LONDON- Chile's Codelco, the world’s largest copper miner, is offering to sell copper to European buyers at a premium of $128 a tonne in 2022, the highest since 2015 and a rise of more than 20% from this year, two sources with direct knowledge said.
The premiums set by state-owned Codelco for physical delivery of copper, paid on top of the London Metal Exchange contract CMCU3 , are seen as a benchmark for global contracts, which means other producers are likely to follow suit.
The premium at $98 a tonne for this year was agreed last year was unchanged from 2020 due to the COVID-19 pandemic hitting global manufacturing activity.
But an easing of lockdowns from late last year, particularly in top consumer China, fuelled a price surge in the copper price to record highs of $10,747.50 a tonne in May on the LME and premiums are up alongside.
Exchange traded prices have since retreated, partly because of a power crunch in top consumer China undermining industrial activity, but expectations are still for a small deficit this year in a market estimated at around 24 million tonnes.
According to the International Copper Study Group (ICSG), the copper market deficit this year is expected at 42,000 tonnes.
Europe's biggest copper smelter, Aurubis, said last week it will offer a 2022 copper premium to its customers of $123 per tonne above LME prices.
(Reporting by Pratima Desai, Tom Daly and Zandi Shabalala; Editing by Edmund Blair) ((pratima.desai@thomsonreuters.com; +44 207 513 5681;))
