Spot import premiums for London Metal Exchange-registered brands of copper cathode on a CIF China basis have fallen amid thin trade after news Qingdao port had halted shipments of aluminum and copper amid a probe into loan irregularities involving stocks in warehouses, sources said Wednesday.
Most import premiums were at $100-110/mt CIF China this week, down from $110-130/mt last week.
Platts lowered the weekly CFR China copper premiums to $100-110/mt plus LME cash Wednesday, from $110-130/mt last week. The price difference between CIF and CFR is negligible.
Qingdao port halted shipments last week, local media reported Monday, after state authorities launched an investigation into some local trading companies for allegedly using warehouse receipts multiple times to secure financing from banks. Up to 80,000 mt of aluminum and 20,000 mt of copper reportedly stored at Qingdao warehouses could not be accounted for.
Southeast Asian traders lowered their export premiums as Chinese buyers turned cautious. One Southeast Asian trader has lowered his premiums to $100/mt from around $140/mt last week, while another indicated at $100-110/mt, compared with $120-130/mt last week.
"Chinese buyers are weary due to the Qingdao port checks," said the second Southeast Asian trader.
Chinese sources also heard a drop in import premiums.
"I am hearing import premiums around $100/mt this week, down from $120/mt last week. Market participants are adopting a wait-and-see [attitude] in view of the Qingdao port incident," said a southwest China-based trader.
A north China-based analyst said: "Copper futures prices also suffered...In addition, the summer is near and the weather will get very hot. Some plants will carry out their scheduled maintenance. Buying activities from the downstream end-users are expected to be slowing down. This may dampened import premiums."
The northern analyst heard import premiums around $100/mt, down from $110-120/mt last week.
The southwestern Chinese trader said: "The import-related loss is still at close to Yuan 1,000/mt, showing no sign of easing." The import-related loss was Yuan 300-500/mt two weeks ago.
Chinese market participants are mostly speculative traders who keep a close watch on LME and domestic copper prices for arbitrage opportunities.
The price of Chinese domestic spot copper was around Yuan 50,130/mt ($8,017/mt) Wednesday, down from Yuan 50,295/mt a week ago, while the front-month June copper futures contract closed Wednesday at Yuan 49,560/mt on the Shanghai Futures Exchange, down from Yuan 49,930/mt week on week.
China's copper stocks continued to slip for a second week in SHFE warehouses, looking set to hit the 90,000 mt mark.
Stocks stood at 91,947 mt last Friday, down 0.8% week on week.
Meanwhile, Chinese spot copper concentrate treatment and refining charges (TC/RCs) were unchanged at $100-110/mt and 10-11 cents/lb, respectively, industry sources said.
TC/RCs, the fees charged to miners by smelters to treat and refine copper concentrate to produce copper metal, typically rise when concentrate supply is ample and fall when supply is tight.
