INDEX QUESTION: I’ve sold above/below the index – why is calculated number so low/high?

Last month, Metal Bulletin launched its TC/RCs index for copper concentrates.

Last month, Metal Bulletin launched its TC/RCs index for copper concentrates.

One question that has been asked by a couple of participants in the copper market is as follows:

“I’ve sold above/below the index – why is the calculated number so low/high?”

The answer is, in short, that while the published index calculation is a single number, the transactions that contribute to it tend to vary broadly, depending on the qualities of concentrates that are being bought and sold.

The Metal Bulletin TC/RCs index is designed to take into account transactions for many different qualities of concentrates, from very high-grade clean material to low-grade concentrates carrying penalty elements that can be difficult for smelters to treat.

For example, when the index was calculated at $103.08 per dmt/10.308 per lb on March 31, the range of reported transactions was $80-120/8-12, and the copper content of concentrates bought and sold ranged between 25% and 34%.

When a sale of, for example, a 34% concentrate is reported at $80/8, it is normalised using two coefficients: copper content and brand.

The first coefficient normalises the individual sale to a 28% base specification, while the second coefficient normalises the transaction by the historical premium or discount that the brand typically achieves, above or below the average price deviation observed for concentrates with that copper content.

For illustrative purposes, the sale at $80/8 may be normalised to $90/9 after the two coefficients have been applied. Likewise, a purchase of 25% material at $120/12 may be normalised to $110/11.

In the event that only those two deals were reported, they would both contribute equally to the calculation of the index, which would result in a reading of $100/10.

If you are negotiating the sale of high- or low-quality concentrates with reference to the index, it is, of course, important to keep the base specification of the index in mind, and target premiums or discounts accordingly.

The discounts and premiums that can be achieved will vary in different market conditions, but for reference, details of the individual transactions that contributed to the index will soon be made available in a trade log that will be published alongside the index.

Interested in the price history for Metal Bulletin’s copper concentrate TC/RC index? Sign up here

Interested in the specification for Metal Bulletin’s copper concentrate TC/RC index? Have a look here

TC/RCs as indexed by Metal Bulletin moved on March 31,

click here to find out more

Mark Burton
mburton@metalbulletin.com
Twitter: @mburtonmb

What to read next
Following a six-week consultation period, Fastmarkets can confirm it will amend the calculation method for all the average functions on the Fastmarkets platform from Wednesday March 1, 2023.
Consolidation, the recycling of electric vehicle batteries, US steel exports and the benefits of sustainable steelmaking were key talking points at Fastmarkets’ Scrap & Steel 2023 conference in Dallas in January
Green shoots of increased demand will emerge in US ferrous markets courtesy of the Biden administration’s trillion-dollar infrastructure package in 2023, Schnitzer’s executive vice president and chief strategy officer Richard Peach said at Fastmarkets’ Steel and Scrap Conference 2023 in Dallas, Texas
US special bar quality steel prices rose in January in line with rising scrap and alloy costs, according to market participants
European metal industry association Eurometaux has called on the European Commission to follow the lead shown by the Inflation Reduction Act and deliver a “powerful” policy to support the industry in the EU while it tries to keep up with the move to a new generation of energy markets
The fallout from Russia’s invasion of Ukraine is changing global trade flows for bauxite, with Brazilian material once again flowing into China and with the introduction of export restrictions elsewhere likely to influence availability through 2023
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed