Copper concs long contracts act as buffer for Chinese smelters; production expansions could slow in 2020 - sources

Low spot copper concentrate treatment and refining charges (TC/RCs) cif Asia Pacific will not lead to production cuts at Chinese copper smelters this year because many signed favorable long contracts at the end of 2018 and smelters remain cash positive, according to analysts attending a copper conference in Qiqihar, China, on Friday September 6.

But expectations of a continued downtrend in TC/RCs in 2020 and a subdued copper price could slow Chinese smelters' expansion plans, according to conference delegates. Fastmarkets' weekly copper concentrate TC/RC index cif Asia Pacific stood at $50.10 per tonne/ 5.01 cents per lb on Friday September 6, down 38% from $88.80 per tonne/ 8.88 cents per lb on November 30. On August 30, Fastmarkets’ copper concentrate TC/RC index cif Asia Pacific region hit record low of $49.20 per tonne/4.92 cents per Ib. Analysts predict production cuts in 2020 Although TC/RCs are hovering around the lowest level in Fastmarkets’ benchmark index six-year history, He Xiaohui, senior copper expert at Chinese information provider Antaike, said current levels are “far from production cutting” levels especially for large-scale smelters, adding that TC/RCs have fallen to $20 per tonne/ 2.0 cents per lb before. Meanwhile, another analyst said output curtailments could come next year. “No production cuts...

Published

Ellie Wang

September 09, 2019

15:00 GMT

Qiqihar