Bloomberg News

Codelco Said to Cut European Copper Premium Amid Slowdown

October 04, 2011

(Adds Goldman Sachs estimate in fourth paragraph.)

Oct. 4 (Bloomberg) -- Codelco, the world’s largest copper producer, cut the premium charged to European buyers next year by 8 percent amid a slowdown in developed economies, according to two people familiar with the matter.

The reduction to $90 a metric ton comes after the surcharge was raised 23 percent to $98 on deliveries this year, according to the people, who declined to be identified because the terms are confidential. The premium is added to the price of copper for immediate delivery on the London Metal Exchange to cover costs including shipping and insurance.

Goldman Sachs Group Inc. lowered its 2012 estimate for three-month copper on the London Metal Exchange to $9,200 a metric ton from $10,790. The price fell 29 percent to $6,841 a ton this year, after prices reached a record $10,190 on Feb. 15.

Commodities declined today to the lowest level in 10 months as European policy makers were still to reach an agreement on the region’s rescue fund, deepening concern that slower economic growth may curb demand for raw materials. Goldman cut its global growth forecasts and predicted recessions in Germany and France.

Codelco has had “some interest” from clients in reducing orders for the metal, Hernandez said Sept. 13. Other clients increased orders, compensating for the losses, he said.

The Santiago-based company sold 23 percent of its copper to Europe in the first six months of this year, compared with 19 percent a year ago, according to a Sept. 13 presentation. Sales to China fell to 32 percent of Codelco’s total sales, compared with 41 percent a year ago.

--With reporting by Matthew Craze in Santiago. Editors: Dale Crofts, Robin Saponar

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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