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China’s group of top copper smelters has reduced the floor price for copper concentrates treatment and refining charges for the first quarter of 2024, in an indication of tighter copper supplies, market sources said Dec. 28.
The smelters group, known as the China Smelters Purchase Team, or CSPT, set the Q1 floor price of treatment and refining charges (TCs/RCs) at $80/mt and 8.0 cents/lb, down $15/mt and 0.15 cent/lb, respectively, from the previous quarter, the sources said citing developments from the group’s meeting held Dec. 28.
However, the floor price was still higher than market expectations at a time when TCs/RCs have remained on a downtrend amid tightening copper supply, according to sources. The price level is also the lowest since the fourth quarter of 2022.
“I think it is difficult to set the [floor] price at any level. CSPT is just following benchmark,” a source said.
Spot offers for February-loading clean copper concentrates were heard at $50-$52/mt from trader to smelter, according to sources. Some trades were reported at $62/mt during the week of Dec. 22 for January to February-loading clean copper concentrates, sources said.
Platts assessed CIF China clean copper concentrate TCs and RCs at $56.80/mt and 5.68 cents/lb Dec. 27. This was down $38.3/mt and 3.83 cent/lb, respectively, from July 31, the highest point of this year, S&P Global Commodity Insights data showed. This was also the lowest level seen since Aug. 10, 2021.
Lower TC/RCs indicated tighter supply from miners, and market sources said the price was yet to stabilize.
On the supply side, the closure of First Quantum’s Cobre Panama mine in Panama and a severe downgrade in Anglo American’s forecast copper production have weighed on market sentiment. Traders were seen delaying offers on purpose to capture better sales levels.
On the demand side, global smelters continued to put the expanded and new smelting projects into operation, which would lead to increasing consumption of copper concentrates.
China’s spot copper concentrate TCs/RCs have been falling since mid-September amid commissioning of new projects and concerns around supply disruptions.
Chinese smelters previously settled the copper concentrate treatment charge/refining charge benchmark for 2024 at $80/mt and 8.0 cents/lb with miners Freeport-McMoRan and Antofagasta, down $8/mt or 0.8 cents/lb from a year earlier.
However, the long-term contract negotiation between miners and traders was delayed due to expectations of supply tightness, which weighed on negotiations between traders and smelters.
The significant decline in TCs/RCs, combined with tight supply of copper concentrates and blister copper, could force some Chinese smelters to cut production, some sources said.
Source: Platts