Negative domestic premiums and expanding import losses led Chinese copper cathode producers to sell more cathodes to ex-China markets, sources said June 3.
S&P Global Platts assessed Chinese copper import premiums at a record low $29/mt plus London Metal Exchange cash, CIF China, on June 2, for LME-registered normal brands of ER cathode. This was $49/mt, or 61.3%, lower than $75/mt assessed on Feb. 23, 2021 -- the highest level this year.Domestic discount traded at Yuan 100-200/mt ($16-$31/mt) over Shanghai Futures Exchange copper futures contract during the week of May 28 and improved to Yuan 10/mt June 3.
Import losses hovering around Yuan 800-1,000/mt for the past three months resulted in muted import interest to China.
In Southeast Asia, the premium was traded at around $80/mt on a CIF basis, compared with $25-$30/mt CIF Shanghai.
"Many smelters have tried to sell more metals to ex-China markets, as domestic cathode market price is low and has very thin liquidity," a Chinese smelter source said.
However, Southeast Asian buyers have booked most of the cathode usage via term contracts, while India's lockdown dampened regional demand.
As a result, Chinese smelters were delivering copper cathode to London Metal Exchange warehouses in Asia. "There are incentives from LME warehouse for delivery, and premium received is much better than domestic market," a state-owned smelter source said.
China's refined copper exports rose 44.8% year on year and 45.3% month on month to 24,001 mt in April, data released by the General Administration of Customs showed.
Meanwhile, China's refined copper output rose 3.6% month on month and 16.6% year on year to 901,000 mt in April, according to the latest data released by the National Bureau of Statistics.
Chinese smelters kept their operating rates high in April as their profit margins were boosted by the high blister copper refining charge and rising sulfuric acid prices.
