SHANGHAI, Feb. 17 (SMM) – TC/RC plays a key role in the relationship between copper concentrate suppliers and buyers, and decides on economic interests of the two sides. Industry peers and experts will discuss this hot topic during the China Copper & Aluminum Summit to be held during March 21-23.
As China relies heavily on the supply of copper concentrate overseas, no say in copper concentrate TC/RC when negotiating with large foreign suppliers and long-running low offers directly threaten the development of domestic copper smelters.
According to SMM survey, domestic copper smelters have begun to exercise TC/RC for long-term copper concentrate contracts for delivery in 2012, but in the context of not considering the price differential between LME and SHFE copper, BHP Billiton’s offer of USD 60/mt (cents 6.0/lb) and Freeport’s USD 63.5/mt (cents 6.35/lb) both is unprofitable for them. Some copper smelters therefore are seeking imported copper concentrate.
But, what’s the future trend in copper concentrate TC/RC? Based on SMM survey, as grows in domestic smelting capacities slow, and as global copper concentrate capacities increase rapidly, domestic copper smelters will have a more favorable position in negotiating TC/RC. However, this will be a very slow process and is expected to emerge in 2014 at the earliest.
As copper concentrate TC/RC is excessively low, large-sized domestic copper smelters are striving to extend from signally copper smelting to mine exploring, and processing, trading, as well as financing, are also included in their pursue of profits.
It’s predictable for the near term that domestic copper smelters will slow copper concentrate imports, which will help lift future spot TC/RC for copper concentrate to some extent.