Chile's State Copper company, the world's largest copper producer, will sell copper to European buyers at a record premium of about $235 a tonne in 2023, up 85 percent from this year, according to two people familiar with the matter.
Chile's national copper company sets a premium for physical delivery of copper on top of the London Metal Exchange contract, which is often seen as the benchmark for global contracts.
According to one of the sources, many European consumers are now reluctant to buy Russian metal, so they have to look elsewhere.
"The copper market is tight at the moment and the self-sanction of European buyers is making it more difficult for them to negotiate." "The source said.
Industry insiders say the reluctance of consumers to import metal from Russia is partly to blame for the surge in demand for metals from other sources.
Russia supplied nearly 292,000 tons of copper to the European Union in 2021, according to U.S. Trade data Monitor. The agency's data also showed that the EU imported more than 801,000 tonnes of copper last year.
Aurubis, Europe's largest copper smelter, said on Thursday it would charge European customers $228 a tonne more than the London Metal Exchange benchmark price in 2023, which would be well above the $123 a tonne premium in 2022.
Last month, Austrian copper refiner Montanwerke Brixlegg also said in a letter to customers that it would set a €295 per tonne premium for its low-carbon copper next year and would introduce a floating surcharge on high energy costs.
It is clear that while the EU has yet to impose any sanctions on Russian metals, European buyers' spooking by a series of financial sanctions against Russia has significantly disrupted global industrial metals pricing.
Large quantities of Russian-produced copper are understood to have been stored in LME warehouses in Germany, the Netherlands and Taiwan since mid-September. Copper stocks on the exchange have risen more than 40 per cent since September 15 to 145,500 tonnes, according to LME data.
The LME issued a discussion paper last week that formally began discussing whether it should ban the trading and storage of Russian metals in its systems. The world's largest and oldest metals exchange has put three options on the table for traders to consider: (1) continue to accept Russian metals; (2) Setting a threshold for the amount of Russian metal in LME warehouses; ③ A complete ban on accepting Russian metals.
