| March 26
March 26 One of Mexico's three copper refineries
owned by Mexican billionaire Carlos Slim's Grupo Carso
shut earlier this month, causing a rash of
enquiries from domestic consumers looking for material,
according to U.S. and Mexico-based market participants.
The Cobre de Mexico plant, which used blister as raw
material to make cathode, was shut for environmental and cost
reasons, according to Mexico-based sources.
An employee at the plant, located in Atzcapotzalco in the
outskirts of Mexico's capital, told Reuters production had
stopped, but did not give any other details.
Grupo Carso declined to comment on the closure. Grupo Carso
owns the plant through its subsidiary Condumex, according to
It had not been producing at full capacity, which market
participants estimated at 150,000 tonnes per year, before the
shutdown, according to industry sources.
"We were waiting for the closure. It's because it's in the
middle of the city. There should be some additional demand for
cathode because of this," a trader in Mexico said.
The refinery, which was Mexico's oldest according to
Reuters' records, is one of only three in the country. The two
other refineries are operated by Industrias Penoles
and Grupo Mexico SAB de CV.
PERCEPTION OF SUPPLY TIGHTNESS
Any additional buying resulting from the closure is not
expected to tip the supply-and-demand balance in the United
States, but it has contributed to the growing perception of
tightness in North America.
The interest has provided a bright spot for U.S. traders who
had a less-than-upbeat start to the year.
Like 2011, many fabricators were happy with their stock
levels for the first few months of the year and have been using
up inventory from last year before turning to draw on their 2012
"It has caused some flurry of activity," said a U.S. trader,
who has seen cathode trucked to the border town Loredo, Texas.
Due to safety and insurance concerns, suppliers will some
times deliver metal to the border and leave their Mexican
customers to organize their own logistics for the rest of the
Given the absence of an uptick in overall demand, the market
has watched with surprise as London Metal Exchange stocks,
particularly in the United States, have fallen sharply so far
Some 75 percent of total withdrawals were from the LME's
registered warehouses in the United States, Mobile, New Orleans,
Chicago, St Louis and Baltimore.
Traders have attributed a portion of those withdrawals to
shipments to South East Asian consumers replacing material lost
due to the outage at Glencore's 215,000-tonne per year
Pasar smelter/refinery in the Philippines.
That plant has been shuttered since the start of the year
due to a fire and is not due to reopen for another three months.
But they also say much of it is due to warehouse games, with
material being moved either off-warrant or from one warehouse to
another company's facility, rather than reflecting genuine
Some of the cathode, albeit only a small portion of the
total, is heading to Mexican consumers, who may have bought
material to replace the lost Grupo Carso supplies, according to
"Glencore's gathering material for Pasar. On the other side,
I heard there's a copper refinery in Mexico shutting down," said
a New York-based trader of the increase in business levels.
"I've had enquiries from the Mexican market. Customers are
asking for additional supply," he said.
The interest has provided some temporary relief from pain
inflicted from plunging premiums and rising stocks in China,
which consumers 40 percent of the world's copper, following the
Lunar New Year holiday.
Premiums in the United States are between 4.5 and 5 cents
per lb, although some traders said they are quoting as high as 6
"There seems to be some tightness there (in Mexico), but I
don't think it'll be long term," said a second U.S. trader
describing business there as "good" and the U.S. market as
An impending planned shutdown of Rio Tinto's
Kennecott Utah Copper's Garfield smelter in May has also
contributed to the rise in activity.