Codelco’s 2017 Copper Premiums to Chinese and European Buyers to be Higher, SMM Expects

SHANGHAI, Oct. 24 (SMM) –Three trading sources said Codelco has slashed its 2017 physical copper premiums to around $70 to Chinese buyers, and $80-85 per tonne to European buyers. Two of the sources said that Codelco would offer a premium of $82 to buyers in Europe.

Codelco's premiums are viewed as a benchmark for global contracts, and other producers are likely to follow suit.

So far, Codelco has made no official comment about this. In past years, the premiums are usually announced by Codelco from mid November to December. 

SMM sees a low chance for 2017 term premiums to Chinese buyers to below $70 per tonne, despite of the fact that financing demand for copper has waned in recent two years. And it is also rare to see the premiums below the $75 level, and the premiums to European buyers are also likely to be higher than $82 per tonne.

Codelco, the world's biggest copper miner, offered a premium of $98 per tonne for 2016 term shipments to Chinese buyers, and $92 to European buyers. 

Aurubis, Europe's biggest copper smelter, has cut the premiums for copper cathode for 2017 to $86 per tonne. Codelco’s terms for quality and shipments are both higher than Aurubis’s.

SMM expects Codelco’s 2017 copper premiums to Chinese buyers to be no less than $75 per tonne.  

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