Aurubis: Spot Copper Concentrate TC/RC Surges to USD 80/Mt

SHANGHAI, Mar. 11 (SMM) – According to Madrid news March 6, Willbrandt, chairman of Europe's biggest copper smelter Aurubis said at a meeting held by Metal Bulletin that the company is buying some copper concentrate at prices higher than current spot TC/RC of USD 80/mt (cents 8/lb).

Benchmark TC/RC for 2013 settled in January surged by 10% to USD 70/mt (cents 7/lb), and spot TC/RC climbed to USD 80/mt (cents 8/lb) for the time being. This is definitely good news for smelters who expect benchmark TC/RC to increase further next time.

TC/RC is paid by miners to smelters for converting copper concentrate into refined metal. Generally speaking, TC/RC rises when copper concentrate supply increases, forcing miners to grab smelting capacities.

“Copper concentrate market will develop further and benefit smelters. With new mining projects commencing production and a large number of smelters being closed, we will see a large supply surplus in copper concentrate market, which will lead to even higher TC/RC levels”, said Willbrandt.

He also said Aurubis is planning to lower dependence on the soft European markets. Income from Europe accounted for around 85% of the company's total revenue last year.

Copper and copper products demand remains sluggish in Europe due to the European debt crisis, as LME copper stocks have increased by 85% to 134,550 mt at present.

Willbrandt said Rotterdam spot copper premiums have fallen to USD 50-70/mt owing to weak refined copper demand, similar to levels in Shanghai.

“We do not expect European economy to grow rapidly, but believe that weak European demand has bottomed. We have finished annual negotiations with customers but are not satisfied with current situation”, said Willbrandt.

He added that the number of orders from the US is large this year but should be very temporary.

Willbrandt was upbeat about copper demand from top consumer China and anticipated merely a slight copper supply surplus this year. He expected copper prices to move between USD 7,500 -8,500/mt this year.

London copper futures prices are quoted at around USD 7,700/mt and have declined by 2% thus far this year on account of tepid Chinese demand, reignited European debt crisis as well as the US financial problem. 

Copper markets have enticed a large amount of investment and caused ETF positions to increase significantly, while financing demand on the LME has also increased.

With regard to the financing trade, Willbrandt held the view that it can bring risks to companies and investors are now leaving raw material and commodity markets.