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The premiums for copper cathodes imported into China rose quickly in the week to Tuesday July 23, supported by improved arbitrage terms between the London Metal Exchange and the Shanghai Futures Exchange (SHFE), Fastmarkets learned.
Fastmarkets assessed the daily benchmark copper grade A cathode premium, cif Shanghai at $10-25 per tonne on Tuesday, up by $15-17 per tonne from $(5)-8 per tonne on July 16.
Similarly, Fastmarkets assessment of the daily copper grade A cathode premium, in-whs Shanghai was $10-22 per tonne on Tuesday, up by $17-20 per tonne from $(10)-5 per tonne on July 16.
Spot activities picked up with import arbitrage numbers turning favorable for imports, participants said.
“Offers were up significantly amid improved arbitrage terms, and buying interest also grew, with many looking for units in the spot market, and some chose to import units themselves,” a Shanghai-based copper trader said.
“Trading sentiment was improving from last Friday, [and] both offers and bids were up amid improved sentiment,” a second trader in Shanghai said.
In the Shanghai equivalent-grade (EQ) copper cathode, market sentiment also improved. Several sources reported shipment delays from Africa, which also supported the market, Fastmarkets learned.
Fastmarkets assessed the weekly copper EQ cathode premium, cif Shanghai at $(35)-(25) per tonne on Tuesday, up by $20 per tonne from $(55)-(45) per tonne the week prior.
“The Shanghai EQ market was also up along with [the] registered copper cathodes market due to improved arbitrage terms. Also, copper shipments from Africa are being delayed again, reducing spot availabilities,” a third trader in Beijing said.
Fastmarkets calculated the copper import loss at $149.96 per tonne on Tuesday, from a loss of $212.12 per tonne on July 16.
Elsewhere in the Southeast Asian copper market, trading remained unchanged amid the summer lull, participants said.
“The market in the Southeast Asian region was very quiet due to slow demand, [and] there is little sign of improvement so far,” a fourth trader in Singapore said.
Fastmarkets assessed the weekly copper grade A cathode premium, cif Southeast Asia at $50-65 per tonne on Tuesday, unchanged since June 18.
And Fastmarkets’ assessment of the copper EQ cathode premium, cif Southeast Asia was $(10)-0 per tonne on the same day, unchanged on a weekly basis.
Fastmarkets’ copper grade 1 cathode premium, ddp Midwest US narrowed to 11-13 cents per lb on Tuesday, from 10-14 cents per lb in the previous week, where it had been since June 11.Inputs were given between 10-14, with an unusual amount of disagreement among sources on the high and low end of that range. Due to these discrepancies, as well as a deal confirmed at 12 cents per lb, the premium was tightened to accommodate the midpoint of inputs, creating a fair balance between the varied commentary of market sources this week.
“People are eating up their contracts so there is difficulty sourcing [spot material],” said one trader.
“It has more to do with [the fact that] there weren’t a lot of contracts being made this year, so suppliers did not buy as much. Now demand is catching up and supply can’t keep up with that. Demand is at levels that it should be, and suppliers [are] not making it,” he added.
Another trader shared a similar view, noting that market participants who did not lock in contracts at 10 cents per lb at the end of last year are now in need of metal, which is now priced around 14 cents per lb.
“[The premium] is wide because there are deals with the premium locked and price floating that are still reporting it as if it’s a current premium spread when it’s not. [The] reality is [the premium] has moved up. I don’t think there’s any current deals at 10 [cents per lb]… maybe not even [at] 11 [cents per lb],” he told Fastmarkets.
But a third trader told Fastmarkets that 14 cents per lb is “too high” and not reflective of the current market. A consumer echoed this view, saying that the premium should be narrowed down.
A second consumer also said the premium should be narrowed, but assessed the market at 11-13 cents per lb. “The market is quiet and there’s not much trade, but 11-13 [cents per lb] is probably closer,” he said.
A fourth trader assessed the market as flat.
Fastmarkets’ fortnightly assessment of the copper grade A cathode premium delivered Germany was $190-210 per tonne one July 23, unchanged since April 30.
Fastmarkets’ fortnightly assessment of the copper grade A cathode premium, cif Leghorn was $130-160 per tonne on July 23, also flat since April 30.
Fastmarkets’ fortnightly assessment of the copper grade A cathode premium, cif Rotterdam was $120-135 per tonne on Tuesday, flat from the previous pricing session.
And the fortnightly copper EQ cathode premium, cif Europe was assessed at $90-100, flat since late May.
The European copper market was said to be quiet with the summer lull affecting demand.
Sources said weak economics in Northern Europe and summer holidays in Southern Europe left the market quiet.
“Everything is unchanged. There is no hope for the rest of the year, and there is nothing to be excited about,” said one consumer source.
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