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Codelco, China ’13 copper premium may land at $100/T

Keywords: Tags  Codelco, copper, copper cathode, China premium, Beijing Antaike Information Development, 8th Asia Copper Conference, Asia Copper Week

SHANGHAI — The annual premium for copper sold in China by Corporación Nacional del Cobre de Chile (Codelco) could be set at $100 per tonne for 2013, down $10 from levels seen this year and twice the reduction European buyers received, according to market sources.

Spot market copper premiums have traded much lower, but Codelco’s premium is unlikely to fall further in China since the Chilean producer initially targeted a premium of $105 per tonne, sources told AMM sister publication Metal Bulletin.

Codelco’s 2013 premium for buyers in Europe fell $5 per tonne to $85 per tonne.

Volumes sold into China on contract for 2013 are unlikely to drop significantly, the sources said.

The Santiago, Chile-based copper producer starts negotiations each year with the goal of achieving at least a rollover in terms of volumes and premiums, Metal Bulletin was told.

"We can see the high quality of (Codelco’s) copper, which is made by the pyrometallurgical process. It’s still much sought after, even though downstream demand remains poor," one Shanghai-based source said.

Demand for financing deals for Codelco’s copper "is still robust," a second Shanghai-based source said.

Still, the lower spot copper premiums have lengthened a seesaw battle between Chinese buyers and Codelco, which was offering copper at premiums of $105 per tonne when negotiations began, a slight reduction from the 2012 premium of $110 per tonne.

Metal Bulletin’s daily spot copper premiums have been running at between $35 and $65 per tonne since October, with noticeable year-on-year declines in the volumes of deals made.

Negotiations about the contract premium between Codelco and Chinese buyers will be protracted this year, sources said.

The outcome of the negotiations, which normally comes out in the middle of November, could be delayed until the end of the month, when a team from the Center for Copper and Mining Studies (Cesco), Santiago, comes to Shanghai to co-host its first-ever Asia Copper Week alongside the Shanghai Futures Exchange.

Buyers hope to obtain a better picture of supply and demand during the event, held Nov. 28 and Nov. 29, in which Metal Bulletin will co-host its 8th Asia Copper Conference and Beijing Antaike Information Development Co. will host its China International Copper Fabricating and Recycling Forum.

"I wish Codelco could offer below $90 or $80 (per tonne)," a third Shanghai-based buyer said. "Business is very hard for us this year."

The Chilean producer is estimated to sell 500,000 tonnes of copper cathode to China per year, a volume equivalent to just under two months’ worth of China’s total imports, according to sources.

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