European Copper Premium Said to Increase on Limited Supply

The premium that copper buyers are expected to pay in Europe climbed in the past month amid limited availability of the metal, according to four people who trade the market.

The surcharge in Rotterdam is about $115 a metric ton, 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 $90 at the end of April.

The fee is added to the price of copper cathode, a form of refined metal, for immediate delivery on the London Metal Exchange. It includes insurance and costs to ship to Rotterdam. Premiums ranged from $100 to $130 a ton, compared with $80 to $125 last month. One person put the range at $110 to $120 and another at $120 to $130. One person gave a single figure of $100 and another said $115.

Producers in the region are sold out for this month and supplies are limited, the people said. They cited curbed availability of scrap as one reason for the higher premiums. Warehouse companies are paying incentives to attract metal to their sheds, further supporting premiums, they said.

Buyers are being asked to pay a premium of about $135 a ton for copper warrants, certificates giving the bearer ownership of metal stored in LME-approved warehouses in Rotterdam, Europe’s biggest port, according to three traders. That’s based on the median of midpoints from the ranges and compares with $80 to $85 in March and $65 to $70 in February.

Stockpiles

LME copper stockpiles in Rotterdam fell 71 percent this year to 4,900 tons, the lowest since Oct. 5, exchange data showed today. They account for 3.3 percent of European stockpiles. The Belgian city of Antwerp holds 90 percent of the bourse’s inventory in the region.

Premiums may start to come down now that a backlog of shipments is starting to ease out of Chile, the world’s largest producer, the traders said. Strikes at Chilean ports which ended in April were holding back 60 percent of the country’s copper exports, Mining Minister Hernan De Solminihac said April 4. It takes about 23 days to ship metal from northern Chile to Rotterdam.

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