NEWSBREAK: Codelco keeps 2020 European copper premium unchanged

Codelco, the world’s largest copper producer, will keep its European copper cathode premium for 2020 supply at $98 per tonne, the same level as for 2019, sources told Fastmarkets on Tuesday September 10.

Offers have already been made to customers in Europe, seven weeks before the copper industry gathers in London for LME Week, Fastmarkets understands.

The annual benchmark, which comes slightly above market expectations, is paid on top of the LME cash price and is based on the cif Rotterdam premium equivalent. It remains around its highest level since 2015 following last year’s 11% increase from $88 per tonne in 2018.

The move highlights Codelco’s broadly bullish outlook for the physical copper market despite a tumultuous year for both prices and premiums.

Market sentiment across Europe remains tepid with participants generally anticipating a downward trend in copper’s benchmark premiums for 2020 due to high cathode availability, a stalling automotive sector and trade tensions affecting economic growth.

But margins for copper miners have tightened recently due to low treatment and refining charges (TC/RCs) for concentrate purchases, slowing demand and higher freight costs in some regions.

Aurubis, Europe’s largest cathode producer, has had to increase its concentrate purchase volumes against its multi-metal strategy and post-acquisition of German wire rod producer Deutsche Giessdraht at a time of low TC/RCs. This could cap its ability to reduce its own annual copper premium offer for 2020 from the $96 per tonne level set for 2019.

“I think any move on benchmark premiums would just be cosmetic in the current climate,” a European-based copper trader told Fastmarkets.

Fastmarkets assessed the copper grade A cathode premium, cif Rotterdam at $40-50 per tonne on Tuesday September 3, maintaining a range held since June 11.

Fastmarkets’ copper concentrate TC/RC index cif Asia Pacific stood at $50.10 per tonne/5.01 cents per lb on Friday September 6, down 43.6% from $88.80 per tonne/ 8.88 cents per lb in November 2018.

Codelco has yet to announce its copper cathode premium offer for customers in China, the rest of Asia and the United States. Well-informed sources said Codelco may roll over or slightly reduce the annual premium in China while increasing the rate for the US.

Chinese buyers gathered at the Antaike copper conference in China last week told Fastmarkets they expect a decline in Codelco’s premium for China in 2020 to around $78-80 per tonne cif Shanghai, compared with a benchmark of $88 per tonne in 2019, due to lower copper imports into China in the coming year.

Fastmarkets assessed the copper grade A cathode premium, in-whs Shanghai at $67-82 per tonne on September 3, which is an eight-month high, primarily due to a three-year low in Shanghai bonded-stocks.

Fastmarkets’ copper premiums will next be published in the afternoon of Tuesday September 10.

Additional reporting by Ellie Wang in Shanghai.

[This article was updated to correct the percentage change in the copper concentrate TC/RC since November 2018.]
What to read next
The attack by the Russian army on a hydroelectric power plant in Nova Kakhovka in southern Ukraine on Tuesday June 6 has affected steelmaking operations at Kryvyi Rih, where ArcelorMittal’s Ukrainian steel mill and Metinvest’s mining and processing plants (GOKs) are located, sources have told Fastmarkets
Fastmarkets will launches its price assessment for ferro-chrome low carbon, 0.10% C, basis 60-64.9% Cr, CIF Europe, on Tuesday June 6.
Find out how Mitsui and Kobe Steel seek to reinforce their position in direct-reduced iron (DRI) production in the Middle East with the construction of a low-CO2 iron metallics production plant.
Fastmarkets proposes to launch published netback rates for both purity and incoterm differentials for its aluminium P1020A Rotterdam premiums.
Fastmarkets proposes to amend the publishing frequency of its three calcined alumina prices from monthly to quarterly.
Fastmarkets invited feedback from the industry on the pricing methodology for cobalt hydroxide, min 30% Co, inferred, China, $lb, via an open consultation process between May 4 and June 1, 2023. This consultation was done as part of our published annual methodology review process.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.