Base metal stocks have been surging. On the back of higher commodity prices resulting from an accumulation binge in China.

According to China Minmetals Nonferrous Metals Co., refined copper imports are expected to rise 34% in 2009, to 1.95 million tonnes. In the first quarter, China imported nearly 1 million tonnes.

Having said that, this appears to be nothing more than a replenishing of raw material inventories, likely financed by China’s economic stimulus package. What better way to spend government money than to stockpile for an eventual economic recovery.

Interestingly, China is one of the few world economies where government spending has delivered the attendant results. And we all know that government spending is only a stop gap measure. Any price re-alignment directly correlated to an unsustainable spending package will eventually fade away. Unless of course, the recovery takes hold, and demand begins to grow at the grass roots.

So far, China is the only big buyer on the board. If an expected seasonal downturn in demand blocks further copper imports, even temporarily, spot prices could slide quickly. And that could negatively impact share prices of Canadian base metals. And it could happen quickly.

If you are an aggressive trader, you might consider short-term puts on base metals stocks like HudBay Minerals (TSX: HBM, recent price $7.10) and Teck Resources (TSX: TCK.B, recent price $14.28). Specifically the HBM June 7 puts at 50 cents, or the TCK June 14 puts at $1.35 or less.