Codelco, the world’s biggest copper producer, plans to raise the fee it charges Chinese buyers by 41 percent next year as demand strengthens, said two people with direct knowledge of proposals made by the Chilean miner.
The premium to be added to the price of the metal for immediate delivery on the London Metal Exchange will climb to $138 a metric ton in 2014 from $98 this year, according to copper industry executives in China who asked not to be identified as the negotiations are private. That compares with the $135 median of 14 estimates in a Bloomberg News survey last month and is the highest since 2005, based on data from researcher CRU.
Codelco, which earns more than 90 percent of its revenue from the metal, has already increased the premium for Europe by 32 percent. Higher fees would shore up earnings at the Chilean miner as it faces a 12 percent drop in futures prices in London this year. Copper imports by China, the biggest user, surged to a 19-month high in September as economic growth picked up and demand may rise 6.5 percent in 2014, Barclays Plc estimates.
Helmut Arbert, a representative for Codelco in China, declined to comment.
Yesterday, the metal for delivery in three months on the London Metal Exchange rose 0.4 percent to settle at $6,996 a metric ton. Prices have declined 12 percent this year.
The premium on the spot market for shipments to Shanghai on a cost, insurance and freight basis is around $190 a ton, compared with $195 late last month and a record $210 in early August, data provided by SMM Information & Technology Co. show.
While China is world’s largest copper-producing nation, it doesn’t produce enough to meet its own needs.
— With assistance by Alfred Cang