HONG KONG, Aug. 26 -- Jiangxi Copper Co., China's biggest producer of the metal, said domestic smelters may cut production as processing fees dropped to a "historical low."
Treatment and refining charges, known as TC/RCs, have dropped to a level that doesn't cover the costs of smelting in China, the Guixi, Jiangxi province-based company said in its earnings statement yesterday.
The expansion of copper-smelting capacity in China and India prompted producers to compete for raw-material supplies from mining companies including BHP Billiton Ltd. A copper concentrate deficit led to cuts in processing fees, a main source of smelters' profit.
"Some copper smelters may cut production in the hope of pushing up processing fees," Jiangxi Copper said. The company buys contracted ore with a pre-agreed fee for the year, which is higher than spot prices, it said.
Jiangxi Copper's first-half profit rose 73 percent to 2.2 billion yuan ($323 million) from a year earlier as production gained and prices of copper and gold increased.
"Copper demand may gradually improve amid a global economic recovery and a weaker dollar," Jiangxi Copper said. Copper rose 1.5 percent to $7,205 a metric ton on the London Metal Exchange at 10:05 a.m. in Hong Kong.