China’s copper smelters agree 4-point drop for domestic concs prices

China’s biggest copper smelters have cut the price they will pay for domestic copper concentrates in 2014, after winning better terms for imported material.

Long-term contracts with domestic suppliers are settled according to a formula based on a percentage of the Shanghai Futures Exchange copper price, payable by metal content and adjusted for different grades.

This year, suppliers have agreed to a percentage of 83%, down from 87% last year, market sources told Metal Bulletin.

“Currently, copper concentrates is a buyers’ market. The supply surge has boosted [treatment and refining charges] TC/RCs for imported concentrates, and domestic prices have also become cheaper,” a source from one of China’s largest smelters told Metal Bulletin.

The formula assumes a standard grade of 20% copper content, with material above that level getting a premium and below that level a discount. The premiums and discounts for different grades are based on industry standards, and are not negotiated.

Chinese copper smelters won a 31% increase in TC/RCs for imported copper concentrates in 2014.

As with TC/RCs, a group of China’s major smelters will usually all agree to accept the same payables index.

A second smelter confirmed it has lowered the index to 83% as a result of rising supply.

“Our 2014 plan is to purchase 100,000 tonnes copper concentrates domestically, which is flat with last year,” he said. “Even though TC/RCs and the domestic payables index are more favourable to us, our profits will still be mostly affected by copper prices in 2014, as our group owns some mines.”

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