The Metal Bulletin copper concentrates index was broadly stable on Wednesday April 30, as market participants awaited firm news regarding the restart of exports from Indonesia.
The Metal Bulletin copper concentrates index was calculated at $104.39 per dry metric tonne/10.439 per lb, down from $105.46/10.546 on April 15.
High concentrates inventories, a negative import arbitrage in China, regional holidays and smelter maintenance campaigns all contributed to a drop-off in concluded smelter business in the second half of the month.
At the same time, traders showed a fading appetite to add to positions ahead of the expected resumption of concentrates exports from Indonesia, leading to a narrowing in the gap between their bids for material and the terms smelters are willing to pay.
Still, while smelters reported receiving offers for clean material as high as $110/11, miners said they are receiving unsolicited bids from traders at around benchmark levels of $92/9.2.
In the last two weeks of March, the range of reported deals, bids and offers was $80/8 to $120/12.
As April progressed, smelters, traders and miners alike all showed a reluctance to commit to deals ahead of a planned resumption in exports from Indonesia, though some cargoes were sold in the Asian market at levels of about $105/10.5 during the second half of the month.
While the latest statements from government officials suggest exports will resume soon, the lack of clarity over the final timing of the restart is splitting sentiment in the copper concentrates market.
Some sources expect that a deal between the government and copper miners in the country could be reached imminently, perhaps as early as next week, while others suggested it could be difficult to strike a deal in the shadow of presidential elections not due to be held until July.
“When we hear from the miners that a deal’s been done, then I’ll believe it,” a concentrates trader told Metal Bulletin.
Customers of Freeport McMoRan, operator of the Grasberg mine, said the miner appears confident that exports will restart in May.
If it is unable to do so, about 50 million lbs of copper month and 80,000 ounces of gold per month will be deferred, hurting Freeport’s ability to hit annual sales targets, the company said in an update on April 24.
Newmont, owner of the Batu Hijau mine, also said last week that it could be forced to scale back production unless exports restart soon, as it is reaching the limit of its storage capacity in the country.
Further compounding the slowdown in spot trader activity was a large producer tender to supply about 150,000 dmt of concentrates over 2014 and 2015, which could steer sentiment in the spot market significantly, sources said.
“If you add that to some of the smaller tenders that are also going on, there are some huge opportunities to lose money right now,” a second concentrates trader quipped.
Mark Burton
mburton@metalbulletin.com
Twitter: @mburtonmb
