Codelco, the world’s biggest copper producer, will cut the surcharge on sales to Japan and South Korea in 2013 by 8.6 percent, reducing the fee for a second year, before an agreement for China sales.
The premium for grade-A metal to Korea will decrease to $85 a metric ton from $93 this year, said two industry executives familiar with the matter, asking not to be identified as the terms are private. The 2013 fee for Japan will be at the same level, two industry executives said last week.
Copper is trading 11 percent below this year’s high on concern that Europe’s debt crisis and an economic slowdown in China will curb demand. Codelco’s settlement may set a benchmark for regional producers. The fee for China, the world’s biggest consumer, may drop to $100 a ton in 2013 from $110 this year, according to the median of 11 estimates from executives, analysts and traders compiled by Bloomberg.
“Given the strong expectation that Chinese demand is going to recover earlier next year, the negotiation results should be higher for China,” Lian Zhen, an analyst at Xinhu Futures Co., said by phone from Shanghai.
The fee is added to immediate-delivery prices on the London Metal Exchange to reflect regional supply and demand and to cover shipping and insurance costs. A call to Codelco’s headquarters in Santiago wasn’t immediately answered.
Copper will average $3.57 a pound in 2013, 20 cents less than the April estimate, on slower China demand and greater-than-expected mine supply, according to a survey of analysts and traders by Chile’s state-run copper commission Cochilco. Codelco cut the surcharge to $85 in 2013 from $90 for European clients, two people with direct knowledge of the matter said in October.
Copper for delivery in three months on the LME dropped 0.5 percent to $7,763.50 a ton at 1:29 p.m. in Seoul. The price touched $8,765 on Feb. 9, the highest this year. The March-delivery contract was little changed at $3.537 a pound on the Comex in New York.