Spot import premiums for London Metal Exchange-registered brands of copper cathode on a CIF China basis inched up as the import-related loss has turned into a profit, while the import interest has generally stayed thin after the New Year holiday from January 1-3, market sources said Wednesday.
Import premiums were heard mostly at $65-85/mt CIF this week, compared with $60-80/mt last week.
Platts raised the weekly CFR China copper premiums assessment to $70-80/mt Wednesday, from $60-80/mt the previous week. The price difference between CIF and CFR is negligible.
A Southeast Asian trader indicated steady export premiums at $70-75/mt CIF, while another Southeast Asian trader said his premiums were $65-75/mt CIF, unchanged from last week.
"Chinese buyers are actively searching for material but credit woes have stopped them from importing," said the first Southeast Asian trader.
The second Southeast Asian trader added that not many Chinese market participants could afford to buy now due to the credit issue.
In June 2014, Qingdao port halted shipments of aluminum and copper during a probe into loan irregularities involving warehouse stocks, prompting banks to tighten requirements for loans. This has made it hard for traders to borrow money to import.
"In addition, there's not so much buying interest as the Chinese market participants have just returned from the New Year holiday. They are still in a holiday mood," the second Southeast Asian trader added.
Chinese sources, however, were hearing higher import premiums.
A north China-based analyst heard import premiums at $70-80/mt CIF, up $5-10/mt from last week, while an east China-based source heard premiums at $70-85/mt CIF, up $15/mt week on week.
"There's no significant change in the domestic demand. Credit woes have also prevented Chinese traders from importing. This gain is probably due to a technical correction. Current premiums at $70-80/mt, however, are still so much lower than the high above $100/mt level seen last year," the northern Chinese analyst said.
The eastern Chinese source, however, said: "The import-related loss has turned into a profit recently and this gave premiums a lift. We saw a gain of Yuan 500/mt ($81/mt) today and Yuan 1,000/mt yesterday."
A Southwest China-based trader said he thought import premiums of $70-80/mt sounded about right. "Chinese traders are not buying as they don't have the funds to do so due to the stringent credit requirement after the Qingdao port probe."
Chinese copper importers are mostly traders and they keep a close watch on LME and domestic copper prices for arbitrage opportunities.
The eastern Chinese source added: "The Lunar New Year is near and credit will get even tighter." China will be closed February 18-24 for Lunar New Year. Up to a month prior to the official holiday, workers will stop work and head home for the reunion celebration for the festival.
Sources also noted the copper prices had remained weak, dampened by weaker oil prices.
Chinese domestic spot copper price was Yuan 45,580-45,640/mt Wednesday, down from Yuan 46,480-46,560/mt last Wednesday, according to the state-owned nonferrous metals information division Beijing Antaike.
The front-month January 2015 copper futures closed Wednesday at Yuan 45,430/mt on the Shanghai Futures Exchange, down from Yuan 46,500/mt a week earlier, while the SHFE weekly copper stocks rose 111,915 mt last Friday, up 6.1% week on week.
On Tuesday, the LME official cash price for copper stood at $6,190-6,191/mt compared with $6,325-6,330/mt a week earlier.
Meanwhile, Chinese spot copper concentrate treatment and refining charges generally held steady at $110-120/mt and 11-12 cents/lb respectively, industry sources said.
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 spot TC/RCs [for copper concentrate] rose to around $130/mt and 13 cents/lb briefly after the news of China's Jiangxi Copper and US miner Freeport-McMoRan having settled the 2015 contract [at $107/mt and 10.7 cents/lb, respectively]. After that, the spot TC/RCs slipped back to around $120/mt and 12 cents/lb," said the northern Chinese analyst.
Sources added that they had not heard any other settlements for the 2015 contract for copper concentrate other than the Jiangxi/Freeport-McMoran deal.
"It is very likely that the whole industry has quietly accepted Jiangxi/Freeport-McMoran's deal as the norm," the eastern Chinese source added.
