China copper premium rises after holiday; US premium faces pressure: LME week

China’s premium for copper cathode imports increased after the country’s golden week holiday from September 29 to October, supported amid favorable import conditions, while the premium in the US copper market came under pressure due to excess supply, sources said

The wider Southeast Asian copper market held stable due to slow demand, sources told Fastmarkets.

Market participants are also focusing on the ongoing LME Week in London, which started from Monday October 9, with next year’s supply negotiations kicking off after key producers, including German copper producer Aurubis and Chilean state-owned copper producer Codelco, rolling over their offers of copper premiums to clients in Europe.

No official offer has been made to Chinese customers yet, but the outlook is not optimistic due to tepid spot demand, higher copper production in China and high financing costs, sources told Fastmarkets.

Chinas copper market

Chinese market participants returned from the week-long National Day holiday on Monday, with increased spot trading due to favorable import terms, supporting the premium. Prompt arrival units were particularly well sought after, sources said.

Offers surged on the first working day [after the holiday], and inquiries were also brisk, with spot deals concluding in the high 60s to low 70s [per tonne] for grade-A copper cathodes.

“Offers surged on the first working day [after the holiday], and inquiries were also brisk, with spot deals concluding in the high 60s to low 70s [per tonne] for grade-A copper cathodes,” a Shanghai-based trader said.

A second Shanghai-based trader added, “Some spot buying came in after weaker copper prices on London Metal Exchange, which was trading sideways at $8,000 per tonne, but some also stayed back amid the expectation of continuous declines in copper prices.”

Fastmarkets assessed the benchmark daily copper grade A cathode premium, cif Shanghai at $55-73 per tonne on Tuesday, up from $52-68 per tonne a week earlier.

Fastmarkets assessed the copper grade A cathode premium, in-whs Shanghai, at $55-75 per tonne the same day, against $50-70 per tonne a week prior.

The Shanghai equivalent-grade copper cathode market also ticked higher due to improved trading sentiment, sources said.

Fastmarkets assessed the weekly copper EQ cathode premium, cif Shanghai, at a premium of $30-35 per tonne on Tuesday, against a premium of $20-30 per tonne on a week earlier.

Elsewhere in the Southeast Asian copper market, some liquidity was seen, but spot demand remained largely quiet, with focus also gradually shifting to the annual supply talks.

Fastmarkets’ weekly assessment of the copper grade A cathode premium, cif Southeast Asia, was $60-70 per tonne on Tuesday, unchanged from September 19.

US copper market

Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at 7-9 cents per lb on Tuesday October 10, narrowing down from 7-9.5 cents per lb on Tuesday October 3, amid an absence of reported trades, with most sources saying the premium remains under pressure from surplus supply.

The premium dropped sharply in the week to October 3, moving down by 15.38% on lower offers and demonstrating a weakening market.

The premium had previously held at 9.00-10.50 cents per lb since June 27 with many sellers insisting that level was unchanged in the absence of spot activity to alter it.

No sales were reported in the week to Monday, reflecting weak demand, with far lower bids and offers heard than in previous assessments, sources said.

Global copper supply rising

The spread between the copper cash and three month prices on the LME reached the largest contango seen in three decades, at $75 per tonne at the 5pm close on Friday October 6. A wide contango indicates ample immediate supply and suggests poor demand.

New inflows into LME warehouses, including to New Orleans in the US, added 1,100 tonnes of copper on Tuesday morning, bringing total global inventories to 171,525 tonnes, almost double the LME copper inventories at the start of 2023.

“The premium’s down on the high end,” a copper buyer said, adding that they had no need for metal this week.

“China controls copper and very weak demand there is lowering premiums globally,” a seller source said.

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