Trafigura Group has been buying large volumes of copper to boost sales into Asia as local supplies run low, adding to a scramble for metal that’s pushed regional premiums for spot cargoes to record highs.
The Singapore-based company is one of the biggest traders in the copper market, and over the past two weeks it has approached several producers and traders in Asia requesting to buy large volumes over November and December, according to people familiar with the matter, who asked not to be identified because the discussions were private.
The buying spree has come during a deepening supply crunch in China, where smelters are facing severe constraints on flows of mined ores and scrap. While demand is relatively subdued, buyers have been thrust into a bidding war to secure alternative spot cargoes to make up for shortfalls from domestic suppliers.
Trafigura in particular has been willing to outbid rivals, contributing to a sharp rally in premiums for spot metal across Asia in recent weeks, some of the people said. A spokesperson for Trafigura declined to comment.
Historically, buying activity in China — which consumes nearly 60% of the world’s copper — has provided crucial support for prices during major corrections. Copper has come under pressure this week during the global selloff in stock markets, but there are growing expectations that Chinese manufacturers will step in to buy the dip, potentially intensifying the squeeze on domestic supply.