re-exporting it would mean providing trade documents, a problem that owners of copper in China would want to avoid.

But others said they had heard of offers of non-LME registered Chinese copper at $10 a tonne premium over LME cash prices and at $20 for LME registered brands. The premium is about $65 per tonne CIF Hong Kong but that may fall, traders said.

Domestic demand has been falling as China's economyslows from the rapid expansion of recent years. Although the official forecast is for China's gross domestic product to expand by eight percent this year, most experts see it growing less.

A Reuters poll of analysts put GDP growth at 7.58 per cent, but privately metals traders say they expect slower growth. "You could knock off one or two percentage points from the eight per cent," a metals trader said. Another estimated China's growth would be three per cent.