* China copper smelters to export to LME over next 2 months
* Move may ease tight LME supply as stocks fall to over 3-yr
low
* No export figure cited, but traders see modest volume
By Polly Yam
HONG KONG, April 30 (Reuters) – Large Chinese copper
smelters and trading firms will export refined copper cathodes
to the London Metal Exchange warehouses over the next two months
to help ease tight global supplies and trim near-record
stockpiles at home.
The move could see thousands of tonnes of refined copper
finding their way back to LME warehouses, boosting inventories
and slashing steep premiums of spot prices over those for later
deliveries.
The premiums, which shot up to near four-year highs between
cash and three-month copper on Friday, means losses for Chinese
smelters that receive term imports of the raw material
concentrate priced on nearby LME months, and then sell refined
copper later.
The premiums also dampens demand by discouraging end-users
from buying spot copper.
In a statement received by Reuters late on Sunday, Jiangxi
Copper International Trading Co Ltd, a subsidiary of China’s top
producer Jiangxi Copper Company Ltd , said
smelters that have agreed to deliver refined copper to the LME
include members of China Smelters Purchase Team (CSPT) and
Xiangguang Copper Co Ltd.
CSPT members and Xiangguang comprise the top 10 copper
producers in China, manufacturing the bulk of the country’s
refined copper.
Participating firms will export “enough” refined copper to
improve availability of the industrial metal in the domestic and
international markets, the statement said. No figure was cited.
“Chinese trading companies and main smelters will jointly
export big amounts of copper in the next two months. The copper
will be seen in LME warehouses in Asia,” a trade manager at
Jiangxi Copper International told Reuters late on Sunday,
without giving details about the volume of exports.
PERCEIVED TIGHTNESS
The exports might be enough to slow, or halt, drawdowns of
LME copper stocks, said Nick Trevethan, senior commodities
strategist at Australia and New Zealand Bank.
“But I suspect it will only be temporary and gains in LME
inventories are more likely to come from material diverted on
its way to China rather than coming out from Chinese smelters,”
he said.
Last year, China exported 156,292 tonnes of refined copper,
according to customs data, just a fraction of imports that
totaled more than 2.8 million tonnes.
China’s refined copper exports reached 27,288 tonnes in the
first quarter, down 65 percent from a year ago. Imports for the
period climbed 77 percent to 1.06 million tonnes.
“It certainly shows there’s a lot of material around in
China and potentially there’s not a lot of material elsewhere,
so they need to move to other parts of the world,” said a
Singapore-based metals trader.
“Any material coming back into LME eventually has to
overwhelm the perceived tightness that’s coming out of Europe
and the United States.”
The Chinese move comes as the amount of copper in bonded
warehouses in China had soared due to weak domestic
demand.
China was estimated to have near-record commercial stocks of
more than 1 million tonnes of refined copper in late March. A
trading manager at a large Chinese smelter estimated the stocks
at about 1.4 million tonnes last week, excluding the stockpiles
of the State Reserves Bureau.
In contrast, copper inventories in LME-registered warehouses
fell to its lowest level since November 2008 on Friday, at just
over 250,000 tonnes.
High cash LME prices have already prompted owners of bonded
copper stocks in Shanghai to re-export some stocks in April.
The premium for cash copper against three-month delivery
material in the world’s biggest metals marketplace
soared to $149 per tonne on Friday, the highest since August
2008.
Chinese markets are closed on Monday and Tuesday for a
public holiday.
