China Copper, owner of Yunnan Copper’s Ningde and Chifeng smelter, bought 120,000 tonnes of clean copper concentrates for the first half of this year from a major trading house at a treatment charge (TC) of more than $70 per tonne, a source with direct knowledge of the matter said.
The delivery period will be stretched to over three months, constituting a "mini-contract," the source added.
The settlement level in the low $70s for the non-blended cargoes of concentrates - described as having low gold content - is high compared with the settlement levels agreed for supply contracts between miners and Chinese smelters over the same six-month period.
In July last year, Antofagasta agreed to supply concentrates to Jiangxi Copper and Tongling Nonferrous
at treatment and refining charges (TC/RCs) in the mid-$60s per tonne/6 cents per lb from January until June 2020.
In November, copper miner Freeport-McMoRan and Chinese smelter Jiangxi Copper agreed 2020 full-year contractual TC/RCs
at $62 per tonne/6.2 cents per lb, which is considered a benchmark for the industry.
With transport disruptions still in place to contain the spread of the novel coronavirus (nCoV-2019), many Chinese smelters are struggling to destock sulfuric acid and copper cathodes
, leading them to scale down their intake of copper concentrates.
Market sellers are scrambling to find smelters willing to take cargoes, resulting in TC/RCs for copper concentrates climbing rapidly to a 10-and-a-half-month high because of increased availability.
Fastmarkets copper concentrates TC index, cif Asia Pacific
, which tracks a market mid-point, rose to $65.80 per tonne/6.58 cents per lb on Friday February 14, up by $9.40 per tonne/0.94 cents per lb week on week and its highest since late March 2019.
The sudden increase in the TC/RCs is the biggest since Fastmarkets started weekly market pricing in April 2019.