Shanghai Bonded Copper Stocks Rise to 600,000 Tonnes due to Enlarging Arbitrage Losses

SHANGHAI, Jan. 24 (SMM) – Shanghai bonded copper stocks have been increasing in the past three months or so to an estimated 600,000 tonnes at present due to enlarging loss in London-Shanghai price arbitrage.

That compares to around 450,000 tonnes at the start of November, 2013, when Shanghai Metals Market last reported its estimate.

Losses of importing each tonne of copper have widened to 1,800 yuan ($295) per tonne, from around 1,500 yuan per tonne in August when copper prices rallied on the London Metal Exchange (LME), according to SMM data.

LME copper have been trading around $7,300 per tonne in the past month after staging another rally from November last year. The metal prices on Shanghai Futures Exchange have not climbed enough to match up the gains in London in the mean time.

Unfavorable SHFE/LME copper price ratio has deterred importers from customs clearance, who put aside their cargoes in bonded warehouses instead, according to SMM's research team.

At the same time, some Chinese smelters have stepped up exporting copper under the tolling trade practice to bonded areas against lower SHFE/LME price ratio.