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Copper Stocks Push Banks to Rein in Credit |
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| Release time:2013-03-27 Source:admin Reads: | |
| Some banks have tightened credit for imports of refined copper by China, the world's largest consumer of the metal, as stocks pile up in bonded warehouses and prices hover below London rates, reducing buying of the metal and keeping premiums low. It is really a bad news for those who run business of metal labels as they are in great demand for copper. Through options for metal labels include other materials such as zinc alloy and aluminum, copper is still seen as a perfect one to be used. In the fourth quarter, approvals of letters of credit for copper imports have tightened after some banks struggled in the previous quarter to recover billions of yuan in loans made to the steel and metal labels trade for these two are largely dependent on copper, traders and analysts said. Credit fell further this month as the year-end approaches, they added, squeezed from last December, when importers rushed to use up credit lines and booked large spot shipments, boosting imports to a record 406,937 tons of refined copper. "Some banks now are definitely saying no to copper imports," said an official at a large Chinese trading house. Undoubtedly, on one hand, manufacturers providing metal labels will be affected and see profit margin squeezed to some extent. But on the other hand, the news is also a good chance to help them realize that some other substitutes can be adopted when they are in critical shortage of copper. "Domestic prices are lower than the cost of imports, which is a risk to the importer, as well as the bank. Banks are not keen to do risky business," said the official, who declined to be identified as he is not authorized to speak to the media. The arbitrage between benchmark three-month London Metal Exchange copper and the corresponding contract on the Shanghai Futures Exchange, an indicator of China's cost of imports, faced a premium of 839 yuan ($130) Wednesday versus a discount 72 yuan on November 19. |
