Heard European buyers are rejecting Russian metal? The world's largest copper producer is raising prices!
Chile's Codelco, the world's largest copper miner, will sell copper to European buyers in 2023 at a record premium of around $235 a tonne, up 85% from 2022, Reuters reported, citing two people familiar with the matter.
Chile's national copper company sets a premium for physical delivery of copper on top of the London Metal Exchange contract, which is often seen as the benchmark for global contracts.
Codelco London declined to comment.
According to one of the sources, many European consumers are now reluctant to buy Russian metal, so they have to look elsewhere.
"The copper market is tight at the moment and the self-sanction of European buyers is making it more difficult for them to negotiate." "The source said.
Industry sources say consumers shunning Russian metals is partly to blame for the increased demand for metals from other sources.
Russia supplied nearly 292,000 tons of copper to the European Union in 2021, according to U.S. Trade data Monitor. The agency's data also showed that the EU imported more than 801,000 tonnes of copper last year.
Aurubis, Europe's largest copper smelter, said last Thursday it would charge European customers $228 a tonne above the London Metal Exchange benchmark price in 2023, which would be well above the $123 a tonne premium in 2022.
Last month, Austrian copper refiner Montanwerke Brixlegg also said in a letter to customers that it would set a €295 per tonne premium for its low-carbon copper next year and would introduce a floating surcharge on high energy costs.
Large quantities of Russian-produced copper are understood to have been stored in LME warehouses in Germany, the Netherlands and Taiwan since mid-September. Copper stocks on the exchange have risen more than 40 per cent since September 15 to 145,500 tonnes, according to LME data. The LME had earlier published a discussion paper that formally began discussing whether it should ban the trading and storage of Russian metals in its systems.
Market, last week on Friday copper fell to the lowest level in the week, week copper rose more than 1%.
Referring to the recent trend of copper prices, Dongwu futures analyst Zhang Hua Wei told the futures daily reporter, the domestic copper fundamentals still maintain a strong reality of weak expected pattern, spot high premium, near and far month spread is widening. Futures buying on the downside restriction copper price rhythm. The delivery ban imposed by the LME on Russian metal traders could disrupt supply in the future. U.S. economic data has been mixed, and bets on Fed policy have swung. The September non-farm data beat expectations, and the market shifted back to a hawkish Fed rate hike in November. The risk of a global recession is rising as central banks in the US and Europe accelerate liquidity tightening to curb aggregate demand in an effort to combat inflation.
According to Zhang Huawei, the international market, the current global spot supply continues to be tight. Domestic social inventory recovered but was still low. Bonded area inventory declined significantly in the second half of the year, weakened the role of reservoir, and increased supply chain vulnerability. LME inventories remain low, with a large addition of Russian copper to recent inventories, and the LME is considering sanctions against Russian metals that would hit LME copper trading if implemented. Moreover, the risk of a global recession continues to rise. The US core CPI hit a 40-year high in September, solidifying the hawkish expectation of further interest rate hikes this year, but the Fed has become more alert to the financial market turbulence caused by too fast rate hikes. On the domestic front, demand is expected to gradually weaken seasonally. But short-term supplies remain tight, with fewer overseas shipments and armed occupation of leased mines at the port of Durban in South Africa and Nambulwa in Congo dampening expectations for imported copper supplies in November. In the continuous wide monetary policy, the downstream enterprises to the cost of the rise of the ability to accept.
"Overall, copper prices are expected to remain volatile. Copper demand is strong inside and weak outside. Fears that the global economy is headed for a recession have dampened prospects for a rebound in copper contracts. "Global inventories remain low, providing support for copper prices, while supply chain shocks could amplify price volatility." "Mr. Zhang said.
Zhang Weixin, a futures analyst at CITIC Jiandou, believes that only from the perspective of China, the fourth quarter is traditionally a destocking stage, and the speed of demand weakening may be slow. For the inflection point of supply and demand, inventory inflection point, there are reasons to believe that it will not come for the time being.
"The downtrend in the global economy is well established and there is no reason to be optimistic about copper demand given the downbeat economic outlook. As major economies overseas contract, foreign demand declines, which will also affect domestic demand. Overall, the demand side is expected to decline under the impact of the economic downturn, and the possibility of supply and demand turning loose in the future is greater. At this point, the most likely future is an inventory turning point, so betting on copper prices to the downside is a winning and profitable option. We believe the turning point in copper inventories could be identified as early as November, followed by the start of a new downward trend that could last more than three months." Zhang Weixin further analysis way.
