Skip to main content

Advertisement

Advertisement

Business

China copper smelters lift Q4 treatment charges ahead of miner talks

China copper smelters lift Q4 treatment charges ahead of miner talks

FILE PHOTO: A worker loads copper cathodes into a warehouse near Yangshan Deep Water Port, south of Shanghai in this March 23, 2012 file photo. REUTERS/Carlos Barria/File Photo

SHANGHAI :China's top copper smelters on Wednesday set floor treatment and refining charges (TC/RCs) for the fourth quarter at US$70 per tonne and 7 cents a pound, three sources with knowledge of the matter said, as talks with miners on an annual benchmark loom.

The fourth-quarter floor, decided at a meeting of the state-backed members of the China Smelters Purchase Team (CSPT) in Shanghai, is up 27.3per cent from US$55 per tonne and 5.5 cents a pound in the third quarter and up from US$58 per tonne and 5.8 cents per pound a year earlier.

Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. The charges, which contribute to determining the profitability of smelters and miners, rise when more supply is available meaning smelters can demand better terms.

The CSPT usually increases the floor, which its members are meant to use when agreeing spot processing deals, for the final quarter to set the tone for negotiations with miners on an annual TC/RC benchmark for the year ahead.

The benchmark, which is referenced in supply contracts worldwide, is US$59.50 a tonne and 5.95 cents per pound for 2021.

Two of the sources, who asked not to be named because they are not authorised to speak to the press, said the fourth quarter floor rate was in line with market conditions.

"The global concentrate market shifted to a surplus in the second half of this year, with mine projects commissioned and ramping up production. This supported spot TCs in China to increase rapidly in July and August," Wang Ruilin, senior copper analyst at CRU Group, said, adding the upward momentum weakened in September.

She said the fourth quarter floor TC at US$70 per tonne meant CSPT members would try not to purchase spot concentrate below this level and also represented some smelters' expectations towards the annual benchmark in 2022.

She added, however, it would be the concentrate market balance in 2022 and the actual spot TC in Q4 that would be "important references during benchmark negotiations".

Spot TCs in top copper consumer China have surged some 45per cent over the last three months and are set for their biggest quarterly gain since the first quarter of 2011.

They were languishing at decade lows of around US$30 a tonne as recently as April given tight supply but have since doubled to US$60.50.

Additional copper concentrate supply from the Kamoa-Kakula mine in the Democratic Republic of Congo, which started up in May, has helped to ease the tightness.

A group of 15 Chinese smelters - mostly CSPT members - in May agreed to reduce concentrate purchases by 8.8per cent this year, although China's overall concentrate imports were up 7.5per cent year-on-year in the first eight months of 2021.

(Reporting by Emily Chow in Shanghai and Shivani Singh in Beijing and Tom Daly; Editing by Christopher Cushing, Robert Birsel and Barbara Lewis)

Source: Reuters

Advertisement

Also worth reading

Advertisement