Exclusive: Codelco looks to cut Asia 2013 premiums - source

Fri Sep 28, 2012 5:39pm EDT
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By Alexandra Ulmer and Fabian Cambero

SANTIAGO (Reuters) - Codelco, the world's No. 1 copper producer, will seek to reduce 2013 physical copper premiums to Asian buyers by about $5, while its European rate will likely be held or trimmed by a smaller amount, a source linked to the company told Reuters on Friday.

The possible offer of a roughly $105 premium per metric ton (1.1023 tons) for Chinese clients over cash London Metal Exchange copper prices comes as international mining companies fret about sagging demand from leading metals consumer China.

For 2012, Codelco CODEL.UL offered $90 premiums to its European clients and $93 premiums to its Japanese clients, trading sources have said. Codelco sets the industry's benchmark for global copper premiums.

Miners are making a special effort to cultivate clients amid an uncertain outlook for demand. Many traders and industry players say copper demand in debt-ridden Europe is nevertheless unlikely to rebound significantly in 2013 no matter the premium.

Copper, which is used extensively in construction and is seen as a bellwether for the health of the global economy, gained around 7 percent this quarter, closing at $8,205 a metric ton on Friday.

Codelco's spokesman said the company could not comment on premiums, as such negotiations are confidential.

The state-run miner's copper output fell 6.4 percent in the first half to 767,000 metric tons compared with a year earlier, but the company said it still intended to produce around 1.7 million metric tons this year.


A worker checks a shipment of copper inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, about 164 km (101 miles) northwest of Santiago, April 16, 2012. REUTERS/Eliseo Fernandez