Heavily negative import arbitrage sees lead TCs soar in October, zinc terms also rise

Treatment charges (TCs) for both lead concentrates and zinc concentrates have been pushed up by low buying interest from major consumer China amid a closed arbitrage window for refined metals into the country.

Lead concentrate TC/RCs continue to rise in October, with a heavily negative arbitrage between the London Metal Exchange and Shanghai Futures Exchange cash prices combining with a short-term excess of units leaving market participants little choice but to raise terms for imports into China. Fastmarkets' lead spot concentrate TC, low silver, cif China was assessed at $125-145 per tonne on October 25, a sharp increase from September's $80-100 per tonne. The Fastmarkets lead spot concentrate TC, high silver, cif China was assessed at $135-160 per tonne, up from $100-120 per tonne the previous month. Higher TCs come as the LME cash lead price has steadily firmed, trading at a 16-month high of $2,247 per tonne on October 25, with futures spreads in backwardation and warrants tightly held. This is in contrast with the SHFE active lead contract, which was last at a three-month low of 16,745 yuan ($2,370) per tonne. A positive price...


Archie Hunter

October 28, 2019

11:00 GMT