February 23, 2018 / 12:04 PM / a year ago

Wieland says Aurubis deal will be neutral for copper premiums

HAMBURG (Reuters) - German copper products group Wieland said on Friday its planned purchase of the flat rolled products business of Aurubis AG (NAFG.DE) should be neutral for copper premiums.

Aurubis is in advanced talks to sell its flat rolled products sector, which has annual output of 230,000 tonnes of products and sales of around 1.3 billion euros ($1.6 billion), to Wieland.

If it goes ahead, the deal could potentially put more buying power in the hands of the copper processors who purchase metal from smelters like Aurubis at premiums.

The deal will need approval from competition authorities in Germany and several other countries.

Some traders have questioned whether the concentration of product output would have an impact on copper premiums, the surcharges over futures prices, that product manufacturers pay smelters like Aurubis for copper cathode (new metal) supplies.

Wieland produces about 500,000 tonnes of copper products globally per year, with annual turnover in its 2016/17 financial year of 3.0 billion euros.

Demand for copper products and the volume of metal needed were the main factors in setting premiums, Wieland said.

“The integration of the business sector flat rolled products of Aurubis AG into the Wieland Group will have no influence on cathode premiums,” a spokesperson for Wieland told Reuters.

“The possible merger of the rolled products sectors will not change the demand for products and the volume of cathodes purchased.”

In October 2017, Aurubis offered its customers 2018 copper premiums of $86 per ton, unchanged from 2017. The premium is paid by customers above the London Metal Exchange (LME) benchmark.

This was below the $88 a ton 2018 premium offered by the world’s biggest copper miner, Codelco [COBRE.UL].

Reporting by Michael Hogan; editing by Alexander Smith

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