NEW YORK A Chilean port dispute and copper scrap tightness could push copper cathode premiums up in the next few weeks, traders and consumers told AMM.
Spot copper cathode premiums remain between 4.5 and 5.5 cents per pound but market participants expect them to increase, pointing to an ongoing strike at the Chilean ports of Angamos, Antofagasta, Inquique and San Antonio (amm.com, March 28).
Traders with material waiting at Chilean ports said the strike is already pushing back deliveries, and if the dispute is prolonged premiums will undoubtedly get a boost, particularly as copper demand continues to improve in the spring.
"Theres a good chance premiums will pick up," one trader told AMM.
A second trader confirmed that the Chilean port strike is delaying deliveries globally, noting that he has not yet received his March material. He said it wont be long until these delays have a trickle-down effect on premiums, particularly as the strike enters a "second week with no signs of going away."
Still, the first trader said he has seen little evidence of any spot deals being closed at higher numbers as a result of the port strikes. "(Premiums) are probably marked higher as a result of whats going on, but Im not sure much has been traded," he said, pegging premiums at 4.5 to 5.5 cents per pound.
However, sources said that an increase is not far off, particularly as demand from wire and cable consumers improves.
"Business is getting better. The tube, wire and cable guys are in the market for the spring and summer," a third trader said.
"Were seeing a little pickup now that were entering the busy season," a consumer source said. "And if I had to guess, Id say premiums would inch up, given they were low recently."
In addition to the port strike and a seasonal uptick in demand, continued scrap tightness also should push premiums higher as consumers who normally purchase scrap are forced to enter the cathode market.
"Scrap is short. Its very tight, so premiums to buy Grade A (will go up)," the third trader said.
"(The lack of) scrap availability is becoming more dramatic," a second consumer source said. "That bodes well for people selling cathode. Ill probably need to buy more cathode on a spot basis."
Traders continued to take advantage of incentives being paid by warehousing companies to store material, with 8,275 tonnes delivered into London Metal Exchange-approved warehouses in New Orleans between March 20 and 27. Copper stocks in New Orleans stood at 569,775 tonnes March 27, with canceled warrants at 91,375 tonnes.