Sterlite outage drives copper TC/RCs to 3.5-month high, market eyes smelter expansions

Spot market copper concentrate treatment and refining charges (TC/RCs) rose to 3.5-month highs in mid-May, with the market becoming progressively bearish due to the continued outage at Sterlite Copper’s Tuticorin smelter in India.

Metal Bulletin’s copper concentrates TC/RC index rose by $2.4/0.24 cents over the past two weeks to $70.5/7.05 cents, its highest since the end of January

Terms for spot concentrates continued to weaken in light of the absence of Sterlite’s Tuticorin from the market as it contests an enforced shutdown – a court in Tamil Nadu state heard opening arguments from the company on Friday May 4, but then deferred proceedings until May 18.

“Normally, these cases take time,” a market source told Metal Bulletin. “There could be one or two more hearings before there is a resolution.”

A second source added: “What happens with Sterlite could change the picture of the whole market.”

The majority of spot deals made by smelters were reported to Metal Bulletin around the $76/7.6 per tonne mark but one 10,000 tonne clip was logged at $80/8 cents cif China with payment terms set at four months after the month of arrival (M+4).

Smelters in and outside China are looking to drive up terms even closer to the $82.25/8.225 cents benchmark set for annual contracts.

“This week we started to receive third-quarter offers from traders at current market levels, which is a new trend. It shows the market is realizing supply is not as tight as first expected,” a Chinese smelting source said.

Demand is also likely to be affected by the forthcoming 35-day shutdown at Birla’s Dahej smelter in Gujarat state, India, and Glencore’s Pasar smelter in the Philippines is still not producing at capacity, several sources said.

Some market players forecast that the eventual return to full-tilt production at these smelters will bring about enough demand for copper concentrates to bring down terms.

The market is also eyeing smelter expansions in China, some of which will be starting trial production in the third quarter of 2018.

In Chile, third-quarter deals for tendered Escondida tonnages were reported to Metal Bulletin by buyers at $65/6.5 cents, while fourth-quarter tonnes for the same mine were said to have traded below $60/6 cents.

Higher terms for tendered concentrates signal lower expectations of a large-scale deficit among traders. Bids for third- and fourth-quarter delivery cargoes were consistently in the mid-to-low $50s/5 cents region in February and March.

“The trading community has backed off a little bit – some of them got burned already from what they bought in the fourth quarter,” a mining source said.

Chilean miner Antofagasta reported that it expected second quarter sales to be down by 10,000 tonnes of copper contained – roughly 30,000 tonnes of concentrates – due to the failure of a pipeline connecting its Los Pelambres mine and concentrator to the nearby Los Vilos port

Meanwhile, data released this month by the Chilean copper commission Cochilco shows that the country’s mined copper production in March was up by 30.7%, or 114,800 tonnes, compared with the same month last year.

In 2017, mine production was adversely affected by strikes at Escondida, the world’s largest copper mine, and discussions with unions over a multi-year labor agreement are set to restart on June 4.

Additional reporting by Gladdy Chu in Shanghai and Julian Luk in Hong Kong

What to read next
Fastmarkets launched two new price assessments for Indonesia’s domestic trade in nickel ore on Tuesday July 15. The two price assessments are for domestic trades of Indonesian laterite ores with 1.6% and 1.2% nickel content. Indonesia now accounts for 60% of the global nickel supplies and while there is an official government reference price, known […]
US copper scrap market participants are shifting from COMEX to LME pricing in response to extreme price volatility and a new 50% copper import tariff. The change is influencing discount formulas, export strategies and long-term trading dynamics across the sector.
The proposal follows preliminary discussions with the market and internal analysis of price usage, which suggests low market liquidity and a lack of demand. Specifically, Fastmarkets is proposing to discontinue: MB-CU-0410 Copper rod premium, ddp Midwest US, US cents/lbQuality: Purity of 99.95-99.99%. Thicknesses of 8 millimeters or 0.3125 inchesQuantity: Min 25,000 poundsLocation: Delivered US MidwestUnit: US […]
After a month-long consultation period, Fastmarkets is amending the below specifications, following no negative feedback from market participants and internal data analysis. The following changes will take place: The new specifications are as follows, with amendments in italics: MB-CU-0002 Copper grade 1 cathode premium, ddp Midwest US, US cents/lb Quality: Grade A 99.9935% min copper cathode conforming to LME […]
The global copper market has finally received the widely anticipated news that imports to the US will be tariffed from August 1. The finer details of the tariffs, including their scope, and whether key copper-exporting nations like Chile, Canada and Peru will be exempt, remain unclear.
LME copper prices took a significant hit following US President Donald Trump's announcement of a potential 50% tariff on copper imports. The uncertainty surrounding the timeline and implementation of the tariff has left market participants hesitant, with analysts noting its immediate impact on price momentum and trading activity.