Chile's Codelco, the world's top copper producer, has raised the premium
for 2014 term shipments to China by 41 percent to a nine-year high,
Reuters reported Wednesday, citing four trading sources, reflecting
strong Chinese demand.
The proposal to clients in private meetings in Shanghai on Wednesday to
increase the premium by $40 to $138 per ton - the highest since 2005 -
offers potential support for copper prices which have fallen about 4
percent this month.
Codelco Chief Executive Thomas Keller said he expected term negotiations
with the company's biggest customer and the world's biggest copper
consumer to wrap up fairly quickly.
The offered premiums reflected spot market conditions, where premiums
have risen sharply since last year, Keller said in Shanghai after the
firm announced the premium to clients. He declined to give details of
the offer.
Chinese traders and end-users said the offer was likely to be accepted.
The offered premium is in line with the $135-$145 range expected by
buyers, and is still lower than spot premiums of $190-$200 per ton for
bonded stocks in Shanghai or shipments due to arrive China soon.
Most buyers in China paid a term premium of $98 per ton over the cash
London Metal Exchange copper price in 2013, with smaller firms paying
above the mark but less than $105 to Codelco. The premium includes
insurance and freight.
Codelco was widely expected to raise the 2014 term premium after a $27
per ton increase for buyers in Europe. Chinese buyers had also agreed to
higher premiums from Japanese suppliers due to rosy forecasts of
economic growth in China and consumption of refined copper.
Traders and end-users were keen to increase bookings of 2014 shipments
as they were growing more confident about the economic outlook and
demand for the metal as a financing tool remained strong, trading
sources said.
The buyers wanted to hold more metal next year after a rise in domestic
demand in the second quarter of this year led to a rundown in stocks at
bonded warehouses.
Source: Reuters |
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