China Copper locks in major concentrates deal with TCs in low $70s/t – sources

One of China's largest copper smelters has locked in a major deal for supply at a time of reduced demand due to a virus-led logistics lockdown in the country.

China Copper, owner of Yunnan Copper’s Ningde and Chifeng smelter, bought 120,000 tonnes of clean copper concentrates for the first half of this year from a major trading house at a treatment charge (TC) of more than $70 per tonne, a source with direct knowledge of the matter said.

The delivery period will be stretched to over three months, constituting a “mini-contract,” the source added.

The settlement level in the low $70s for the non-blended cargoes of concentrates – described as having low gold content – is high compared with the settlement levels agreed for supply contracts between miners and Chinese smelters over the same six-month period.

In July last year, Antofagasta agreed to supply concentrates to Jiangxi Copper and Tongling Nonferrous at treatment and refining charges (TC/RCs) in the mid-$60s per tonne/6 cents per lb from January until June 2020.

In November, copper miner Freeport-McMoRan and Chinese smelter Jiangxi Copper agreed 2020 full-year contractual TC/RCs at $62 per tonne/6.2 cents per lb, which is considered a benchmark for the industry.

With transport disruptions still in place to contain the spread of the novel coronavirus (nCoV-2019), many Chinese smelters are struggling to destock sulfuric acid and copper cathodes, leading them to scale down their intake of copper concentrates.

Market sellers are scrambling to find smelters willing to take cargoes, resulting in TC/RCs for copper concentrates climbing rapidly to a 10-and-a-half-month high because of increased availability.

Fastmarkets copper concentrates TC index, cif Asia Pacific, which tracks a market mid-point, rose to $65.80 per tonne/6.58 cents per lb on Friday February 14, up by $9.40 per tonne/0.94 cents per lb week on week and its highest since late March 2019.

The sudden increase in the TC/RCs is the biggest since Fastmarkets started weekly market pricing in April 2019.

What to read next
Read more from senior analyst Andy Farida on how the price action in LME nickel has played out in the first half of 2024
Tight aluminium scrap availability, the increase in container costs, sluggish demand in the US and the US market’s current indifference to rising premiums in Europe and Asia were the top subjects discussed during the Harbor Aluminum Summit that took place in Chicago on June 4-6
Germany-based copper recycling and non-ferrous metal provider Aurubis has started commissioning their secondary smelter in Augusta, Georgia, and could eventually introduce black mass recycling to the facility
Base metals on the London Metal Exchange were mixed in morning trading on Monday June 10, with three-month prices lacking direction amid thin traded volumes due a public holiday in China, the largest market for base metals
Copper concentrate treatment and refining charges have repeatedly fallen to record-low levels over the first five months of 2024
The publication of Fastmarkets’ assessments for the nickel briquette premium, delivered Midwest US and the nickel 4x4 cathode premium, delivered Midwest US for June 4 were delayed because of incorrect methodology application.