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Codelco Said to Cut Copper Premium 5.6% for European Clients

Oct. 16 (Bloomberg) -- Codelco, the world’s largest copper producer, cut the premium charged to European buyers next year by 5.6 percent, according to two people with direct knowledge of the matter.

The fee will be $85 a metric ton, from $90 this year, said the people, who declined to be identified because the terms haven’t been made public. The premium is added to the price of copper for immediate delivery on the London Metal Exchange to cover costs including shipping and insurance.

Copper prices fell to a one-month low yesterday on concern that policy makers in China, the biggest consumer of the metal, may refrain from additional economic stimulus after exports grew more than expected in September. Goldman Sachs Group Inc. cut its 12-month estimate for the metal used in homes, cars and power grids by 11 percent yesterday and copper traders are the most bearish in four months, according to a Bloomberg survey.

“Lower premiums are clearly an attempt to incentivize European consumers to contract for more copper next year,” David Wilson, an analyst at Citigroup Inc. in London, said by e-mail. “European demand has been very soft, and consumers seem to be showing a reluctance to contract for much material next year given the gloomy European macro outlook.”

Codelco declined to comment, according to a person from the press office who can’t be named because of internal company policy.

Aurubis AG, located in Hamburg, and Tokyo-based Pan Pacific Copper Co. already lowered premiums. The 17-nation euro area’s economy will contract 0.4 percent this year, the International Monetary Fund said this month.

Copper for delivery in three months climbed 0.5 percent to $8,132.25 a ton by 4:11 p.m. in London.

To contact the reporters on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net; Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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