GLOBAL COPPER WRAP: Shanghai premiums at 7-mth low; Europe, US markets flat

China’s import premiums for copper cathode are in free fall, and market sentiment remained very low in current unfavorable import condition. Premiums in other regions held unmoved.

  • Shanghai premiums in free fall; equivalent grade (EQ) market trades at a bigger discount.
  • United States and European copper premiums steady.

China premiums collapse to seven-month low; EQ market deepens in discount
The premiums for copper cathodes imported to China tumbled to their lowest since late September 2020 on a prolonged arbitrage loss and lingering backwardation, Fastmarkets understands.

The low premiums also came amid a traditionally high season for copper consumption in China and some market participants were worried about spot demand when exchange prices kept strengthening.

Fastmarkets assessed the copper grade-A cathode premium, cif Shanghai at $35-45 per tonne on Tuesday April 20, down by $5 per tonne from $40-50 per tonne a week ago, the lowest since September 29.

“The market is running into a tunnel now with no light ahead [and] a higher [LME copper] price only makes buyers cautious on purchases,” a Shanghai-based trader said.

Similarly, Fastmarkets’ assessment of copper grade A cathode premium, in-whs Shanghai was at $40-55 per tonne on the same day, widening downward from $45-55 per tonne a week earlier.

Fastmarkets’ assessment of Shanghai copper bonded stocks continued growing for a sixth straight week, up to 380,000-396,000 tonnes on April 19, compared with 375,000-393,000 tonnes on April 6, reflecting the absence of buying interest.

The growth, however, slowed down in recent weeks after low import premiums for copper cathode to China discouraged suppliers from shipping cargoes to China, Fastmarkets learned.

The non-exchange-deliverable EQ-grade material in China also took a dive due to a lack of spot demand amid an arbitrage loss, sources said.

Fastmarkets assessed the copper EQ cathode premium, cif Shanghai at a discount of $10-20 per tonne, against a $0-15-per-tonne discount to the London Metal Exchange copper price a fortnight ago.

“A sustained arb loss only breeds more availability in the market [and] EQ materials get cheaper. The sad thing is it’s hard to find buyers,” a second trader in Shanghai said.

Elsewhere in the market, the premium for copper cathodes in the Southeast Asian market held in a quiet and stable market, sources said.

Fastmarkets assessed the copper grade-A cathode premium, cif Southeast Asia at $74-79 per tonne on Tuesday, unchanged from March 23.

US copper premium steady, spot market quiet
The United States copper premiums maintained their range this week because there was little market activity, sources told Fastmarkets.

“There’s very little spot business. Nothing’s really changed in the last 60 to 90 days,” one trader said.

The potential infrastructure spending and increased demand for electric vehicles (EVs) should be bullish on copper in the long term but that has yet to trickle down to the immediate physical market.

“Business seems to be getting better but it’s more speculative at this point than anything,” a second trader said.

Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at 7.50-8.00 cents per lb on Tuesday, stable week on week.

European premiums unchanged, good demand continues
In Europe, the copper grade-A cathode premium in Northern Europe remained at its recent price, while there was a slight rise in Italian cif premiums this week, sources said.

“Demand is good and quotations are moving all the time. The freight issues from March have been solved and were absorbed by the market. You should order a few weeks before delivery but there are no issues in availability,” one trader in Northern Europe said.

Fastmarkets’ copper grade A cathode premium, delivered Germany remained at $85-95 per tonne on April 20, after trading at $90-95 per tonne for most of March.

Fastmarkets’ copper grade A cathode premium, cif Rotterdam was also assessed unchanged at $45-55 per tonne on Tuesday, stable since March 2.

Following intake at the start of April, which took on-warrant levels in Rotterdam to 85,975 tonnes, outflows and cancellations have been the norm in the past week. Some 9,500 tonnes of copper were booked for delivery on Monday and Tuesday, while 4,375 tonnes have left warehouses in the Dutch city so far.

“Producers cannot bargain on premiums given the higher copper stocks in Rotterdam so this is also limiting premiums on the upside,” the first European trader said.

Fastmarkets assessed the copper grade-A cathode premium, cif Leghorn at $60-70 per tonne on April 20, its first rise since March 9, following the recent rise in Northern European markets.

Market participants in the area said the corresponding delivered premium, which relates to shipments going to Carlo Colombo, was at no less than $100 per tonne this week.

Click on the thumbnail above to access this week’s price table.

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