FreeEnergy
13th April 2013, 09:08 PM
Did anyone read WSJ article about copper shortages?
Two Firms Amass Much of World’s Copper Supply
Commodities Traders Pay to Divert Shipments From Other Warehouses; Manufacturers Worry About Access
Two major commodities-trading firms have amassed much of the world's copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs.
Two major commodities-trading firms have amassed much of the world's copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs, traders and analysts say.
Red Alert
Some trading firms have stashed the world's copper supply in warehouses in New Orleans, Antwerp and Johor. The moves have sparked worries about the possibility of delayed deliveries and higher costs for industrial consumers.
View Graphics
More on copper
MarketBeat: Goldman J.P. Morgan Leave Copper Stashing to Rivals
This concentration of copper supplies has sparked concerns among industrial consumers of the metal. Some manufacturers and builders say they are worried that those stockpiles of copper—which is used in goods including automobiles, circuit boards and plumbing fixtures—could prove tough to procure if demand were to pick up sharply or output from mines were disrupted.
The London Metal Exchange, the world's main venue for trading of industrial metals, certifies a global network of warehouses that store metal that can be delivered against the exchange's futures contracts. The wait time to receive aluminum and zinc at warehouses at some locations has surged in recent years as those metals have piled up.
Enlarge Image
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Bloomberg News
A bundle of copper sheets is moved at a warehouse in South Korea.
Now, there are worries that the trend is spilling over into the copper market.
"The current situation, where LME warehouse owners are paying huge incentives to attract copper, and then have those units subject to long load-out queues, is effectively making that copper unavailable for immediate delivery to serve industrial consumers," a spokesman for Southwire Co., the largest U.S. copper-wire maker, said in an emailed statement.
Copper prices have fallen since February amid expectations of a supply glut, but buyers say they are starting to pay hefty fees to get metal when they need it—on top of the actual price of copper—because so much is being diverted into warehouses.
The fees have blunted some of the benefit industrial consumers have seen from falling copper costs.
The amount of copper in LME warehouses has surged 84% since the start of the year to 590,175 metric tons, a 10-year high. The increase, more than 270,000 tons, is almost double expectations for the 153,000 ton surplus of copper that experts predict will emerge this year, evidence of warehousers' success in attracting metal from the open market into their sheds.
Much of the excess supplies are stacking up in warehouses owned by Glencore GLEN.LN -2.13% International PLC and Trafigura Beheer BV, according to traders in London, New York and Singapore who trade with the companies or their customers.
Glencore declined to comment.
A spokeswoman for Trafigura declined to comment on the company's role in the warehousing system, but said most of this year's increase in copper stockpiles is due to slowing demand from China and rising mine production.
The physical trading of raw materials is generally unregulated and there is nothing illegal about stockpiling metals.
Benchmark copper prices on the London Metal Exchange rose 0.5% on Thursday to $7,609 a metric ton.
Traders and analysts say they noticed the shift when copper began piling up in unusual places. The increase is coming at ports that historically haven't been a destination for the metal. Sixty percent of the increase in stockpiles this year has occurred at Antwerp, Belgium, and Johor, Malaysia, according to LME data. Warehouses in these locations, many of which are owned and operated by the two trading firms, held little copper until this year.
Trafigura is the largest warehouse owner in Antwerp, while Glencore owns the most facilities in Johor, and in New Orleans, which has also seen a sharp increase in copper stockpiles, according LME data.
The LME doesn't make public the amount of metal held in individual warehouses, but traders and analysts say the accumulation is occurring in warehouses owned by Trafigura and Glencore.
The companies don't always buy the copper outright but do charge for its storage and assess fees for its movement.
Because of the logistics of moving the metal, the wait for copper out of Antwerp is as long as 25 weeks. In New Orleans, it is 18 weeks, according to a Wall Street Journal analysis of LME data. Johor's wait is six weeks.
Fees to get copper delivered in the U.S. are at $132 a ton, a six-month high, according to pricing-information service Platts. The fees in Europe are the highest in four months—at $85 a ton. The fee is paid by anyone who wants copper available for immediate delivery on the so-called spot market.
...
http://online.wsj.com/article/SB10001424127887324010704578415041545251264.html
Two Firms Amass Much of World’s Copper Supply
Commodities Traders Pay to Divert Shipments From Other Warehouses; Manufacturers Worry About Access
Two major commodities-trading firms have amassed much of the world's copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs.
Two major commodities-trading firms have amassed much of the world's copper supplies in their warehouses, partly by paying to divert shipments away from other storage hubs, traders and analysts say.
Red Alert
Some trading firms have stashed the world's copper supply in warehouses in New Orleans, Antwerp and Johor. The moves have sparked worries about the possibility of delayed deliveries and higher costs for industrial consumers.
View Graphics
More on copper
MarketBeat: Goldman J.P. Morgan Leave Copper Stashing to Rivals
This concentration of copper supplies has sparked concerns among industrial consumers of the metal. Some manufacturers and builders say they are worried that those stockpiles of copper—which is used in goods including automobiles, circuit boards and plumbing fixtures—could prove tough to procure if demand were to pick up sharply or output from mines were disrupted.
The London Metal Exchange, the world's main venue for trading of industrial metals, certifies a global network of warehouses that store metal that can be delivered against the exchange's futures contracts. The wait time to receive aluminum and zinc at warehouses at some locations has surged in recent years as those metals have piled up.
Enlarge Image
image
image
Bloomberg News
A bundle of copper sheets is moved at a warehouse in South Korea.
Now, there are worries that the trend is spilling over into the copper market.
"The current situation, where LME warehouse owners are paying huge incentives to attract copper, and then have those units subject to long load-out queues, is effectively making that copper unavailable for immediate delivery to serve industrial consumers," a spokesman for Southwire Co., the largest U.S. copper-wire maker, said in an emailed statement.
Copper prices have fallen since February amid expectations of a supply glut, but buyers say they are starting to pay hefty fees to get metal when they need it—on top of the actual price of copper—because so much is being diverted into warehouses.
The fees have blunted some of the benefit industrial consumers have seen from falling copper costs.
The amount of copper in LME warehouses has surged 84% since the start of the year to 590,175 metric tons, a 10-year high. The increase, more than 270,000 tons, is almost double expectations for the 153,000 ton surplus of copper that experts predict will emerge this year, evidence of warehousers' success in attracting metal from the open market into their sheds.
Much of the excess supplies are stacking up in warehouses owned by Glencore GLEN.LN -2.13% International PLC and Trafigura Beheer BV, according to traders in London, New York and Singapore who trade with the companies or their customers.
Glencore declined to comment.
A spokeswoman for Trafigura declined to comment on the company's role in the warehousing system, but said most of this year's increase in copper stockpiles is due to slowing demand from China and rising mine production.
The physical trading of raw materials is generally unregulated and there is nothing illegal about stockpiling metals.
Benchmark copper prices on the London Metal Exchange rose 0.5% on Thursday to $7,609 a metric ton.
Traders and analysts say they noticed the shift when copper began piling up in unusual places. The increase is coming at ports that historically haven't been a destination for the metal. Sixty percent of the increase in stockpiles this year has occurred at Antwerp, Belgium, and Johor, Malaysia, according to LME data. Warehouses in these locations, many of which are owned and operated by the two trading firms, held little copper until this year.
Trafigura is the largest warehouse owner in Antwerp, while Glencore owns the most facilities in Johor, and in New Orleans, which has also seen a sharp increase in copper stockpiles, according LME data.
The LME doesn't make public the amount of metal held in individual warehouses, but traders and analysts say the accumulation is occurring in warehouses owned by Trafigura and Glencore.
The companies don't always buy the copper outright but do charge for its storage and assess fees for its movement.
Because of the logistics of moving the metal, the wait for copper out of Antwerp is as long as 25 weeks. In New Orleans, it is 18 weeks, according to a Wall Street Journal analysis of LME data. Johor's wait is six weeks.
Fees to get copper delivered in the U.S. are at $132 a ton, a six-month high, according to pricing-information service Platts. The fees in Europe are the highest in four months—at $85 a ton. The fee is paid by anyone who wants copper available for immediate delivery on the so-called spot market.
...
http://online.wsj.com/article/SB10001424127887324010704578415041545251264.html