LONDON: It should be easy and for many years it was.

China is the world's single most important driver of metals demand.

It is also structurally short of key industrial inputs such as copper, iron ore and nickel.

Therefore, what it imports should be a valuable real-time signal of the strength of Chinese manufacturing activity, a guiding beacon in the statistical haze.

This is why the release of preliminary Chinese import figures used to be one of the most keenly awaited dates in the monthly metals calendar. A strong number would signal that all was well with what the London "Street" affectionately dubs "The Dragon".

Sure, there were complications in interpreting the trend, mostly deriving from the country's counter-cyclical stocking cycle. But, for markets such as copper, China's import numbers played a central narrative role.

And, ironically, it's copper more than any other metal that has blown apart the previous accepted wisdom that imports provide a read-through to the real-world state of metals demand in China.

Copper was the stand-out in terms of China's metal imports last year, as shown in the next graphic.

Net imports surged by 449,000 tons to 3.13 million tons, an increased pull on units from the rest of the world equivalent to over 2 percent of global production.

And that despite the fact that Chinese exports of the red metal also hit a record high of 274,000 tons in 2012.

Yet this surge tells us little, if anything, about China's copper demand.

Most of that increase was not imported to feed the country's copper wire and tube plants. Rather, it went to be stored in Shanghai's bonded warehouse zone to be used as collateral for loans in China's shadow banking system.

China's copper market has changed with the metal becoming a hybrid of financial asset and manufacturing input.

The same thing has happened outside of China to aluminum and zinc, both of which have attracted the attention of stocks financiers.

And just as the stocks-financing game bedevils any old-school interpretation of London Metal Exchange inventory changes, so too has the copper-as-collateral trade in China hopelessly clouded any interpretation of copper imports as straightforward demand signal.

That's not to say that this tectonic move of metal into Shanghai's bonded zone is somehow irrelevant to prices.

Quite the opposite. The mountain of metal sitting in the port is likely to be a key factor in global market dynamics over the coming period.

Financial rather than manufacturing drivers also help explain last year's accelerated imports of primary aluminum and zinc.

China doesn't in fact need more of either metal. Indeed, it had so much aluminum and zinc sitting around late last year that the government was induced into soaking up some of the overhang in the form of purchases by the State Reserves Bureau.

Even allowing for some imports under tolling contracts, whereby manufacturers can re-export product at reduced export tariffs, increased flows of both metals last year were more likely a result of opportunistic plays by a handful of arbitrageurs, with financiers as likely to be the end-buyer as industrials.

Mind you, looking at primary aluminum imports for any insight into Chinese market dynamics was always problematic, given the fact that the country is actually a big net exporter of aluminum alloy (384,000 tons last year) and an even bigger net exporter of fabricated products (2.3 million tons).

If Chinese imports of any metal in refined form actually "mean" anything, look lower down the list to humble tin.

Too scarce and too expensive to interest financiers, tin is still a true manufacturing metal, and one which China is importing in ever greater quantities.

Imports jumped 31 percent to 29,600 tons last year. The 7,100-ton year-on-year increase doesn't sound like much, but in the tiny tin market the extra flow represented almost two percent of global supply.

There's still the distinct possibility that this import flow is more a stocking cycle than a signal of stronger demand.

It's noticeable that China's imports have been running strong at a time when the tin price has been running weak.

Refined nickel imports, on the other hand, tell a different story.

They fell by 32 percent, or 58,300 tons, in 2012 to 124,000 tons. It was the only year-on-year decline of any of the base metals.

It's a counter-intuitive outcome. Nickel's main usage is in stainless steel and China's stainless output was up 7.9 percent in the first nine months of 2012, according to industry group ISSF.

But then China is generating an increasing amount of its own nickel in the form of nickel pig iron (NPI). Statistical coverage of the sector is poor with estimates of last year's output ranging from 250,000 to 350,000 tons.

Even at the lower end of that range, though, domestic NP is filling an increasing part of China's historical import requirements.

Or, more accurately speaking, changing them.

Rather than refined metal, China is importing ever-greater amounts of nickel ore from Indonesia and the Philippines to feed its rapidly-expanding NPI sector.

Ore and concentrate imports were up 30 percent last year. Given the mid-year clampdown on Indonesian exports, such import strength says much both about NPI production and, at one remove, about demand from the stainless steel sector.

What is happening in China's nickel sector is symptomatic of a broader shift toward refined metal self-sufficiency in the country.

At one extreme is aluminum.

China has sufficient smelter capacity to meet its demand requirements.

Import dependency has shifted up the materials chain through intermediate product alumina to bauxite, where the aluminium production process starts.

The hit on Indonesian bauxite supply last year generated major shifts in the raw materials import mix, those of alumina more than doubling to 5.0 million tons.

Copper lies at the other end of the spectrum.

China has historically been structurally short of the red metal at every stage of the production chain.

But, even here, with new smelter capacity being continuously rolled out, the balance is shifting gradually away from refined metal to concentrates and scrap.

Imports of concentrates boomed by 23 percent to 7.83 million tons last year with a marked acceleration over the closing months.

Scrap imports rose by 3.7 percent, the third successive annual rise.

As "true" industrial inputs, such imports are as good a barometer of end-user demand as the increasingly problematic refined metal numbers.

So, how to make sense of China's metals imports?

Refined imports alone have lost much of their analytic usefulness due to both the financialization of some markets and the continuing long march to metals self-sufficiency in others.

Calculations of "apparent consumption" in China, predicated as they are on net trade at the refined metal stage, become increasingly dubious.

Refined imports need to be seen as part of a more complex matrix that includes both fabricated products and raw materials.

Sometimes the parts of the matrix will be self-confirming as was the case last year with tin, which saw both refined metal and concentrates imports rise.

At other times they will be contradictory.

Consider, for example, the 34 percent drop in zinc concentrate imports last year.

This resulted from increased domestic mine production but also from reduced smelter demand.

Refined zinc production in China dropped 5.6 percent last year, a highly unusual outcome from a sector that has notched up higher year-on-year output for a decade.

Together with those government purchases of surplus zinc falling national run-rates were a sign of weakness in Chinese demand.

In this market last year's imports of raw material painted a "truer" picture of Chinese zinc demand than those of refined metal.

Sure, it's a far-from-perfect prism through which to see what is happening in China, dependent as it is on an assumption that the country's smelters will efficiently align production levels with demand.

But in truth refined metal imports were never the perfect prism they appeared to be either, witness the limited insight into China's aluminum sector afforded by analyzing primary metal imports alone.

Same as it ever was, then.

— Andy Home is a Reuters columnist.

The opinions expressed are his own.