Refined copper moving into deficit in 2024, Antofagasta CEO says | Hotter Commodities

The refined copper market is now expected to be in a deficit of 200,000-300000 tonnes in 2024, a reflection of improving demand and revisions to production seen toward the end of 2023, Iván Arriagada said in a recent interview.

“We now expect a tighter market than last year, with probably a small emerging deficit,” Arriagada said.

Arriagada noted in an interview during the annual CESCO industry week in Santiago, Chile, that a cyclical component to the copper market was currently playing out.

“We seem to be moving, from a business cycle point of view, into a phase of soft landing and early recovery, especially in the US; we’re seeing some of that in China as well, although China has been lagging behind compared to what most people expected,” he told Fastmarkets.

He added, “Despite that, we think copper demand grew by 6% in China in 2023. So, despite the fact that overall economic growth was lower and probably in the 4-5% range, copper demand stood up quite well.”

Arriagada acknowledged that nonetheless, this demand has not been translating to physical copper premiums in the way that might be expected.

Fastmarkets’ daily assessment of the benchmark copper grade A cathode premium, cif Shanghai was $35-50 per tonne on Friday April 12, down 3.41% from the prior assessment, while in the United States, Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at $0.07-0.09 per lb, unchanged since January.

“There has been better availability and less demand on the copper cathode side, and certainly more demand and tighter availability on concentrate,” Arriagaga said.

“Concentrate demand into China grew at double digit rates on the back of an expanding smelting-refining capacity, and therefore we’ve seen treatment and refining charges drop to very low levels, where they remain today,” he noted.

He added, “So, demand has favored concentrates and not cathodes, and that’s why we see the differential in premiums and TCs/RCs.”

Smelting growth

A rapid increase in smelting capacity has been underway in China, which was previously forecast to add at least 3.4 million tonnes per year of new copper production capacity by 2026.

The majority of this capacity will come from three projects by Tongling Nonferrous, which will make it the biggest smelting company in the world at over 2 million tpy.

Other new projects include Freeport-McMoRan’s Manyar smelter in Gresik, Indonesia, which will have the capacity to process around 1.7 million tpy of copper concentrate when it ramps in 2024.

Major additional smelting capacity is also scheduled for 2024 in India, the Democratic Republic of Congo (DRC) and Indonesia.

India’s Adani Enterprises is pushing ahead with plans to start the first phase of operations at its 500,000 tpy copper facility in 2024, while Ivanhoe Mines and Zijin Mining Group will complete a 500,000 tpy direct-to-blister copper smelter at Kamoa-Kakula in the DRC.

A unit of PT Amman Mineral International is building a smelter at the Batu Hijau mine in Indonesia, a project the company says will be completed in May, with commissioning and ramp-up to follow. The smelter will have the capacity to process 900,000 tpy of copper concentrate from the company’s Batu Hijau and future Elang mines.

Fastmarkets analyst Boris Mikanikrezai forecasts the global refined copper production to grow 1.5% in 2024 compared with 2023 levels, with demand to rise by 2.6%. This will create a deficit of around 200,000 tonnes, he noted, from an 84,000-tonne surplus in 2023.

The tightness in copper concentrates has pushed spot TCs to record lows.

Fastmarkets calculated the weekly copper concentrates TC index, cif Asia Pacific at $0.10 per tonne per tonne on Friday April 12, down from $2.30 per tonne the prior week.

TCs are the fees mining companies pay smelters to have their semi-processed ore, or concentrate, turned into finished metal. Typically, tighter spot supply leads to a drop in spot TCs and RCs.

In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.