Trade Resources Economy Spot Import Premiums for London Metal Exchange-Registered Brands Amid Persistent Weakness

Spot Import Premiums for London Metal Exchange-Registered Brands Amid Persistent Weakness

Tags: Copper, aluminum

Spot import premiums for London Metal Exchange-registered brands of copper cathode on a CIF China basis generally remained steady but displayed signs of slipping amid persistent weakness in the physical buying interest, market sources said Wednesday.

Platts assessed the weekly CFR China copper premiums steady at $80-105/mt Wednesday as bids and offers were heard within the range.

A Southeast Asian trader has kept his export premiums steady at $90-100/mt CIF China, while another Southeast Asian trader offered at $80-100/mt CIF, unchanged from the previous week.

The price difference between CFR and CIF is negligible.

"There's not much movement in the export premiums. Chinese buyers are not buying on credit issues," the first Southeast Asian trader said.

Some Chinese companies have difficulties of getting bank loans on stringent credit policy following the Qingdao port probe. In June, Qingdao port halted shipments of aluminum and copper during a probe into loan irregularities involving warehouse stocks.

The second Southeast Asian trader agreed, adding that he had not done any trade for the past few weeks.

In addition, sources said some Chinese market participants had refrained from importing as the import-related loss had climbed to around Yuan 2,000/mt ($327/mt) from around Yuan 1,000/mt last week.

"LME copper prices have stayed strong while Chinese domestic copper prices have remained fairly weak and this has resulted in a larger import loss of around Yuan 2,000/mt. Last Friday, the loss was around Yuan 1,300/mt," an east China-based analyst said, having heard import imports at $90-105/mt, down from $95-110/mt last week.

The first Southeast Asian trader agreed, saying there was currently "no arbitrage opportunity for the Chinese players."

Chinese copper importers are mostly traders who keep a close watch on LME and domestic copper prices for arbitrage opportunities.

Chinese domestic spot copper price was Yuan 48,230-48,280/mt Wednesday, up from Yuan 47,960-48,000/mt last Wednesday but down from Yuan 48,680-48,730/mt on October 8. China was closed October 1-7 for National Day.

Front-month November copper futures closed Wednesday at Yuan 48,470/mt on the Shanghai Futures Exchange, up from Yuan 47,860/mt last week.

On October 8, the front-month October contract closed at 48,430/mt.

On Tuesday, the LME official cash price for copper stood at $6,859-6,859.50/mt Tuesday compared with $6,658-6,660/mt a week earlier and $6,800-6,800.50/mt Monday.

Meanwhile, Chinese spot copper concentrate treatment and refining charges (TC/RCs) were mostly steady despite news of potential strikes by copper workers in Peru and Indonesia, industry sources said.

Antamina workers in Peru are threatening to go on strike indefinitely starting November 10, while Freeport-McMoRan workers in Indonesia are expected to begin their strike next week for a month.

Most sources heard spot TC/RCs steady at $110-120/mt and 11-12 cents/lb in October, compared with $110/mt and 11 cents/lb in September. In August, TC/RCs were $100-110/mt and 10-11 cents/lb respectively.

TC/RCs, however, rose to $110/mt and 11 cents/lb in September on news of Newmont and Freeport resuming exports following Indonesia's ban in January on the export of 12 types of mineral ores.

TC/RCs -- fees charged to miners by smelters to treat and refine copper concentrate to produce copper metal -- typically rise when concentrate supply is ample and fall when supply is tight.

"The impact of the news of the potential strikes was felt in the LME copper prices rather than on the spot TC/RCs," the eastern Chinese analyst said. 

Source: platts
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China Copper: CIF Import Offers Steady But Signs of Falling on Weak Buying
Topics: Metallurgy