NEW YORK Copper
cathode traders and consumers expect spot market premiums to
rise in July, when supplies could tighten, after holding steady
in recent weeks.
delivered premiums remained at 7 to 9 cents per pound June 26
as the market continued to move slowly. However, market
participants said delayed market reaction to Kennecott Utah
Coppers declaration of force majeure following a
wall slide at its Bingham Canyon Mine (
amm.com, May 21) and long queues at London Metal
Exchange-listed warehouses will cause delivery premiums to
"Business is a little
on the slow side but higher premiums could happen," a trader
told AMM. "Im down a little because of some
recent activity but as some of the domestic producers run out,
like Kennecott, supply will tighten."
The effect of
Kennecotts outage likely will not be seen until the end
of July, sources said. "Theyve been expecting (higher
premiums) since April since Kennecotts wall slide," a
second trader said.
Two sources said
Kennecott will be able to make its July contractual deliveries,
but the company would not comment.
"I was last told ...
that Kennecott would have a plan by September," a copper buyer
said. "If they did all of a sudden get material for July,
were already booked. We had no choice but to buy material
from overseas. We cant cancel our contract overseas."
Delivery premiums for overseas material are already at 9 to 11
cents per pound, he said.
For others, the
upcoming high premiums has "everything to do with the (LME)
warehouses," a second copper buyer said. "Copper producers and
merchants have so many incentives with the pricing schemes at
This adds to the
growing long queues out of the warehouse. Currently it takes up
to two years to get copper out of warehouse, with premiums of
$70 to $120 per tonne in New Orleans and $70 to $135 per tonne
in St. Louis, according to AMM data.
premiums, copper prices remain low. Comex copper prices dropped
again this week, with the July contract settling at $3.041 per
pound June 26.
This has prompted some
companies to hold onto material previously purchased at around
$3.30 per pound, a third trader said. These companies will be
reluctant to sell, contributing to a tightening supply of