Trafigura Group has been buying large volumes of copper to boost sales into Asia as local supplies run low, adding to a scramble for metal that’s pushed regional premiums for spot cargoes to record highs. The Singapore-based company is one of the biggest traders in the copper market, and over the past two weeks it has approached several producers and traders in Asia requesting to buy large volumes over November and December, according to people familiar with the matter.
The buying spree has come during a deepening supply crunch in China, where smelters are facing severe constraints on flows of mined ores and scrap. While demand is relatively subdued, buyers have been thrust into a bidding war to secure alternative spot cargoes to make up for shortfalls from domestic suppliers. Trafigura in particular has been willing to outbid rivals, contributing to a sharp rally in premiums for spot metal across Asia in recent weeks.
In Shanghai, spot premiums have tripled over the past two weeks to hit a record of 2,615 yuan ($392) a ton, according to local pricing agency Shanghai Metals Market. Premiums for imported copper tracked by Fastmarkets Ltd. have also soared more than 40% to $195-210 a ton, the highest level in data going back to 2017. Deliverable stocks in SHFE warehouses now stand at 33,848 tons, nearing a multiyear low struck in 2022, data showed on Friday. That would cover China’s overall copper usage for less than a day.
“One of the main drivers for the tightness is the slowdown in refined production growth, which reflects the fact that smelters have been struggling for feedstock,” said Amy Gower, a metals strategist at Morgan Stanley.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing