HONG KONG, Oct. 28 -- China's copper capacity will grow more slowly from 2010 because of lower treatment and refining charges (TC/RCs) and a weaker market for sulfuric acid, said Chen Hongzhou, vice-manager of the marketing department at Chinalco Luoyang Copper Co.
"We do believe the capacity expansion will continue in coming years, but the rate [of growth] will slow down," he told delegates at MB's 6th Asian Copper Conference in Hong Kong.
Chen said China's refined copper capacity at the end of 2009 would probably be up year-on-year by around 700,000 tpy. China's refined copper capacity at end-2008 was around 4.5 million mt, so Chen's figure indicates growth of around 15%.
Spot TC/RCs are currently quoted at USD 20/mt /Cents 2/lbs while the acid by-product is at only RMB 30-60/mt.
Treatment fees for 2010 annual contracts are likely to be around $50/5c, down from $75/7.5c this year, Chen said.
"The offer will be much lower than 2009 benchmark, which is at production cost for most smelters. [And] the losses cannot be offset by the sulfuric acid, given the sharp drop of those prices this year," said Chen.
"The average price for the acid is only RMB 30-60/mt, but most smelters will accept RMB 20/mt, just so the buyers can take the material away," he said.
TC/RCs at $50/5c are probably also loss making for Japanese smelters, said Gayle Berry, vice-president of commodities research at Barclays Capital.
"I do not have a specific figure or prediction for 2010 TC/RCs, but [that] forecast is a very interesting figure. Most Japanese smelters [will] complain the offer is not workable," she said.
(Source: Metal Bulletin)