Codelco’s China Copper Offer Challenges Market Norms
Codelco, the world’s largest copper producer, has proposed record premiums to Chinese buyers. The company set a $350/ton premium over London Metal Exchange (LME) prices, a sharp rise from last year’s $89/ton. This offer has caused unease among Chinese term-contract buyers. At least three have already signaled intentions to forgo contracts in favor of spot deals.
The premium reflects the ease of delivering Codelco cargoes to the US Comex, where next-year forward prices are significantly higher than LME levels. However, Chinese buyers face challenges accessing Comex trades, suggesting the high premium targets global trading houses rather than domestic end-users.
Meanwhile, Codelco has not publicly commented on the premium offers. The willingness of Chinese buyers to reject term deals underscores growing questions about the benchmark’s relevance in Asia, highlighted during discussions at the World Copper Conference in Shanghai.
Market Implications and Global Copper Dynamics
Chinese imports of refined copper from Chile have steadily declined since 2023, both in volume and as a share of total imports. Rising premiums follow concerns about a global copper shortage next year, which pushed LME prices to a record $11,200/ton in late October. As of early November, copper trades around $10,868/ton.
Codelco’s European customers also face record-high premiums of $325/ton for 2026, a 39% increase year-on-year. These pricing dynamics may encourage alternative sourcing strategies, including increased spot-market purchases and greater reliance on regional suppliers.
SuperMetalPrice Commentary:
Codelco’s record-high China copper premium signals tension between benchmark pricing and buyer realities. Spot-market alternatives may gain appeal if premiums remain elevated. Traders and producers must monitor Chinese demand closely, as shifts in sourcing strategies could influence global copper pricing trends throughout 2026.
Leave a Reply
You must be logged in to post a comment.