Chinese refined copper importers have delayed some February-March shipments and diverted some arriving shipments to South Korea due to weak demand in top copper consumer China, raising availability in the global market, traders said on Thursday.
Chinese demand has been a source of concern for the global market in recent weeks as it has failed to pick up after the week-long Lunar New Year holiday in late January, making some analysts question the sustainability of copper prices, which have risen above 10 percent so far this year.
Traders said some Chinese refined copper producers had also shipped metal to South Korea because of strong London Metal Exchange prices. It was not clear whether the diverted metal was heading to LME warehouses in South Korea. Stocks in warehouses monitored by the LME stood at 296,425 tonnes on Wednesday, a 2-1/2 year low.
"We have many clients delaying their February deliveries to May," a trader at a large trading house said. "The clients did not want to take the metal because spot selling in the domestic market has been poor." A trader at one large Western supplier said his firm had delayed some refined copper shipments due to arrive in Shanghai in February and March to May and June.
Despite the diverted shipments, traders said weak domestic demand and low Chinese prices had prompted importers to temporarily store some of the copper that arrived in February at bonded warehouses, where copper has not yet been assessed for China's 17 percent value-added tax.
Bonded stocks in Shanghai are estimated by traders in the city at about 400,000 tonnes this week, compared to about 350,000 tonnes two weeks earlier. The stocks are expected to rise above 450,000 tonnes in the next four weeks. Copper stocks at warehouses monitored by the Shanghai Futures Exchange remained near 10-year highs of 216,086 tonnes last Friday despite a drop for the first time since early December. Of the stocks, 11,599 tonnes were VAT unpaid bonded copper.
Weak demand cut premiums, paid by buyers in addition to the cash LME copper prices, for bonded stocks in Shanghai. Most deals were at premiums of $60-$80 a tonne this week and small amounts were sold at premiums of $20, traders said. Those premiums are lower than $120-$140 seen at the beginning of this year and $110 that Chinese firms have agreed to pay Chile's Codelco, the world's top copper producer, for 2012 shipments.
Comments
Comments are closed for this article.