Copper miners consider counterparty risks selling into 2025 and beyond

Sources from across the copper concentrate industry told Fastmarkets that some miners are becoming more cautious of their counterparty risk – the risk that the other party in a transaction may not fulfill its part of the deal – with copper concentrate terms being agreed as far out as 2028

Sources have told Fastmarkets that traders have agreed to concentrate contracts with aggressive treatment and refining charges (TC/RCs) for 2025, 2026 and 2027.

Sources told Fastmarkets they believe that certain market factors could change that would reduce market tightness or alter trader margins, which could cause them problems.

These factors include increased concentrate production, especially if Cobre Panama, which has been closed since the last quarter of 2023, reopened or if there was some smelter curtailment, or a narrower copper contango, which is currently wide and boosting traders’ economics.

Sources have told Fastmarkets that miners are considering how to best prepare for a situation in which some traders face financial challenges in 2025.

“There is a lot of speculation and betting at the moment in the market,” one trader source said. “No one really knows what market fundamentals will look like in 2025, 2026 and 2027.”

The first trader source added that market dynamics could change drastically and move the spot TC level, which could cause problems for traders who had purchased at material lower levels.

“The counterparty risk is huge,” one miner source said, “we are conservative at how we sell due to counterparty risk.”

Counterparties receive better TCs for 2025 tonnage

Multiple sources noted that in a recent tender, certain counterparties were able to receive better TCs for 2025 tonnage based on their perceived reliability in a situation in which the market were to turn.

For one tender for 2025 tonnages, Fastmarkets has heard TCs in a range close to $10 per tonne between different counterparties.

“They told us they were taking reliability into account on bids,” a second trader source said of a miner for the above-mentioned 2025 tender.

“They made it clear that they were not obliged to give the tender to lowest bid,” a second miner said about the said tender.

“If you sell to a smaller trader at deep negative and the market turns it could be a problem,” the second miner added.

Multiple sources noted that larger, more diversified traders may be less challenged by market movements.

“For some traders, the changes are diluted,” the first miner said, noting their large book size and diversified assets.

Sources, however, told Fastmarkets that the copper market is likely to remain tight for a long time, meaning that although traders are taking a risk in buying for the coming years, they are following the market expectation.

Sources reported concerns over why larger miners had sold less tonnage, if any, for 2025. Some small- and medium-size miners have, however, sold far more aggressively for 2025 and onward.

Sources noted that the reason traders were taking such aggressive position was because they wanted to guarantee they have tonnage for next year.

“Traders are taking risks to stay afloat next year, not in terms of TC level, but in terms of making sure they have tonnages,” the first trader told Fastmarkets.

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