HONG KONG, July 30 -- China's major copper smelters have not concluded spot copper concentrate imports this month as they hold out for higher treatment and refining charges which have fallen to $20 and 2 cents, an official at the China Smelters Purchase Team said on Wednesday.
Smelters' reduced orders could cut the country's concentrate imports in the third quarter after record imports in June, and that may trim refined copper production in China, the world's top buyer of concentrates and consumer of the metal.
"Spot TC/RCs are around $20 and 2 cents now, which is a loss-making level," said the official at CSPT, which groups China's top copper smelters and controls members' imports of spot concentrate.
At the current TC/RCs, Chinese smelters would make a loss of nearly $670,000 for every 10,000-tonne of concentrate imports, he estimated, using TC/RCs of $20-$25 per tonne and 2-2.5 cents per pound.
TC/RCs are the discount from the London Metal Exchange copper price that concentrate sellers charge smelters for concentrates to convert into refined copper. Lower TC/RCs arise when supply of concentrate falls or demand rises, which usually raise the prices of concentrate.
In January, spot TC/RCs to China had settled at about $90 and 9 cents. But Chinese smelters had increased bookings in March-May due to strong Chinese copper prices, driving down spot TC/RCs in Asia, traders said.
Chinese smelters that had built concentrate stocks in the first half were making profits for refined copper production, thanks to a 80 percent rise in LME and Shanghai copper prices this year, a Chinese smelter official said.
The cheap concentrate stocks were encouraging Chinese smelters to run at full production, he added. Output reached 335,200 tonnes in June, the third-highest level in China.
CSPT had relaxed control over member smelters' imports of spot concentrate in June and allowed smelters to set TC/RCs with sellers depending on their situations.
But it has tightened controls again and told members not to buy spot shipments below TC/RCs of $40 and 4 cents, hoping to push up the charges to Chinese smelters, the CSPT official said.
"Smelters do not have to book as much spot concentrates in the second half as they did in the first half. If they are a little short of the concentrate, they may adjust production," he said.
Low spot charges in Asia pressured mid-year TC/RCs for term contracts. Japanese smelters and global miners such as BHP Billiton <BLT.L> <BHP.AX> set term TC/RCs at around $50 and 5 cents for shipments between July 2009 and June 2010, a third lower than $75 and 7.5 cents for shipments in 2009.