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US copper cathode premiums rise significantly

Keywords: Tags  copper cathode, premium, Kennecott Utah Copper, Bingham Canyon Mine, force majeure, PMX Industries, Barbara O'Donovan


NEW YORK — U.S. copper cathode premiums have soared in the aftermath of a wall slide at Kennecott Utah Copper’s Bingham Canyon Mine.

AMM’s spot copper cathode premiums rose to a range of 6 to 8 cents per pound on a delivered basis May 1, up from 4.5 to 5.5 cents previously.

Quotes for spot material rose soon after the April 10 wall slide ( amm.com, April 17), but most consumers held back from buying until more information about the situation was available. Kennecott declared force majeure April 16, saying it did not expect to be able to make shipments from June onward.

While purchases since have been scarce, anyone who must buy will have to pay higher premiums, consumers and traders confirmed.

Several traders reported hearing of sales of copper cathode at 9-cent and 10-cent premiums, but AMM could not confirm any such transactions in the spot market.

The situation at Kennecott, a lack of scrap, long queues for material in London Metal Exchange-approved warehouses and strikes in Chile have conspired to push premiums higher, one trader said.

"Premiums were, say, 5 cents or thereabouts before the problem at Kennecott Utah Copper. Offers for copper in the United States on a delivered basis over the past 10 days are from 7 to 8 cents plus," said the trader, who had transacted at the higher numbers.

Copper stocks in LME-approved warehouses in the United States totaled 203,950 tonnes May 1, but consumers and traders said that most of the material is not immediately available.

"I can’t recall a time when most of the available stocks were paralyzed," a second trader said.

"Things have been squeezed. Domestic copper is tight," said one consumer source, who paid a premium of about 6 cents per pound to secure material in recent weeks.

Several traders told AMM that they had no available spot material, having previously opted to sell what copper they had into LME-listed stores in exchange for the incentives being offered by warehousing companies.

"The only material I would have is coming from Chile, so the earliest I could deliver to anyone here is July," the second trader said.

Comex copper stocks totaled 85,799 short tons May 2, and data showed that inventories had risen in New Orleans stores following a 1,000-ton delivery.

A recently announced copper surcharge by Cedar Rapids, Iowa-based PMX Industries Inc.—which had sourced almost all of its cathode from Kennecott—also spurred the increase in copper premiums, market participants told AMM ( amm.com, April 30).


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