High gold and silver-contained concentrates shine on stronger precious prices, sources say

Prices of gold and silver have surged so far in 2024, leading to more popularity for copper, zinc and lead concentrate containing higher levels of these precious metal to profit from the rising value of the byproduct, Fastmarkets has learned

The London Bullion Market Association (LBMA) gold price closed at $2,333.50 per oz on Thursday May 24, up by 13.06% from the beginning of this year. The silver price on LBMA closed at $30.31 per oz on the same day, up 27.25% from the year’s start.

Spot buying competition for copper concentrate started to intensify at the beginning of this year due to squeezed supplies. This has resulted in record-low copper concentrate treatment and refining charges (TC/RCs), which are discounts paid to smelters to process concentrates into refined metal.

Fastmarkets calculated the weekly copper concentrate TC index, cif Asia Pacific at negative $3 per tonne on May 17, down by $0.60 per tonne from May 10, the lowest level on Fastmarkets record tracking back to 2013.

Smelters using more concentrate with high gold and silver

Copper concentrate TCs are one source of copper smelters’ profits. The extremely low levels are pushing smelters to use more concentrate with high gold and silver content in a bid to gain from the precious metal price rises and relieve some raw material pressures, participants said.

“Copper smelters are very active in looking for [copper concentrates] units containing gold, because they can profit from a rising gold price,” a copper concentrate trader said.

“Gold is much more valuable, [and] despite low copper content in copper concentrates, smelters are still very active in buying as long as they can secure a high recovery rate of gold,” a second copper concentrate trader added. “Trading of gold concentrate is also active, but seems not many spot units are available now.”

This is also happening in zinc and lead concentrate markets, with copper now becoming more competitive following a copper price surge.

“I heard an offer at negative single digits for high-copper content zinc concentrates, very aggressive, no deal is done yet, and lead concentrate containing copper and some other minerals like antimony have long been sought after, with some concluded at negative $10s-20s [per tonne],” a Shanghai-based zinc and lead concentrate trader said.

Fastmarkets’ twice-monthly assessment of the zinc spot concentrate TC, cif China was $30-50 per tonne on Friday May 10, unchanged from the level on April 26, but down from $50-70 per tonne on April 12. The number is at its lowest level since June 2018.

Fastmarkets’ monthly assessment of the lead spot concentrate TC, high silver, cif China was at $0-20 per tonne on Friday April 26, flat from March, and down from $0-30 per tonne in January.

Fastmarkets latest assessment of the lead spot concentrate TC, low silver, cif China was at $40-60 per tonne on the same day, also flat from a month ago, but falling from $70-90 per tonne at the beginning of this year.

Payment terms playing bigger role and getting tougher

With growing buying interest and low spot availability, suppliers are offering “tougher” payment terms for those well-sought-after copper, zinc and lead concentrate, Fastmarkets has learned. And payment terms, including the quotation period (QP) and payables of gold and silver, are playing a bigger part during price negotiations, according to market participants.

“Spot TCs are already very low now, [and] copper smelters now gradually accept M+4 or M+5 as the quotation period [for all payable metals] when purchasing [copper concentrates] on spot, to [prevent] its buying level touching zero or below,” a third copper concentrate trader said.

“Payment terms for spot copper concentrates are getting tougher, with traders not only asking for ‘longer’ QPs, from M+4 to M+5, to profit from a wide contango [among LME copper contracts], but also asking for a higher payable for gold following its price rise,” a smelter source said.

Typically, gold contained in copper concentrates will be free of charge when its volume is below 1 gram, and gold will be charged higher when its volume exceeds 1 gram.

This has changed, according to the smelter source: “In the past, when gold is 1-3 gram, its payable is usually 90%, but this year, the 90% payable applies when gold is between 1-2 gram, and it’s getting more expensive.”

Shiyue Zhao in Shanghai contributed to the story.

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