Benchmark negotiations are set to kick off when market participants gather in London for the annual LME Week; talks come after a year afflicted by a series of supply disruptions and volatile treatment and refining charges for concentrates.
Miners argue that smelting capacity in China is expanding at a rapid rate, while smelters contend that these projects can face delays and that with copper prices over $7,000 per tonne, mine output will surely rise.
Falling copper mine ore grades and a lack of major new projects has long underpinned market deficit forecasts for 2018 and beyond; as usual both parties are wide apart ahead of talks kicking off.
“We agree that there are very limited new mining projects in 2018, but the market usually exaggerates the speed of smelting facility expansions,” one smelting source said.
The 2018 TC/RCs benchmark is likely to be settled in the range of $85-90...