LONDON Copper premiums
have been quoted as high as $120 per tonne in Rotterdam,
Netherlands, this week as the European market experiences
tighter supply following port strikes in Chile and a
maintenance shutdown at Swedish miner Boliden AB that began in
The recent slump in copper
prices on the London Metal Exchange has also tightened the
supply of scrap and increased demand for cathodes as a
replacement, market sources told AMM sister
publication Metal Bulletin.
Rotterdam in-warehouse copper premiums stood at $90 to $120 per
tonne April 30, up from $65 to $100 at the start of April, as
market sources reported a flurry of inquiries for cathodes to
cover shortfalls arising from a three-week Chilean port strike
that ended April 6.
Corporación Nacional del
Cobre de Chile (Codelco) said shipments of about 60,000 tonnes
of cathodes were delayed during the strike, while Anglo
American Plc said 10,000 tonnes of its material was
The short-term strain in
availability has been compounded by extensive maintenance
shutdowns at Bolidens copper and zinc smelters since the
start of April.
The most extensive work is being
undertaken at the Rönnskär copper smelter in Sweden,
which averaged nearly 18,000 tonnes per month of cathode
production last year.
The outages will negatively
affect operating profit to the tune of about 300 million kronor
($46.3 million), Boliden said in its annual report in
The group is expected to provide
a further update May 3, when it releases its first-quarter
"We definitely have a shortage
in the market these days," a source at a copper producer told
The recent flow of material into
LME warehouses in Antwerp has also concentrated the
availability of the surplus material that was entering the
market prior to the port strikes and shutdowns, he added.
There were 122,575 tonnes of
copper stored in Antwerp, Belgium, warehouses April 30, about
87 percent of the total available in European LME sheds.
Warehouses helped to boost
premiums in the first quarter as they offered incentives of up
to $100 to bring copper into storage in Antwerp, but consumers
are now outbidding them to secure material through the
unexpected shortfall, sources said.
The same trend has been seen in
Asia and the United States to varying degrees, following a
court-ordered shutdown at Sterlite Industries India Ltd.s
Tuticorin smelter in India and a wall collapse at Kennecott
Utah Copper LLCs Bingham Canyon Mine.
"Weve had inquiries from
all over, but weve got no availability. Its down to
the strikes and the shutdowns, the lack of cathodes due to the
queues and the lack of scrap," a second producer said.
The availability of scrap has
tightened since the 11-percent drop in prices seen earlier in
April, leading to narrower discounts on the material that is
available. In some cases, No. 1 copper scrap has been sold on
an LME-plus basis in Europe, he said.
"I wouldnt consider that a
benchmark, because its only small tonnages and its
a marginal cost for the buyers, but the market for No 1 in
particular has become really tight," he said.
Immediately following the swing
in copper prices in April, there were reports that No. 1 copper
scrap had traded at a premium in the United States.
At the time, Aurubis AG chief
executive officer Peter Willbrandt told Metal Bulletin
that discounts were narrowing in Europe, but it was unlikely
that the market would be bid so aggressively.
In addition to tighter supply
caused by the slump in prices, consumers of high-grade scrap
are also facing stiffer competition from China as a result of
restrictions on the import of lower grades, a source at a large
scrap dealer told Metal Bulletin.
No. 1 scrap is trading flat to
or at a premium over Comex and the LME, while No. 2 grades are
selling at a 5-percent discount, he said.
The drop in prices has not
triggered significantly stronger buying interest from consumers
in Europe, where buyers continue to run inventories as thinly
as possible and avoid taking strategic positions in response to
lower prices, the first producer source said.
A version of this article was first
published by AMM sister publication Metal