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Copper Premium Said to Rise in Europe After Gain in Orders

The premium that refined copper buyers are expected to pay in Europe increased in the past month on more orders, according to four people who trade the metal.

The premium is about $114 a metric ton in Rotterdam, based on the median of midpoints from ranges given by the people, who asked not to be identified because they aren’t authorized to speak to the media. That compares with $105 last month and $110 in August. The people cited more orders while demand is steady.

Stockpiles monitored by the London Metal Exchange in Europe have fallen 26 percent since the year’s high June 24 and are at the lowest since January, according to bourse data. Aurubis AG’s smelter in Hamburg and Atlantic Copper’s plant in Huelva, Spain are closed for maintenance.

“A little pick-up in demand after summer looks to be the cause,” Vivienne Lloyd, a consultant at London-based researcher CRU, said by e-mail today. The shutdown at the two smelters is also a reason behind the increase in the premium, she said.

The premium ranged from $100 to $140 a ton, compared with $100 to $120 a ton last month. The premium is added to the price of cathode, a form of refined metal, for immediate delivery on the LME. It includes insurance and costs to ship to Rotterdam.

The ranges cited by the traders were: $105 to $110 a ton, $100 to $110, $115 to $125, and $130 to $140. Copper for immediate delivery on the LME settled at $7,148 a ton today. The metal gained 3 percent last month. Scrap supply is restricted even as higher prices encouraged more supplies, the people said.

Aurubis AG, Europe’s largest refined copper producer, raised the 2014 premium by 22 percent to $105 a ton, it said last week. Some suppliers of copper started to ask for higher premiums for the metal after that announcement, one person said.

Codelco, the world’s biggest copper producer, will discuss the premium with its customers next week, Rodrigo Toro, corporate sales vice-president, said in an interview yesterday. The Santiago-based company expects a “reasonable” increase in the premium after the surcharge on the spot market climbed this year, he said.

“I have a perception Europe is doing better than a year ago,” Toro said.

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