U.S. Copper Premiums Seen Falling Next Year as Fee Talks Begin

The amount charged for physical deliveries of copper to the U.S. will probably fall next year as a global supply glut drives metals prices lower.

Metal suppliers, buyers and traders are meeting this week for the annual American Copper Council meeting, and the groups are negotiating the premiums. The fee, which is added to the price of copper traded on the Comex in New York, is set to drop by about 1 cent a pound, a survey of five attendees showed as discussions began. Reuters reported last year that the 2015 charge would be 3.5 cents to 4 cents a pound.

Copper buyers will have the advantage over suppliers as the fees are negotiated, according to Dane Davis, analyst at Barclays Plc. Ample supplies will help to limit costs for buyers, he said before the talks started. Copper futures have tumbled 23 percent this year as slowing economic expansion in China, the world’s biggest consumer, cuts demand and worsens a global supply glut. Codelco, the top global producer of the metal, plans to cut the premium it will charge for delivery to Europe by 18 percent for 2016, two people familiar with the matter said last month. Fees are also falling in China.

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