Reduced copper inventories among consumers and lopsided global stockpiles lie behind higher European premiums for the metal, according to Aurubis AG.
Premiums paid in Rotterdam for immediate-delivery copper on the London Metal Exchange are between $90 and $100 a metric ton, compared with $60 a ton in December, Chief Executive Officer Peter Willbrandt said in an interview. Lower consumer stockpiles mean every new order is further straining supplies, he said.
“It’s not really a pickup in the economy causing the rise in premiums,” Willbrandt said yesterday by phone from Hamburg, where Aurubis is based. “The supply pipeline here in Europe is really empty. Any delay to shipments into Europe further tightens the market.”
LME copper inventories have dropped 30 percent this year to the lowest level since July 2009, while those tracked by the Shanghai exchange are the highest since at least 2003, according to figures from the bourses. U.S. warehouses hold 78 percent of LME stocks, compared with 14 percent in Europe and about 8 percent in Asia.
“What we’re seeing at the moment is a little bit atypical,” the CEO said. “The stocks are unequally distributed around the world.”
Copper stocks in China, which accounts for about 40 percent of global demand, may come to 700,000 to 750,000 tons including those in bonded warehouses, according to Willbrandt. Some copper cathodes, or finished plates, may be shipped to China from Europe, he said. Bonded warehouses’ holdings are undisclosed.
Shipments to China
“A lot of the volume produced around the world has gone to China during the last couple of months and weeks,” Willbrandt said. Imports of refined copper into the country rose 12 percent in February from the prior month, customs figures showed today.
China’s government this month cut its target for annual economic growth to 7.5 percent from 8 percent. That cast doubt on the outlook for demand in the biggest global consumer of the metal, used in wiring, pipes and roofing.
“Copper demand in China is much higher than two to three years ago, so 7.5 percent growth in the economy means that in absolute figures, we will still have strong growth in copper demand this year,” Willbrandt said. Usage in the country will climb 6 percent to 7 percent in 2012, Aurubis says.
While customers remain cautious, orders from carmakers in Europe are “at a high level” and demand for specialty wire used under water is improving, according to the CEO. Italian demand for wire rod has strengthened, he said.
Aurubis produced more refined copper in 2011 than any company in the world except Codelco, the state-owned Chilean copper miner, figures compiled by researcher CRU show. The German company is the largest global recycler of the metal, according to its website.
Production of cathodes at Aurubis was 1.15 million tons in 2011 and should be at “the same level” this year, Willbrandt said. He joined the company in 1988 and succeeded Bernd Drouven as CEO at the start of this year.
Copper for three-month delivery, up 11 percent on the LME this year, was unchanged at $8,430 a ton by 3:09 p.m. local time. Aurubis shares slid 0.6 percent to 40.33 euros in Frankfurt trading, reducing the company’s market value to 1.81 billion euros ($2.4 billion).