Codelco to increase copper shipments to China

Chile's Codelco, the world's top copper producer, has raised the premium for 2014 term shipments to China by 41 percent to a nine-year high, Reuters reported Wednesday, citing four trading sources, reflecting strong Chinese demand.

The proposal to clients in private meetings in Shanghai on Wednesday to increase the premium by $40 to $138 per ton - the highest since 2005 - offers potential support for copper prices which have fallen about 4 percent this month.

Codelco Chief Executive Thomas Keller said he expected term negotiations with the company's biggest customer and the world's biggest copper consumer to wrap up fairly quickly.

The offered premiums reflected spot market conditions, where premiums have risen sharply since last year, Keller said in Shanghai after the firm announced the premium to clients. He declined to give details of the offer.

Chinese traders and end-users said the offer was likely to be accepted.

The offered premium is in line with the $135-$145 range expected by buyers, and is still lower than spot premiums of $190-$200 per ton for bonded stocks in Shanghai or shipments due to arrive China soon.

Most buyers in China paid a term premium of $98 per ton over the cash London Metal Exchange copper price in 2013, with smaller firms paying above the mark but less than $105 to Codelco. The premium includes insurance and freight.

Codelco was widely expected to raise the 2014 term premium after a $27 per ton increase for buyers in Europe. Chinese buyers had also agreed to higher premiums from Japanese suppliers due to rosy forecasts of economic growth in China and consumption of refined copper.

Traders and end-users were keen to increase bookings of 2014 shipments as they were growing more confident about the economic outlook and demand for the metal as a financing tool remained strong, trading sources said.

The buyers wanted to hold more metal next year after a rise in domestic demand in the second quarter of this year led to a rundown in stocks at bonded warehouses.