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Asia copper premiums said likely to continue climbing

Keywords: Tags  Sterlite Industries, Vedanta Resources, copper, smelter shutdown, copper premiums, P. Ramnath, Shivani Singh

SINGAPORE — Asian copper premiums are likely to keep rising as India’s largest copper smelter remains closed.

The 400,000-tonne-per-year smelter, operated by Vedanta Resources Plc subsidiary Sterlite Industries India Ltd., was shut down in late March after area residents complained that plant emissions caused them to have breathing problems.

An expert panel that inspected the plant had been expected to present its report to a fast-track environmental court in Tamil Nadu state April 29. But in a surprise development, the judge said that the sealed report would instead be sent to a court in New Delhi.

"We expected some result (April 29)," P. Ramnath, chief executive officer of the Tuticorin, India-based company’s copper business, was quoted as saying in a Reuters report.

"Traders had expected the smelter to get clearance (to reopen) with conditions, but now that (the date) has been shifted it will have a big impact on the market," a trader in Singapore told AMM sister publication Metal Bulletin. "It will get resolved, but not for another 15 days is my wild guess. ... If this is going to continue, then premiums are going to continue to rise."

Copper premiums in Singapore rose to $60 to $75 per tonne last week, up from $30 to $50 per tonne at the end of March. Shanghai premiums have gone to $130 to $140 per tonne from $60 to $90 per tonne in the same comparison.

Wire rod premiums would also rise, another market participant said, noting that Indian producers use Sterlite’s copper cathode to convert into wire rod. "We buy copper wire rod at premiums of $225 to $250 over (London Metal Exchange) cash price. ... In India, these may rise (even further)," he said. "The wire rod premiums to India may rise by $20 in the near term."

Other market participants believe that the queues created in Johor, Malaysia, are pushing premiums up.

"The higher premiums are going to last for the next couple of weeks in May and may go up, as there is a problem in getting material out of some warehouses such as Johor due to the incentives," a third trader in Singapore said.

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

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