SHANGHAI, Nov 4 (SMM)—Copper traders have embarked on the signing of long-term contracts for delivery in 2021 since November. As SMM learned, Codelco has set its premiums of copper cathode long-term contracts (for 2021 delivery to China) at $88/mt, unchanged from 2020, but many of the domestic traders did not accept the new benchmark price.

The imported copper market performed well only in the second quarter. During that period, as domestic demand recovered at a fast pace from the COVID-19 pandemic and the import arbitrage window was opened, trades were active in the market, and premiums of Yangshan copper were boosted to its highest level since October 2018. However, as consumption weakened in Q3, copper prices started to decline, with premiums of Yangshan copper falling rapidly to below $50/mt. As of November 4, SMM Yangshan copper premiums (warrants) averaged $73.88/mt, the average quote under bill of landing stood at $64.95/mt, and the average quote for high-quality copper under bill of landing came in at $72.14/mt.

Besides, given the implementation of the new secondary copper import policy, some traders were bearish on demand for imported copper in 2021, as rising copper scrap supply will narrow the demand for copper cathode.

At present, most of traders are standing on the sidelines, waiting for the “first person” to sign the long-term contracts. Some big traders indicated that they may reduce the number of long-term contracts, and increase the proportion of floating pricing, while some small and medium-scale traders and downstream users said that they are considering completely replacing long-term contracts with floating pricing.