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Spot Copper Cathode Import Premiums Remian Steady

Categories: Yinghua NewsStars: 3Stars Visit: - Release time: 2014-11-20 15:23:00
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Spot import premiums for London Metal Exchange-registered brands of copper cathode on a CIF China basis remained steady for the fourth consecutive week amid thin trade, market sources said Wednesday.

Sources said physical buying interest had stayed weak as market participants had difficulties getting bank loans on stringent credit policy following the Qingdao port probe.

In June, Qingdao port halted shipments of aluminum and copper amid a probe into loan irregularities involving warehouse stocks.

Platts assessed the weekly CFR China copper premiums assessment at $80-105/mt Wednesday, unchanged from last week.

A Southeast Asian trader continued to indicate export premiums steady at $95-105/mt CIF China, while another Southeast Asian trader maintained his premiums at $80-100/mt CIF, unchanged from last week.

The price difference between CFR and CIF is negligible.

"There's no change in our premiums. Financial issues have kept Chinese market participants away from the market. They still can't get bank loan on the back of the Qingdao port case," the first Southeast Asian trader said.

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

The second Southeast Asian trader said Chinese market participants had just returned from a three-day holiday and would need time to settle in.

China was closed September 6-8 for the Mid-Autumn Festival.

Chinese sources were generally hearing steady import premiums level.

A north China-based analyst heard import premiums at $80-100/mt, compared with around $90/mt last week and an east China-based source heard steady premiums at $90-115/mt, while a southwest China-based trader heard premiums at $90-110/mt.

"Generally, import premiums are mostly steady around $80-90/mt though $100/mt is also heard. Market participants are still troubled by financing issue," the northern Chinese analyst said.

An eastern Chinese source, who heard premiums steady at $95-115/mt, said: "The import related loss is Yuan 200-300/mt ($33-49/mt) this week, down from Yuan 600-700/mt last week. However, importers are unmoved due to the financing issue. Downstream end-users are likely to replenish their stocks after the week-long National Day holiday in October. They will then work till January before shutting down from the Lunar New Year holiday in February."

Front-month September copper futures closed Wednesday at Yuan 49,510/mt on the SHFE, down from Yuan 50,210/mt last week.

Chinese domestic spot copper was at Yuan 49,630-49,800/mt Wednesday, down from Yuan 50,360-50,480/mt last Wednesday.

The LME official cash price for copper stood at $6,936.50-6,937/mt Tuesday compared with $6,965-6,965.50/mt a week ago.

Meanwhile, Chinese spot copper concentrate treatment and refining charges (TC/RCs) inched up amid recent news of Newmont and Freeport resuming exports following Indonesia's ban in January on the export of 12 type 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.

Sources heard spot TC/RCs at $105-120/mt and 10.5-12 cents/lb in September, up from $100-110/mt and 10-11 cents/lb in August.

"The recent news of Newmont and Freeport resuming exports from their Indonesian mining sites have given the spot TC/RCs a lift as this will increase the supply in the market and will increase the spot TC/RCs," a southwest China-based trader said.

However, the trader was unsure how far they would rise.

A north China-based analyst heard indications at $105-110/mt and 10.5-11 cents/lb, while an east China-based source heard $115-120/mt and 11.5-12 cents/lb.

The eastern Chinese source said: "Last week, shortly after the news of Newmont resuming exports, I heard talks of the TC/RCs at $110/mt and 11 cents/lb, up from $100-110/mt and 10-11 cents/lb previously. This week, they have gone up further to $115-120/mt and 11.5-12 cents/lb."

The eastern Chinese analyst, however, said he had heard as high as $120/mt and 12 cents/lb but was skeptical about it as these exports were mainly for fulfilling long-term contracts.

Newmont Nusa Tenggara said in a statement on September Thursday that it had signed a memorandum of understanding with the government following which it will be able to export copper concentrate in September.

Freeport-McMoRan's Indonesian unit has resumed copper concentrate exports on August 7 following a halt since January.