Bloomberg reported that copper premiums in Shanghai, the main hub in China for importing the metal have dipped below USD 100 per tonne for the first time since August as stockpiles at local bonded warehouses surge.

Mr Zhu Lin an analyst at data provider SMM Information & Technology Company said that premiums paid by importers over the London cash price were quoted as low as USD 90 per tonne on a cost insurance and freight basis to Shanghai this week. That compares with about USD 120 per month ago.

According survey of seven analysts and traders in China, stockpiles held by bonded warehouses in Shanghai have risen to almost 400,000 tonnes from about 300,000 tonnes a month ago. Rising inventories in the world’s largest user may curb Chinese imports in coming months, capping prices as local fabricators have yet to return to the market after the Chinese New Year holidays.

Mr Zhu said that “We heard a wide range of premium quotes with the lower end breaching the USD 100 benchmark and although estimates on bonded stockpiles vary, everybody agrees they have increased from the end of last year. This may be because the market hasn’t fully recovered from holiday mode.”

Mr Pang Juan an analyst at Jinrui Futures Company said that as the arbitrage window has been closed for some time and domestic inventories continue to increase, it won’t be surprising to see premiums drop further.

Mr Pang said that “Orders were slow at the end of last year, so some fabricators are not in a hurry to resume production this year. We’ll have to wait for a couple of weeks to see if the market can warm up.”

(Sourced from Bloomberg.net)