Chinese importers have cut purchases of copper in bonded warehouses in Shanghai this week because of weaker domestic demand, caution over prices and slower processing by local customs offices, traders said on Wednesday. Reduced trade was discouraging investors and merchants from placing new import orders for spot copper, which could trim arrivals in the world's top copper consumer next month, traders said.
Premiums, paid by buyers to sellers in addition to cash London Metal Exchange copper prices, have fallen about 10 percent from last week despite a fall in the supply of copper stocks in bonded warehouses in Shanghai, China's most popular destination for refined copper imports."We cannot sell at good premiums. But even at lower premiums, there have been very few deals done so far this week," said a trader at a large Chinese trading firm.
The firm had resold bonded copper at premiums of about $135 this week versus $150 last week, he added.Chinese buyers were unwilling to trade because a crucial euro zone summit later this week may move international prices, he said. The $135 premium is still higher than the $120-$130 at which material changed hands in mid-November and $110 offered by the world's top copper producer, Chile's Codelco for shipments in 2012. Traders said offers for bonded copper stayed at premiums of about $140-$150 per tonne over cash LME prices versus $150-$180 last week.
BONDED STOCKS Bonded stocks, in Shanghai but not yet assessed for China's 17 percent value-added tax, are the most popular type among Chinese importers, since they offer the shortest delivery time.The stocks were estimated at about 260,000-270,000 tonnes, compared to about 300,000-330,000 tonnes in the middle of last month. Bonded copper had fallen after investors and merchants paid the VAT and resold the metal in the domestic market in the previous 2-3 weeks, traders said.