Premiums for bonded copper in Shanghai fall as supply rises

Reuters reported that sellers of bonded copper in Shanghai may not get a premium in coming weeks as supply rises and China's credit tightening hit demand likely forcing them to consider re exports from the world's top copper consumer.

Traders said that the premiums, typically paid by buyers on top of London Metal Exchange spot copper prices and rose above USD 250 per tonne in 2009 now traded around USD 20 versus USD 30 to USD 70 per month earlier and USD 115 for 2011 shipments provided by the world's top copper producer Codelco. For Chinese less popular solvent-extraction electrowinning copper no premium was being required.

A warehousing source said that arrivals in January were not low and much of those were put into bonded warehouses. The firm's bonded copper stocks had risen by a quarter this year. The stock is copper that has arrived in China but has not paid the country's 17% value added tax in bonded warehouses.

Traders said that importers were holding off the VAT payments and leaving the metal in bonded warehouses as prices had been lower in the Chinese market than the cost of the imports. About 500,000 tonnes of refined copper cathodes may be stored in bonded warehouses in Shanghai after the poor arbitrage increased the storing of contracted arrivals in the past few months.

（Sourced from Reuters）