Sinopec USA turns copper buyer to source for China operations-sources

SINOPEC Engineering Co

10/04/2018 16:05

(Adds details)
    By Alexandra Alper
    SANTIAGO, April 10 (Reuters) - The U.S. unit of China's oil
major Sinopec Corp  0386.HK  is procuring copper to send to its
equipment suppliers in mainland China, two sources familiar with
the matter told Reuters, in a rare move by a Chinese oil
company.
    Sinopec USA is seeking to buy a total of 300,000 tonnes of
copper and copper concentrates per year to then sell on to its
mainland suppliers of copper rods and cables, the sources said,
speaking on condition of anonymity because the discussions were
confidential. Sinopec will then buy back the finished product,
the sources said on the sidelines of the CRU-CESCO annual mining
conference. 
    Sinopec began to buy copper last year, the people said, and
plans to source some of its material from Latin America. It may
look to expand into procurement of other metals as required.
    In a statement, Sinopec confirmed that two of its
representatives attended the conference for the first time to
seek copper supplies for customers on an e-commerce platform. It
added that the intent was only for such procurement and that no
contracts had been signed.   
    The procurement efforts come after Sinopec pledged to raise 
spending on energy infrastructure after a bumper earnings season
last year, betting on robust growth demand for liquefied natural
gas (LNG).
    China, the world’s biggest copper user, imported 352,000
tonnes of unwrought copper and 1.45 million tonnes of copper
concentrate in February.  urn:newsml:reuters.com:*:nL4N1QQ21T
    Sinopec representatives are seeking meetings with a number
of mining companies that have Latin American copper operations,
including Brazil's Vale  VALE3.SA , three sources said. 
    Two of the sources said they were also reaching out to
Canada's Teck  TECKb.TO , Arizona-based Southern Copper  SCCO.N 
 SO2i.LM , which is controlled by Grupo Mexico, as well as
Chilean miners Codelco  COBRE.UL  and Antofagasta  ANTO.L . 
    Vale and Teck declined to comment while Southern Copper,
Codelco and Antofagasta did not respond to requests for comment.
    
    Companies such as car makers that use commodities like
aluminium and copper in bulk often lock in supplies in long-term
deals to protect against big swings in prices and secure raw
materials.
    Car makers and high-tech companies are currently scrambling
to secure raw materials like cobalt, fearing a shortage due to
soaring demand for electric vehicles and their batteries.
    China's state-owned enterprises are sometimes eligible to
avoid raw material import duties for products that they then
export to other markets. It is unusual for an oil company to buy
copper directly from producers and do tolling deals with wire
makers. 
    Sinopec last month pledged to raise spending by 17.7 percent
this year mostly on upstream development, after the company
posted its best annual earnings since 2013 on the back of a
rally in oil prices above $70 a barrel. urn:newsml:reuters.com:*:nL3N1R70CF 
    The energy firm said some of the funds would go towards
building more shale gas production capacity in southwest China
as it plans to more than double its LNG receiving capacity in
the next six years to 26 million tonnes on an annual
basis. urn:newsml:reuters.com:*:nS6N1R201E

 (Additional reporting by Aizhu Chen and Tom Daly in Beijing;
writing by Melanie Burton in Melbourne; Editing by Amran Abocar
and Bernadette Baum)
 ((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals;
+613 9286 1421; Reuters Messaging:
melanie.burton.thomsonreuters.com@reuters.net))