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European and Chinese copper demand firm - Aurubis

Reuters reported that Chinese and European copper demand remains firm which should help support global prices.

Aurubis said that there is little to indicate a sharp drop in demand just now. In view of the continuing inadequate level of copper production the copper price should therefore be fundamentally well buttressed against any decrease. Euro zone industrial activity remains high despite the sovereign debt crisis London Metal Exchange copper stocks have also fallen.

The company said that this leads to the impression that there is a discrepancy between the perceived crisis and actual business operations, though economic weaknesses will indeed become more noticeable in the future.

The drop in LME copper prices in past weeks, sometimes falling below USD 7,000 per tonne has opened an arbitrage window for Chinese importers. Chinese importers traditionally buy more when LME prices fall below Chinese markets. This window allowed Chinese imports of raw copper and copper products to climb by almost 12% in September compared with the previous month.

It said that this is the highest level in 16 months and the trend is expected to continue. That is indicated particularly by the amount of copper in LME warehouses waiting to be shipped: most of the total of 51,850 tonnes of cathodes is waiting at South Korean sites to be delivered to China. But it said some customers were becoming more reserved about copper purchasing which was adding to difficulties assessing European demand.

It added that customers have become noticeably more cautious in the way they order. They are avoiding stockpiling copper even more than before, particularly as the year draws to an end their sights are set on the shorter term and they are more interested in flexible deliveries in order to be able to respond immediately to changes in their order books.

Sourced from Reuters

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