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| Codelco Copper Premium |
China Faces Unprecedented Codelco Copper Premium
Codelco has offered Chinese buyers a record $350/t premium over LME prices for 2026 term contracts. This increase contrasts sharply with last year’s $89/t agreement. As a result, several Chinese buyers consider skipping term contracts and opting for spot deals.
The premium reflects Codelco cargo delivery advantages to the US Comex exchange. However, Chinese buyers face difficulties accessing these forward trades. Consequently, the offer appears targeted at large trading houses rather than end consumers.
Meanwhile, Chinese imports of refined copper from Chile have declined steadily since 2023. Therefore, the relevance of Codelco’s benchmark for China is increasingly questioned at the World Copper Conference Asia in Shanghai.
Market Implications and Pricing Outlook
Codelco also raised premiums for European customers to $325/t, a 39% increase year-on-year. This follows LME copper reaching a record high of $11,200/t in late October. Traders note that lower offers might encourage Chinese buyers to sell cargoes for US export, altering global trade flows.
The high premium coincides with anticipated copper shortages in 2026. Consequently, global supply-demand dynamics remain tight, pressuring pricing strategies and term contract negotiations.
Strategic Considerations for Chinese Buyers
Chinese buyers must evaluate spot versus term deals amid high premiums. Meanwhile, forward market constraints complicate procurement strategies. Therefore, companies may increasingly rely on alternative suppliers or trading intermediaries.
ScrapInsight Commentary
Codelco’s record premium signals supply tension and potential realignment of Chinese sourcing strategies. Spot market uptake may rise, affecting global copper trade flows. Tight supply supports sustained high prices, influencing term contract relevance and risk management for major consumers.
