UPDATE 1-Aurubis CEO Expects Rising Copper TC/RCs-Shanghai Metals Market

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UPDATE 1-Aurubis CEO Expects Rising Copper TC/RCs

Industry News 09:47:04AM Dec 15, 2010 Source:SMM

HAMBURG, Dec 14 (Reuters) - Copper concentrate treatment and refining charges (TC/RCs) are likely to rise in coming months, the CEO of Europe's largest copper smelter, Aurubis (NAFG.DE), said on Tuesday.

Bernd Drouven also told a news conference that repairs to a furnace damaged in an accident last week were set to be finished on schedule and concentrate processing would restart on Friday.

The accident will cause an impact in single-digit million euros in the new full year pre-tax earnings, he said.

Aurubis on Tuesday posted a strong rise in profits in its previous financial year ending Sept. 30.

The accident on Dec. 2 had stopped concentrate processing at Aurubis' main plant in Hamburg.

Drouven said current high copper prices were encouraging mines to produce more concentrate which was likely to support TC/TCs in coming months.

Copper TC/RCs are the fees paid by mines to refine copper concentrate (ore) into metal. They are a key part of the copper industry's earnings and have risen strongly in September and October.

 "When you look at the cost structure of mines a copper price of about $3,000 a tonne is needed for profitability," Drouven said. "With prices now around $9,300 a tonne you can work out in your head that prices are attractive to mines to raise production."

Three-month copper on the London Metal Exchange CMCU3 stood at $9,229 a tonne at 1209 GMT.

Strong copper product demand was currently being seen "across the board" from consumer industries, Drouven said. These included the electricity and power sector, automobiles, construction and engineering.

"We believe we will see rising copper product prices," he said.

Asked about the impact of new exchange-traded products (ETPs) -- financial securities backed by physical metal -- being expanded to copper, he said the outcome was likely to be greater market volatility.

"This could present difficulties to copper consumers who do not hedge," he said.

There was also a danger that copper consumers may not be possible for to pass on sudden rises in copper prices to their customers, he said.

"Sooner or later these instruments could tighten copper supplies and so will have an impact on prices," he said.

"There is also a danger of substitution if copper is the only metal to rise in price and other prices such as for aluminium do not rise."

Asked about the reports of a dominant position in LME copper he said this could also cause more volatility but it was unclear who the position holder was.

A dominant position controlling between 50 and 80 percent of cash warrants for London Metal Exchange copper has risen to above 90 percent, latest LME data showed on Tuesday.

Asked if he was worried about the dominant position, he said: "You may as well ask me if I am worried about the weather, there is nothing we can do about it."

A dominant financial position could have the impact of removing copper stocks from the industrial market as the metal would be needed to cover financial investment requirements, he said.

While this could firm prices, prices could also drop suddenly if a financial investor decided to sell.

Aurubis had fully hedged its copper requirements for product output but he was concerned that some market players had not.

He repeated that Aurubis had long-term interest in a foreign acquisition but gave no details, saying that Aurubis was generally looking for opportunities.
 

 

 

 

UPDATE 1-Aurubis CEO Expects Rising Copper TC/RCs

Industry News 09:47:04AM Dec 15, 2010 Source:SMM

HAMBURG, Dec 14 (Reuters) - Copper concentrate treatment and refining charges (TC/RCs) are likely to rise in coming months, the CEO of Europe's largest copper smelter, Aurubis (NAFG.DE), said on Tuesday.

Bernd Drouven also told a news conference that repairs to a furnace damaged in an accident last week were set to be finished on schedule and concentrate processing would restart on Friday.

The accident will cause an impact in single-digit million euros in the new full year pre-tax earnings, he said.

Aurubis on Tuesday posted a strong rise in profits in its previous financial year ending Sept. 30.

The accident on Dec. 2 had stopped concentrate processing at Aurubis' main plant in Hamburg.

Drouven said current high copper prices were encouraging mines to produce more concentrate which was likely to support TC/TCs in coming months.

Copper TC/RCs are the fees paid by mines to refine copper concentrate (ore) into metal. They are a key part of the copper industry's earnings and have risen strongly in September and October.

 "When you look at the cost structure of mines a copper price of about $3,000 a tonne is needed for profitability," Drouven said. "With prices now around $9,300 a tonne you can work out in your head that prices are attractive to mines to raise production."

Three-month copper on the London Metal Exchange CMCU3 stood at $9,229 a tonne at 1209 GMT.

Strong copper product demand was currently being seen "across the board" from consumer industries, Drouven said. These included the electricity and power sector, automobiles, construction and engineering.

"We believe we will see rising copper product prices," he said.

Asked about the impact of new exchange-traded products (ETPs) -- financial securities backed by physical metal -- being expanded to copper, he said the outcome was likely to be greater market volatility.

"This could present difficulties to copper consumers who do not hedge," he said.

There was also a danger that copper consumers may not be possible for to pass on sudden rises in copper prices to their customers, he said.

"Sooner or later these instruments could tighten copper supplies and so will have an impact on prices," he said.

"There is also a danger of substitution if copper is the only metal to rise in price and other prices such as for aluminium do not rise."

Asked about the reports of a dominant position in LME copper he said this could also cause more volatility but it was unclear who the position holder was.

A dominant position controlling between 50 and 80 percent of cash warrants for London Metal Exchange copper has risen to above 90 percent, latest LME data showed on Tuesday.

Asked if he was worried about the dominant position, he said: "You may as well ask me if I am worried about the weather, there is nothing we can do about it."

A dominant financial position could have the impact of removing copper stocks from the industrial market as the metal would be needed to cover financial investment requirements, he said.

While this could firm prices, prices could also drop suddenly if a financial investor decided to sell.

Aurubis had fully hedged its copper requirements for product output but he was concerned that some market players had not.

He repeated that Aurubis had long-term interest in a foreign acquisition but gave no details, saying that Aurubis was generally looking for opportunities.