NEW YORK More than 11,000
tonnes of copper have been delivered into London Metal
Exchange-listed warehouses in New Orleans this month as
incentives from warehousing companies entice traders to use the
market of last resort amid slow spot demand.
Some 11,600 tonnes of copper
have entered the citys LME-registered warehouses since
Jan. 31, with just 50 tonnes shipped out. New Orleans copper
stocks stood at 111,075 tonnes and canceled warrants totaled
3,075 tonnes Feb. 8 vs. stocks of 75,775 tonnes and cancelled
warrants of 13,550 tonnes Jan. 2.
The most recent spate of
deliveries has been attributed to traders shifting Chilean
copper into warehouses.
"Its all from Chile," one
trader told AMM. "If you have warehouses willing to
pay you an incentive and that incentive is enough that you
wont lose money, you might as well put it in there."
"Chances are high that it came
from Chile. Shipments from Chile will continue since world
copper markets suck at the moment," a second trader said.
Warehousing firms have been
offering incentives to get metal into their stores in New
Orleans since last year (
amm.com, Oct. 8). Incentives are about $100 per
tonne but can go as high as $120 per tonne for larger volumes,
"The top Ive heard is
$120, but it has to be 5,000 tonnes or more to get that kind of
incentive," the first trader said.
Storing the metal doesnt
pay handsomely but it is still worthwhile for sellers, given
weak copper demand.
"Warehouses are offering very
attractive premiums. ... And its cash in hand. You
dont have to wait for payment," a third trader said.
Queues to get material out of
New Orleans warehouses are out to about a year due to a build
up of zinc inventories, but traders said they are not concerned
about a potential copper supply shortage should demand pick
"Most domestic consumers have
long-term contracts covered, so its going to be quiet for
a month or two. Maybe (demand) will come back in March, but I
dont think it will have much of an impact," the third
Traders and producers would
rather sell directly to consumers instead of putting material
in warehouses, but theres just nothing happening at the
moment, a fourth trader said. "At the end of the day, Comex is
high. It (would be) preferable to sell (to consumers) over
warehouses. But there really hasnt been that much
consumer buying. Theres been some light improvements in
the economywire business seems to be improving slightly,
but its nothing significant enough to warrant an uptick
Comex prices are high, settling
at $3.7595 per pound Feb. 8.
CWT Commodities Pte Ltd.,
JPMorgan Chase & Cos Henry Bath division, Metro
International Trade Services LLC, Noble Metal LLCs
Worldwide Warehouse Solutions Group, Pacorini Metals USA and
Trafigura Ltd. all operate LME-approved warehouses in New
Barbara ODonovan, New
York, contributed to this story.