* Copper cancellations more than double in past ten days
* Singapore copper premiums CU-GDA-SG climb $20 on week
* Traders complain metal is not accessible
By Melanie Burton
SINGAPORE, April 4 Copper premiums in Singapore
have climbed to their highest since May, fuelled by a port
strike in top producer Chile, and a force majeure event called
by India's largest copper smelter, traders in Singapore said.
Premiums, which consumers pay on top of London Metal
Exchange cash prices to get metal, are expected to rise
further when markets in top consumer China reopen on Monday
after a two-day break, they said.
Premiums for Grade A copper warrants in Singapore warehouses
CU-GDA-SG were quoted at $50 to $65 from $30 to $40 last
Thursday, traders said, the highest in almost a year.
"Premiums all across Asia have gone up. There's talk Codelco
is going to have some delivery problems because of the port
strike. The Indian smelter yesterday also declared force majeure
on shipments," said one warrants trader based in London.
Rapidly spreading port strikes in export-dependent Chile are
taking a growing toll on copper shipments in the world's leading
producer of the metal.
World No.1 copper miner Codelco has said nearly
60,000 tonnes of its copper is blocked, while global miner Anglo
American told Reuters the port strikes had triggered
"difficulties for our exports."
Sterlite Industries Ltd, India's largest smelter,
has halted deliveries of copper after it shut down last week due
to complaints over emissions.
Sterlite produces more than 300,000 tonnes of copper per
year and accounts for around half of Indian supply. Some 45
percent of production is exported while 55 percent supplies
domestic users, a company spokesperson said.
Several Indian trade houses based in Singapore noted a
flurry of enquiries from Indian end users for copper cathode as
well as scrap.
"The bigger clients are still getting material -- but the
question is for how long," said a trader based in Singapore.
He quoted European origin cathode as high as $60 to $70, and
LME-registered African origin copper at $50 or double last
Adding to the lift in premiums was increased buying from
China, several traders said, as demand picks up into the
seasonally strongest second quarter, with premiums expected to
firm further next week.
"(Premiums) are up around $20 from last week, because China
is short of material too," a third Singapore-based trader said.
Reflecting an increase in orders for copper, cancelled
warrants -- metal to be delivered out of warehouses and not
available to market -- have more than doubled to 143,975 tonnes
in the past ten days, to stand at one quarter of LME stocks.
Latest data showed a jump in new orders for Asian-based
stock, with cancellations of around 24,000 tonnes in South Korea
and Singapore on Wednesday. <0#MCUSTX-LOC-GRD>
But traders said the new orders may reflect dominant market
players grabbing easily available metal to force premiums higher
for end users.
"Some of these physical guys are maybe getting caught
short," the trader in London said.
"But given the steep price falls in copper, somebody may be
cancelling all the warrants in Asia to push premiums up a little
bit and some of these news headlines are helping," he said.
LME copper prices touched an 8-month low below
$7,350 a tonne on Thursday.
Bonded copper stocks in China are just shy of records while
inventories held in Shanghai and London exchange systems are
towering at their highest in around a decade, but traders say it
is still tough to get. MCU-STOCKS CU-STX-SGH
"Bonded stocks are near 1 million tonnes, yes, but that
doesn't mean this material is accessible. The stock is there,
but you can't get it out, the same goes for LME stocks," said
the third Singapore trader.
Commodities trading house Glencore, whose
warehouses dominate the ports of Johor, Vlissingen in the
Netherlands and New Orleans, houses the majority of LME copper
Since December, it has shunted much of the global surplus of
copper into Johor as it extends a strategy to lock up metal to
earn lucrative warehouse rentals and premiums, industry sources
said in March.
Metal gets stuck behind a backlog that snarls out for around
three months, making supplies from that location less attractive
Even so, premiums to obtain metal from Johor edged up to
around $15, from $5 to $10 in late February.
"I think consumers must be almost crying now," the third
Singapore trader said.
(Additional reporting by Anupama Chandrasekaran in Chennai;
Editing by Clarence Fernandez)