* Weak pre-holiday demand pushes down premiums to 5-mth lows
* Premiums for bonded stocks in Shanghai at $150-$165 this
* Bonded stocks near 600,000 tonnes currently -traders
By Polly Yam
HONG KONG, Jan 24 Chinese end-users face higher
spot prices for refined copper in the domestic market next month
when many factories reopen after the Lunar New Year break,
boosting domestic demand amid tighter global supplies because of
strikes at Chilean ports.
Many producers of copper products such as tubes and power
cables were also not able to build sufficient copper inventories
ahead of the holiday due to the rising cost of raising cash to
pay for the metal, trading sources said.
Stronger domestic prices in China could prompt spot import
demand from the world's top copper consumer after the holiday
break. That could help support global prices, which were
on track for their biggest weekly fall since mid-November this
The pre-holiday cash crunch in China was more serious this
year than in previous years, making end-users cautious about
building copper inventories ahead of the Lunar New Year, traders
and officials at refined copper producers said.
Reflecting weak pre-holiday demand, Chinese prices for spot
refined copper saw rare discounts of 70-300 yuan ($11.60-$49.60)
per tonne to the front-month contract of Shanghai Futures
Exchange this week.
Last year at the same time spot copper was selling at
premiums of about 200 yuan to the front-month Shanghai contract.
This year Lunar New Year falls on Jan. 31.
"The main problem of the domestic demand now is the cash
flow," an executive at a large copper producer said.
"The cash crunch happened in previous years but this year is
more severe. The demand, as well as prices, should pick up after
the holiday," the executive said.
The cash crunch prompted China's central bank to inject 255
billion yuan ($42 billion) into the interbank market this week,
the largest amount in one day in 11 months.
A large end-user said the firm was considering building its
copper inventories to cover orders in February, although high
financing costs were forcing the firm to delay purchases until
next week and cut the amount.
China's arrivals of refined copper were likely to fall next
month as a result of port strikes in Chile, the largest supplier
to China, traders said.
Workers at 14 ports in Chile are on strike. State miner
Codelco, the world's top producer, said on Jan. 10 that the
strikes had delayed around 20,000 tonnes of copper exports.
Lower imports would draw down bonded stocks of refined
copper in Shanghai, pushing up premiums, the traders said.
The Shanghai stocks currently stand near 600,000 tonnes, up
from about 460,000 tonnes in mid-December, traders estimated.
Premiums for the stocks fell to $150-$165 a tonne over cash
London Metal Exchange this week, the lowest since August
2013, traders said.
China does not release bonded stock figures and the stocks
are typically estimated by traders.
($1 = 6.0517 Chinese yuan)
(Reporting by Polly Yam; Editing by Tom Hogue)