HONG KONG, July 14 (Reuters) - Spot refined copper buyers in China, the world's top consumer, face the highest premiums since the first half of last year on strong demand and limited supplies as an expected pickup in imports has not shown in monthly trade figures, traders said on Wednesday.
Premiums for spot refined copper were offered this week above $120 per tonne over LME cash prices MCU0 for August arrivals and at $110-$120 for September arrivals from Chile to China with Africa origins about $10 lower, traders said.
Bonded copper in Shanghai, the most popular source among spot buyers on short delivery time, was offered over $150 and supplies were falling fast.
"There are very few solid offers around," a trade manager for a tube producer said of the firm's recent import enquiries.
Last week, spot premiums were seen at $120-$150 for bonded stocks in Shanghai and $100-$120 for September arrivals from Chile, compared to $110-$120 for bonded copper and $95 for July arrivals offered a month earlier.
Copper demand by China has been restricted following tighter lending rules in the property market made earlier this year, a major source of copper consumption in the country.
Traders also cited low bookings between late-March and April when the arbitrage was poor.
But Chinese buyers increased spot copper booking in May on improved arbitrage, buying on the London Metal Exchange MCU3 and selling to Shanghai <0#SCF:> on hopes that second half Chinese prices would be over the LME.
Traders said demand also increased after China's central bank announced a freer yuan in late June, raising hopes for a stronger local currency which typically makes imports cheaper.
Still copper imports by China fell 17.3 percent in June from May [ID:nTOE65H06S], the third straight monthly drop, implying any previously booked shipments have not yet arrived or buyers had not aggressively replenished supplies used earlier in the year.
SCRAP DRIVES DEMAND
Reduced scrap supplies, a cheaper material for fabricators, has also increased local demand for refined copper, a manager at a northern copper smelter said.
"A fabricator said to us the firm could not find scrap in the market and now it wants to sign a term contract (for refined copper) with us," he said.
Scrap sellers were unwilling to sell the material following a more than 10 percent fall in metal prices CU-1-CCNMM in the past three months, the sales manager and traders said.
Bonded stocks have fallen to 100,000-200,000 tonnes in Shanghai compared to around 300,000 tonnes in May, traders and warehousing sources estimated.
The figure is largely viewed as anecdotal however as China does not provide the actual data.
"The remaining bonded stocks mostly should be locked with financial deals and are not available to the market," an executive at an Asian trading firm said.
He noted that some global suppliers have shipped copper to China and sell the metal in the yuan-denominated domestic market to reap high margins, a switch from the usual practise of selling to Chinese merchants for U.S. dollars.
Other overseas traders may have oversold yearly shipments settled in the beginning of the year and are buying spot metal in the international market for the contracted shipments, said the executive.
Chinese buyers may have contracted total term refined shipments of around 200,000 tonnes per month this year, compared to below 150,000 tonnes in previous years, according to estimates by traders, also a figure deemed anecdotal as there is no official data.
"Even us, we find it difficult to buy from producers," the executive said, adding producers normally offered lower spot premiums than those in the international spot market.