GLOBAL traders selling copper into China have signed up for lower annual contract volumes from producers for 2015, due to concerns that the Qingdao metals scandal could crimp demand and amid expectations of a supply glut next year.

    Banks have tightened credit for metals financing in the wake of the Qingdao port scandal, which has hit small manufacturers and trade houses, while the global market is expected to be in surplus next year.

    “It used to be that if you could fill your boots with copper — 5,000 tons or 50,000 tons — you’d still find a buyer. This year, that has all changed,” said a trader at a global trading company in Singapore.

    Chile’s state-run miner Codelco, the world’s top producer, sets benchmark premiums in Asia. It set a US$133 per ton premium, paid on top of London Metal Exchange (LME) cash prices for 2015 term shipments, down from US$138 in 2014.

    But spot premiums have fallen sharply in recent months to US$50 — down from above US$100 in September — with offers seen as low as US$20, traders said, suggesting copper importers who bought on term lost money.

    “You don’t want to cut your ties with Codelco, but there’s going to be less volume,” said one Singapore-based trader.

    Codelco declined to comment.

    Global trading houses operating in Singapore are contracting lower shipments from producers, five traders said, estimating that annual contracted volumes could be down 30-40 percent. Total imports won’t fall that much since traders will buy more on spot or quarterly cargos.

    One large global trading house was “aggressively” selling copper on term at US$120, and other merchants were undercutting even that figure, traders said, suggesting they see weaker premiums next year.

    “Many people have noticed that Chinese buyers have been very noncommittal in term negotiations this year,” said Luo Shengzhang, general manager of the copper department at copper trader Xi’an Maike.

    “The reason is because there is too much uncertainty about 2015 demand since many of our downstream buyers are unsure whether they will get the same amount of bank credit next year.”(SD-Agencies)