HONG KONG, April 30 |
HONG KONG, April 30 (Reuters) - Large Chinese copper smelters and trading firms have agreed to deliver refined copper cathodes to the London Metal Exchange in the coming two months in an effort to boost the availability of copper in the global market, Jiangxi Copper International Trading Co Ltd said.
The joint action means thousands of tonnes of refined copper will likely be shipped to LME warehouses, helping to ease tightness in copper stocks, which has driven spot prices to a steep premium over prices further out.
This causes losses for Chinese smelters that receive regular term imports of raw material concentrate priced on nearby LME months, and then sell refined copper later. It also dampens demand by discouraging end-users from buying spot copper.
In a statement received by Reuters late Sunday, Jiangxi Copper International, a subsidiary of China's top producer Jiangxi Copper Company Ltd , said the smelters included members of China Smelters Purchase Team (CSPT) and Xiangguang Copper Co Ltd.
CSPT members and Xiangguang make up the top ten copper producers in China and produce the bulk of the country's refined copper.
Firms participating in the joint action would export "enough" refined copper to improve availability in the domestic and international markets, the statement said. No figure was cited.
"Chinese trading companies and main smelters will jointly export big amounts of copper in the next 2 months. The copper will be seen in LME warehouses in Asia," a trade manager at Jiangxi Copper International told Reuters late Sunday, without providing the amount.
The move comes as copper in bonded warehouses in China has soared due to weak domestic demand and an increase in the use of copper as a financing tool for other markets.
The statement said copper in bonded warehouses had reached a record high, but did not give a figure.
At the same time, copper in LME-registered warehouses fell to its lowest level since 2008 on Friday at just over 250,000 tonnes.
The benchmark cash-to-three-months backwardation - the premium for cash copper against three-month delivery on the world's biggest metal marketplace - hit its highest since August 2008 on Friday at $149 per tonne.
China was estimated to have near-record commercial stocks of over one million tonnes of refined copper in late March. A trading manager at a large Chinese smelter estimated the stocks at about 1.4 million tonnes last week, excluding the stockpile of the State Reserves Bureau.
High cash LME prices have already prompted owners of bonded copper stocks in Shanghai to re-export some stocks in April. (Reporting by Polly Yam; Editing by Richard Pullin)
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