SMM Copper Summit: Tight ore supplies, smelting capacity expansion to weigh on TC/RCs

YINGTAN, Mar 28 (SMM) – Treatment charges (TCs) for copper concentrate and refining charges (RCs) for blister copper are unlikely to climb to highs in 2019-2020 as tight ore supplies overseas and smelting capacity expansion at home take a toll, said Ye Jianhua, senior copper analyst at SMM.

With few new projects coming online overseas, global copper ore supplies are expected to grow at a slower rate of 2.2% in 2019, with output of copper that is produced from ore expanding by some 450,000 mt, Ye told delegates at the SMM Copper Summit on Thursday March 28 in Yingtan, Jiangxi province.

TCs and RCs peaked in 2015. This, together with the drive to reduce reliance on imports of copper cathode, triggered a surge in smelting capacity in China, making the nation as the home to most new copper smelting projects in the last couple of years.

SMM expects China’s output of copper cathode to rise 7.5% from 2018 to stand at 9.4 million mt in 2019. The output grew 9.1% to stand at 8.73 million mt in 2018.

China, as the top copper consumer, is likely to see its copper consumption grow at a moderate and stable rate. SMM expects the compound annual growth rate for China’s copper consumption to come in at 3.2% in 2019-2021.

In 2019, investment in the power sector will rebound faster and policies are likely to facilitate the development of the home appliances industry, Ye said.

China’s apparent demand for copper cathode is expected to stand at 12.27 million mt in 2019, while apparent consumption is likely to rise 3.44% from 2018 to 12.92 million mt, SMM estimates.

Copper prices are likely to continue to advance this year, with LME copper trading at $6,800/mt and SHFE copper trading at 51,500 yuan/mt.