Why have SMM copper concentrate spot TCs rebounded recently? [SMM Analysis]

Published: Jul 23, 2024 11:40

Source: SMM

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Since July, SMM copper concentrate spot TC index has continuously rebounded.

Since July, SMM copper concentrate spot TC index has continuously rebounded. Does this indicate a reversal in the shortage of copper concentrate supply? Is the shortage of raw materials for smelters no longer an issue?
I believe the answer is no. The raw material shortage for smelters continues, and the long-run supply-demand balance for copper concentrate will worsen. SMM believes that currently, Trump has a significant chance of becoming the next US president. In Trump's multiple speeches on monetary policy, the probability of the US Fed cutting interest rates by 25bp in September has risen to 94%. Against the backdrop of a high probability of rate cuts, mining companies expect copper prices to peak in December. One of the most important profit sources for the copper business units of mining companies is copper prices rather than TCs. Additionally, the QP for mines and traders is mostly M+4. If mining companies want the Copper Settlement Price for QP M+4 to be the monthly average price in December, it means traders need to ship copper concentrate by the end of August. However, it takes a month to find a dry bulk vessel, so they must ensure the sale by the end of July. Consequently, spot offers increased naturally in mid-July.

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