China Copper Premium Near Record Level on Trade Financing Demand

Premiums for imported copper in China, the world’s biggest consumer, remained near a record on demand for import financing even as the country moved to control capital inflows.

The premium was at $195 per metric ton today, compared with a record $210 seen in August, according to data provided by SMM Information & Technology Co.

China’s foreign exchange regulator said banks should prevent companies from obtaining trade financing based on fabricated trades, the State Administration of Foreign Exchange said yesterday. A similar move to control capital inflows effective from June raised market concerns earlier this year over the short-term outlook for copper.

Yesterday’s announcement “may not have an immediate material impact on the trade because it’s not clear how strict enforcement will be,” said Sijin Cheng, a Singapore-based commodities analyst at Barclays Bank Plc. “A credit crunch and rising domestic rates fueled demand for copper import financing in the past month.”

Copper for delivery in three months on the London Metal Exchange fell 0.3 percent to $7,104.25 a ton at 3:55 p.m. in Shanghai. Prices are down 30 percent from a record $10,190 in February 2011. Futures in Shanghai closed little changed at 50,870 yuan ($8,375) a ton.

Unwrought copper and copper products imports by China rose 7 percent on month to 435,613 tons in November, customs said yesterday. Codelco, the world’s biggest producer, raised the fee it will charge Chinese buyers to $138 a ton for 2014, the highest since 2005, according to two people with direct knowledge of proposals.

Refined-copper inventories tracked by the Shanghai Futures Exchange fell to the lowest level in 17 months last week to 141,533 tons, data from the bourse showed on Dec. 6. Stockpiles monitored by the LME fell to 408,100 tons, the lowest since Feb. 18, according to data from the bourse.

To contact Bloomberg News staff for this story: Alfred Cang in Shanghai at acang@bloomberg.net

To contact the editor responsible for this story: Jarrett Banks at jbanks15@bloomberg.net

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