Term Copper Concentrate TCs for Chinese Buyers to Reach $100 in 2017 on Rising Supply, SMM Says

SHANGHAI, Oct. 12 (SMM) - Term TCs of copper concentrate signed between Chinese buyers and overseas copper mines are expected to reach $100 per tonne mark in 2017 due to growing copper ore supply worldwide, SMM foresees.

Copper prices weakened this year but still found support from 35,000 yuan per tonne, SMM says. Meanwhile, the US dollar strengthened, precipitating depreciation of non-US dollar currencies and helping reduce cost at mines. Most overseas copper mines thus maintained production. New capacities at mines in Peru also added to global copper ore supply.

Combined copper output in Chile and Peru rose 6.45% year-on-year during the first eight months of this year, the second highest for the year, according to official data from the two countries.

Chile’s copper output added 3.1% year-on-year to 455,000 tonnes in August after falling for four months in a row, Chilean government reported. The country’s copper output in August 2015 was the second lowest for the year. Copper output during January-August 2016 decreased 4.27% year-on-year to 3.68 million tonnes, though, due mainly to lower ore grade.

Copper output in Peru increased 32% year-on-year to 207,000 tonnes in August, after the growth had slowed for two straight months, according to official data. The country’s copper output in the first eight months of the year increased 45.53% year-on-year.

In China, average weekly TCs of spot copper concentrate stayed around $102.5 per tonne level since mid-June, according to SMM data. Spot TCs averaged $94.9 per tonne as of September 30, compared to $94.4 per tonne in the same period of last year.

Of the 12 major Chinese copper smelters, only 2 incurred losses, according to their semiannual reports.

SMM understands Chinese copper smelters have mostly built sufficient stocks for production in Q4, so their demand for spot copper concentrate will be soft in the near term.

Moreover, the China Smelters Purchase Team (CSPT) set floor price for term TCs in Q4 at $105 per tonne, compared to $103 per tonne in Q3. All these factors will drive up term TCs of copper concentrate in 2017, SMM added.

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