QP Continues to Be Postponed, Parsa Smelter Halts Production [SMM Copper Concentrates Spot Weekly Review]

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       On February 7, the SMM Imported Copper Concentrate Index (weekly) stood at -$2.70/mt, down $0.5/mt from the previous reading of -$2.20/mt. The pricing coefficient for domestic ore with a grade of 20% was 93%-95%. The spot market for copper concentrates continued to deteriorate during the week, with various forms of price suppression observed.

       According to SMM, during the Chinese New Year, a trader won a bid for 10,000 mt of Bisha tender ore at a processing fee close to -$40, with shipment scheduled for March and April. A trader offered African complex ore to a smelter at $0, with the QP set at M+6. A smelter purchased 10,000 mt of Cerro Verde copper concentrates at a low single-digit negative TC, with the QP set at M+4 and shipment scheduled for March. A trader purchased 10,000 mt of clean ore from another trader at a low single-digit price, with the QP set at M+6. KGHM's Sierra Gorda tendered 10,000 mt for shipment in March this year, with 10,000 mt to be shipped each quarter in 2026, and the tender closed on February 6.

       Currently, with the imbalance in raw material structure, smelters are facing severe difficulties in spot procurement and a "price collapse" phenomenon in the spot market. In addition to TC spot prices falling into negative territory, a more severe issue is that some traders have started extending the QP to M+6. The extension of the QP imposes settlement risks on both buyers and sellers. For buyers, an excessively long QP poses significant challenges to hedging raw material business, while for sellers, an extended QP creates challenges for declaring QP in raw material business. If the futures market structure reverses during this period, it could result in risk losses.

       According to market sources, Glencore's PASAR copper smelter in the Philippines has been shut down, with no specific timeline for resumption. The smelter has an annual crude smelting capacity of approximately 200,000 mt. Additionally, in December 2024, there were reports of Glencore's potential intention to sell the smelter.

       As of January 24, SMM's nine-port copper concentrate inventory stood at 847,300 mt, down 95,800 mt from the previous period, with the main reduction coming from Yantai Port. This week, Yantai Port's copper concentrate inventory decreased by 77,100 mt WoW.

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