Japan Copper Premium Ups by 30-35% for 2011 Shipment to Asia

Japanese copper smelters and Asian copper users are reaching agreement in premium for 2011 shipment, which is put on electrolytic copper price at London Metal Exchange as margin for smelters. The premium is likely to surge by 30-35% compared with 2010 shipment, reaching US$ 98 per tonne for Taiwan and South Korea while US$ 115 per tonne for China. Most smelters and users seem to conclude negotiations within this year.

Japanese premium is based on the premium previously announced by Corporacion Nacional del Cobre de Chile (CODELCO) as in usual years. CODELCO announced in November its premium at US$ 98 per tonne for 2011 shipment to Taiwan, South Korea and Yokohama, Japan, raised from US$ 74-75 for 2010 shipment. CODELCO’s premium upped to US$ 115 for China from previous US$ 85 to reflect strong demand for copper in the country.

For 2009 shipment, CODELCO lowered its premium to US$ 64-65 for Japan, Korea and Taiwan and to US$ 75 for China from previous US$ 100 level since copper demand significantly weakened after Lehman’s Shock. Copper demand in Asia, especially in China, rapidly upturned in and after 2009. Consequently long-term contract premium increased for 2 years in a row when spot premium maintains above US$ 100.