Singapore copper premiums rise again on good demand
Singapore copper premiums rise again on good demand
SINGAPORE (Reuter): Singapore copper premiums were buoyant on good demand this week, underpinned by rising copper cable and wire production in Indonesia and Malaysia and despite weak buying from China, traders said yesterday.
Local copper premiums were quoted at between US$100 and $120 a over London Metal Exchange (LME) cash metal compared to about $100 a ton last week.
"Demand is on a gradual recovery while supplies remain tight in this region," one trader said, adding that he expected higher consumption in Singapore's neighbors to support premiums for the remainder of the year.
Chinese traders said that China's copper demand could remain subdued for the next few months unless there was a resumption of the steep fall in LME three month prices seen on Thursday.
LME copper prices rose in early trade in London yesterday boosted by an unexpected 2,100-ton fall in exchange stocks.
Three month metal rose to $1,938/$1,943 at one stage following the stocks data before settling back to $1,930/$1,934 at 0945 GMT, still up from Thursday's $1,925 late kerb close.
A U.S trader in Singapore attributed the fall to traders clearing positions held during the market's crash in June at the time of Sumitomo Corp's revelation that it had lost $1.8 billion in unauthorized copper trades. Three month contracts held in June are current expiring.
"Prices will continue to be volatile until all the positions are cleared," the trader said.
"It's just pure speculative trading, fundamentals in the physical trade are largely unchanged," said another trader, adding that there was still room for copper to fall to $1,900.
Singapore Zinc premiums over LME cash prices also rose this week on good Asian demand and a drawdown of previously excessive inventories, traders said. They said firm U.S demand had also fueled the rise.
A U.S trader said prices in the fourth quarter are expected to continue to increase. "We are tight for the moment and the situation is expected to be worse in 1997," he said.
He said zinc demand in Asia is growing at eight percent a year and in Vietnam at 25 percent.
He said good quality zinc could command a premium between $120-$130 a ton over the LME.
Aluminum and lead premiums stayed steady. Lead traders said the market's fundamentals are providing solid support and that regional demand is healthy.