NEW YORK Lethargic copper
cathode demand pushed AMMs spot premiums lower
Free-market copper cathode
premiums dipped to 4.5 to 5.5 cents per pound from 5 to 6 cents
previously, the first time premiums fell to this range since
early March 2012.
"Premiums are pretty low,"
according to one consumer, who bought a small spot load at a
premium that was below 5 cents.
Spot demand for copper cathode,
which has already been quiet so far in 2013, has been
particularly low due the Chinese New Year holiday, which began
"Thats over 40 percent of
the market out of the market," a second consumer told
"With China shutting down for
two weeks, its kind of boring," a trader added.
"China is slow. We havent
really done any spot," a second trader agreed, pegging premiums
at 5 to 5.5 cents per pound.
The second consumer purchased
500 tonnes of cathode in the past week at a premium of less
than 5 cents. This cathode will be used in the building wire
end-markets, an area that participants are forecasting will
increase slightly this year.
"The wire business seems to be
improving slightly," a third trader said. "But its
nothing significant enough to warrant an uptick in buying
(yet). In terms of consumer buying, there really hasnt
been that much. Our spot business is slow."
Most consumers are meeting their
needs with material bought on contract, although some traders
are optimistic that spot business could pick up later this year
as less material was contracted for 2013 than in 2012.
"Most domestic consumers have
long-term contracts covered, so it will be quiet for a month or
two," the second trader said.
The third trader agreed, but
added that many consumers "left a big chunk" of business open
for the spot market this year.
This hasnt happened yet,
however, leaving traders with little choice other than to
deliver metal into London Metal Exchange-registered
More than 11,000 tonnes of
copper has been shipped into LME-registered warehouses in New
Orleans since the start of February, LME data shows. Total
copper inventories in New Orleans stood at 112,050 tonnes Feb.
12 compared with 75,775 tonnes Jan. 2.
Delivering the metal into the
warehouses might not be as lucrative as selling to consumers,
but in the absence of spot demand incentives being paid by some
warehousing companies is enough to entice traders to continue
to ship copper into the warehouses (amm.com, Feb.
The trend will continue as long
as demand is lackluster, traders said.
Traders were surprised at the
strength of copper prices on the LME given the absence of the
The Comex March copper contract,
the most actively traded, settled at $3.744 per pound Feb. 12,
up 0.6 percent from $3.7225 Feb. 11. Three-month copper on the
LME ended the official session at $8,220 per tonne Feb. 12,
down 0.5 percent from $8,258 per tonne Feb. 11 but up 0.4
percent from $8,190 per tonne Feb. 1.