Copper market’s biggest whale fuels speculation of a major shift
The world’s single biggest buyer of copper, State Grid Corp. of China, has slowed its purchases of copper wire this year.
Global aluminum producers have offered Japanese buyers premiums of $115-$133 per tonne for October-December primary metal shipments, down 10-22% from the current quarter, three sources directly involved in quarterly pricing talks said on Wednesday.
Japan is Asia’s biggest importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.
For the July-September quarter, Japanese buyers agreed to pay a premium of $148 per tonne, down 14% from the previous quarter.
The latest quarterly pricing negotiations began last week between Japanese buyers and global suppliers, including Rio Tinto and South32 Ltd, and are expected to continue until late this month.
The lower premium offers reflected weak demand from automakers amid a global supply chain crunch.
Higher local inventories also underline an oversupply situation, a source at a trading company said.
“With slumping demand in the auto sector and ample stockpiles, buyers will likely seek much lower levels than the offers as spot deals have been done at below $100 a tonne in recent weeks,” he said.
Aluminum stocks at three major Japanese ports were at 364,000 tonnes at the end of July, according to Marubeni Corp.
The healthy inventory levels for the Japanese ports are somewhere between 270,000 tonnes and 280,000 tonnes, another source at a global producer said.
“Still, demand in non-auto sectors remained solid, and once automobiles output starts picking up, demand for aluminum may recover pretty quickly,” he said.
(By Yuka Obayashi; Editing by Jason Neely)
Read more: Aluminum price at 17-month lows as strong dollar overshadows smelter cuts
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