Thanks Jim Willie! I imagine you have seen this article...but I will post it just in case you missed it.
Reuters
China Copper-Spot cargoes tight as output cuts feared
Friday November 21, 5:36 am ET
By Nao Nakanishi
HONG KONG, Nov 21 (Reuters) - China's appetite for copper has shown no signs of weakening, despite recent sell-offs in Shanghai futures which helped knock London Metal Exchange (LME) prices from six-year highs, traders said on Friday.
They said strong demand had pushed up Shanghai spot premiums to $100 per tonne or higher, C&F, as many expected Chinese smelters to cut production next year due to tight global copper concentrate supplies.
"Premiums are very high because of a shortage," said a trader based in Shanghai. "The situation is unlikely to change until the middle of next year...we have very strong demand."
Traders said some refined copper suppliers were asking 2004 term premiums of more than $95 over the LME cash settlement price -- well above an offer of $88 by Codelco, the world's largest copper producer.
"The supply is tighter than expected," said one industry source based in China. "China is likely to need some 3.5 million tonnes next year. It's difficult to imagine the domestic production would go up a lot more than 1.5 million."
Industry sources have said China's leading smelters are bracing for production cuts next year as they have little hope for a substantial improvement in fees they receive for processing concentrate into copper.
TALK OF GRESIK OUTPUT CUT
Traders in Singapore said China had also helped dry up supply of the metal in the Southeast Asian spot market amid talk of production cuts at Gresik smelter in Indonesia after an accident at Grasberg copper-gold mine in October.
"There's hardly any copper available," said one trader at an international house in Singapore. "It seems Gresik has also wound down operations. It seems it hasn't even made any offer (for 2004 premiums) because of uncertainties on concentrates."
No official was immediately available for comment at Gresik, majority-owned by Mitsubishi Materials Corp (Tokyo:5711.T - News), which has planned 2003 output of 219,000 tonnes.
Grasberg mine, owned by FT Freeport Indonesia, a subsidiary of U.S.-based Freeport McMoRan Copper & Gold Inc (NYSE:FCX - News), supplies copper concentrate to the Gresik smelter.
A Mitsubishi Materials spokesman said in October the company had seen little impact from the Grasberg landslide that killed at least four employees.
With Singapore stocks down to 5,225 tonnes, compared with a peak of 12,500 tonnes in May, premiums were seen at $65/$75 a tonne in the warehouses, traders said.
Official data showed China produced 1.46 million tonnes of refined copper during the first 10 months of this year, up 20.4 percent from the same period in 2002. It imported 1.10 million tonnes of the metal in the period, up 7.4 percent. |
