Reuters reported that Chinese importers are buying less spot copper as it becomes more difficult to secure US dollar letters of credit and on sufficient domestic supply. Traders said that this has cut spot premiums and may spill over into next year with the world's top copper producer Codelco expected to offer a premium of USD 110 per tonne for refined copper for delivery in 2012. The Chilean miner is meeting Chinese clients next week, and could settle prices then. A trader at an international trading firm which bought Codelco copper said that we understand that they are thinking of cutting by USD 5 for 2012. A USD 110 premium would be 4.3% cut from the USD 115 Chinese smelters have paid this year and the low end of USD 110 to USD 115 range that had been expected by Chinese buyers. Traders said that spot premiums above the cash London Metal Exchange copper price were around USD 120 to USD 125 for copper already in bonded warehouses in Shanghai. Offers remained at USD 130 to USD 150 depending on the volume compared with USD 140 to USD 170 in late October. Supply of bonded stocks, in Shanghai but not yet assessed for China's 17 percent value added tax had risen after arrivals rose in the previous few weeks and weaker Chinese copper prices prompted importers to store arrived metal in bonded warehouses. Traders estimated about 300,000 tonnes to 330,000 tonnes of bonded stocks in Shanghai currently compared to 150,000 tonnes to 200,000 tonnes in late October. The availability of letters of credit to import copper has fallen after some banks in the eastern provinces of Zhejiang and Jiangsu tightened requirements to local firms in September to October due to escalated private debt worries. Importers in southern industrial province of Guangdong found it difficult to obtain LCs for copper from this month.

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