China blister copper deficit to widen 100,000 mt in 2020

SHANGHAI, Dec 18 (SMM) – China’s blister copper market looks set to tighten further next year, with new smelting capacity to exceed new refining capacity by 100,000 mt.

About 350,000 mt of copper smelting capacity is expected to come on stream in China in 2020, while refining capacity will expand by 450,000 mt, showed SMM data.

Chinese copper smelter Jiangxi Copper and Zambian blister copper producer Chambishi have agreed refining charge (RC) of $128/mt cif for 2020 blister copper supply.

This sat around the refiner break-even point of RC of $130/mt estimated by SMM and marked a decline of $37/mt, or 22.4% from $165/mt for 2019, reflecting expectations of tight blister copper supply next year.

Copper concentrate supply crunch is the major reason behind blister copper shortfalls for this year and the year to come. SMM expects a copper concentrate supply gap of 400,000 mt for next year. Tight concentrate supply has sharply lifted the costs for Chinese smelters, leading to shutdowns or production curtailments of some small and medium-scale, private smelters.

A drop in copper anode imports and new refining capacity also contributed to tighter blister copper supply. Data from China customs showed that China’s imports of copper anodes in January to October decreased 20% from the same period last year. SMM assessments showed that RCs for spot blister copper now stand around $130/mt cif for imported materials and 1,100 yuan/mt for domestic materials.

The market is looking ahead to the standards for reclassifying high-quality copper scrap as renewable resources that are free from import restrictions. The long-awaited standards, likely to be introduced in early next year, will help ease the copper raw material supply trouble.