Codelco Said to Maintain 2010 Copper Premium at $80

LONDON, Sept. 30 -- Codelco, the world's largest copper producer, maintained the premium charged to European buyers next year, signaling that consumers may still be too cautious about the outlook for demand to book more orders.

    The premium will stay at $80 a metric ton, according to a person in the industry with knowledge of the situation, who declined to be identified because the terms are confidential. The premium, on top of the London Metal Exchange price of copper for immediate delivery, covers the cost of shipping and insuring the metal from Chile to Rotterdam, Europe's largest port.

    This year's premium fell from $115 as the world entered its deepest recession since World War II and manufacturers of copper products such as tubes and wires slashed output. World demand is expected to rebound by about 4 percent next year, after dropping 3.6 percent this year, Societe Generale estimates. Consumers may not be fully confident yet, Barclays Capital said.

    "A lot of people are not going to commit to contracts and that could be a reflection of what we are seeing" in the Codelco premium, Barclays analyst Gayle Berry said by phone from London. "A lot of consumers are choosing to wait and see what their order books are like and book less on contract."

    Copper advanced 93 percent in London this year as China, the biggest consumer of the metal, imported record amounts. The Asian nation's overseas purchases fell in July and August.

    The International Monetary Fund expects the world economy to grow about 3 percent next year, compared with a 1 percent contraction this year, Deputy Managing Director Murilo Portugal said in Sao Paulo yesterday.

    (Source: Bloomberg)