Wed, 16 Oct 08:53:00 GMT
(Corrects description of TC/RCs in second paragraph)
* Miners tell smelters concentrate output may fall in 2014
* Smelters now only expect 2014 TC/RCs $85-$95/8.5-9.5 cents
* Spot deals at TC/RCs $110-$112/11-11.2 cents last week
By Polly Yam
HONG KONG, Oct 16 (Reuters) - China copper smelters have lowered their expectations on copper treatment and refining charges (TC/RCs) for term imports of concentrates in 2014 as expected supply growth may be smaller than they had anticipated, trading sources said on Wednesday.
Miners pay TC/RCs to smelters to refine concentrate into metal. As the supply of concentrate increases, the demand for smelting capacity and charges rise, translating into higher profits for smelters.
Large Chinese smelters had planned to ask global miners to pay TC/RCs of about $105 a tonne and 10.5 cents a pound for term concentrate shipments in 2014 versus a 2013 benchmark of $70 and 7 cents, encouraged by greater availability of concentrate and spot charges hitting two-year highs.
Spot TC/RCs rose 12 percent in the past month.
But after a first meeting with global miners during the London Metal Exchange Week last week, smelters now expect miners may only agree to TC/RCs of $85 to $95 and 8.5 cents to 9.5 cents for 2014 concentrate shipments. The 2014 benchmark is likely to be settled later in the year.
Global miners had told the smelters that production at some mines may fall next year due to lower ore grades, which could offset output from new mines such as Mongolia's giant Oyu Tolgoi, two sources at large smelters said.
"We now don't see a chance that miners will agree a $100/10 cents TC/RC (for 2014)," one of the sources said, declining to be named because of the sensitivity of the matter.
On the upside, Japanese smelters were expected to increase imports of copper concentrates next year to boost metal production after domestic demand had increased this year, said the source. Japan is the world's second-largest importer of copper concentrate after China.
China's Jinchuan Group may also boost concentrate, with the expected opening of 400,000 tonnes of capacity in the second quarter.
Chinese smelters had bought 40,000-50,000 tonnes of spot clean, standard copper concentrates last week with two deals at TC/RCs of $110 and 11 cents and one at $112 and 11.2 cents, up 12 percent from $100 and 10 cents last month, traders said.
Spot TC/RCs have risen more than 50 percent so far in the second half because of increased supplies, even though buyers of Oyu Tolgoi concentrates have not been able to take the shipments they had already bought, traders said.
Oyu Tolgoi shipped 38,000 tonnes of concentrate to a bonded warehouse in China between July and Sept and another 122,000 tonnes was being held in inventory at the mine, Turquoise Hill Resources said previously, which runs Oyu Tolgoi and is 66 percent owned by Rio Tinto.
Oyu Tolgoi’s customers were making good progress with Chinese customs officials to obtain necessary approvals to enable them to collect purchased concentrate from the bonded Chinese warehouse, Rio Tinto said on Tuesday. It expects sales to be aligned with production rates by the end of the year.
Oyu Tolgoi shipments have used Ganqimaodou, a small border county in China's Inner Mongolia region, said traders, the smelter sources and a term buyer of Oyu Tolgoi concentrate.
The Ganqimaodou customs office had requested the concentrates to be imported under border trade, for which only approved local-registered firms are allowed, they said.
The sources said Rio Tinto had signed four or five buyers, including three Chinese firms, for term Oyu Tolgoi concentrates, and none of the buyers had registered in Ganqimaodou.
(Reporting by Polly Yam; Editing by Michael Perry)