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Warehouse incentives lift Europe’s copper premiums

Keywords: Tags  copper premiums, copper, London Metal Exchange, LME, LME copper stocks, warehouse incentives, LME prices, copper scrap supply Mark Burton


LONDON — Copper premiums in northern Europe jumped at the start of this week as sellers boosted their offers in line with incentives of up to $100 per tonne offered by traders and warehouses to draw copper into the Belgian port of Antwerp.

Rotterdam copper premiums published by AMM sister publication Metal Bulletin rose to $60 to $100 per tonne March 11, where they remained as of March 13. That’s up from $50 to $90 per tonne March 8, as traders and producers said that they were quoting and booking in line with incentives offered in London Metal Exchange warehouses in Antwerp.

The weighted average premium stood at $75.77 per tonne, up from a low of $57.50 in late February.

"We don’t sell to warehouses, but we have spot material that we sell to merchants. The ones that can do these warehouse deals are offering better premiums than a consumer," one producer source said. "For me, it doesn’t make sense to sell to a consumer at $60 (per tonne) in Rotterdam when I can get $100 from the merchants. At the moment, the premium in northern Europe is the warehouse incentive in Antwerp."

Consumer activity remained dormant, particularly at the lower levels that physical copper users have been able to achieve until recently.

"Less than a couple of weeks ago I could buy spot material at $65 (per tonne), but it appears the situation is different today," one semifabricator source said. "It just shows how quickly things can change in the copper market."

Consumers will increasingly have to compete with warehouse incentives in order to book material, as they now do in the aluminum market, sources said. But unless the queues in locations such as Antwerp get longer, premiums will only push above those incentives in response to traditional drivers, such as Chinese restocking or higher cathode demand caused by a shortage of scrap.

"We’ve seen already in these past few weeks that scrap supply has decreased as a result of lower prices, and there are signs that some of my colleagues are having to replace scrap with cathode," the semifabricator source said.

A version of this article was first published by AMM sister publication Metal Bulletin.


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