SHANGHAI, Jul. 24 (SMM) – Total refined copper inventories were down to 55,980 mt in June, a survey of 24 copper smelters undertaken by Shanghai Metals Market (SMM) showed. Copper smelters with scrap copper as raw material reduced production during June due to unfavorable scrap copper prices and tight liquidity. Refined copper inventories might level off or begin to grow again in July with improved cash flows.
Spot TC/RCs of copper concentrate moved between USD 75-80/mt during early-to-mid June, but fell to USD 70-75/mt later in the month due to fewer arrivals of ores following the resumption of production at one Indian smelter, less than full capacity in operation at the Grasberg mine, as well as falling copper prices.
Continuous declines in prices of sulfuric acid and other precious metals also cut revenue contributions which normally would help to offset copper smelting costs. Smelters have an optimistic outlook for 2H 2013, however, so they are unwilling to purchase at prices close to long-term TC/RC contract prices, and are instead purchasing enough only to maintain normal production.
As copper prices fell, suppliers of scrap copper were also unwilling to move goods. Strong demand from other Asian countries, such as India and South Korea, and the 17% VAT in China, also added to difficulties in securing goods and further tightened scrap copper supply at smelters. To maintain production, those producers using scrap copper would now increase purchases of crude copper and copper anodes in the future.