Sinopec USA turns copper buyer to supply China operations -sources

SINOPEC Engineering Co

10/04/2018 18:42

(Adds more detail on move, quote)
    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 China, two sources familiar with the
matter told Reuters, a rare move by a Chinese oil company.
    Sinopec USA is seeking to buy around 300,000 tonnes of
copper and copper concentrates per year to then sell on to its
suppliers of copper rods and cables in mainland China, the
sources said, speaking on condition of anonymity because the
discussions were confidential.
    The suppliers would then sell the equipment to Sinopec and
other firms, the sources said on the sidelines of the CRU/CESCO
annual mining conference that is taking place this week in
Chile.
    The move would allow Sinopec to profit by selling copper to
Chinese suppliers that struggle to clinch big international
trade deals, one of the sources said, adding that many such
companies in China face high prices and a limited supply of
copper.  
    "For some there are three middlemen," between the miner and
the supplier, he said. 
    Sinopec has pledged to raise spending on energy
infrastructure after a bumper earnings season last year, betting
on robust growth demand for liquefied natural gas (LNG). 
    Sinopec began to buy copper last year, the people said. 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.
    Sinopec representatives were 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 Sinopec was also reaching out to
Canada's Teck  TECKb.TO , Arizona-based Southern Copper  SCCO.N 
 SO2i.LM , which is controlled by Grupo Mexico  GMEXICOB.MX , as
well as Chilean miners Codelco  COBRE.UL  and Antofagasta
 ANTO.L . 
    Vale and Teck declined to comment while Southern Copper and
Codelco did not respond to requests for comment. Antofagasta
said it had no knowledge of the matter.     
    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
    Companies such as car makers that use commodities like
aluminium, cobalt and copper in bulk often lock in supplies in
long-term deals to protect against big swings in prices and
secure raw materials amid occasional shortages.
    Sinopec last month pledged to raise spending by around 18
percent this year after posting its best annual earnings since
2013 on the back of a rally in oil prices. 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
and that it planned to more than double its LNG receiving
capacity in the next six years.

 (Additional reporting by Aizhu Chen and Tom Daly in Beijing;
writing by Melanie Burton in Melbourne; Editing by Amran Abocar
and Rosalba O'Brien)
 ((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals;
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