SHANGHAI, Dec 25 (SMM)－ While SMM forecast the 2018 benchmark copper concentrate treatment charges (TCs) to be $87-90/mt, we take a look back on the price development this year.

In March, China’s domestic spot copper concentrate TCs dropped to $73.5/mt as multiple mines globally were hit by strikes and production cuts. However, it went back up in April as production resumed and some Chinese smelters went on maintenance.

Since September, the price increase of spot copper concentrate TCs has accelerated with transactions at above $90/mt, following the improvement in supply. Suspensions of smelters in India and the Philippines have also led to more copper concentrate available in the market and supported TCs. As it was close to the negotiations of annual long-term contracts, smelters were keen to keep TCs firm.

The negotiations have dominated market talks since November and the momentum of rising TCs cooled down. As of Friday last week, spot imported clean copper concentrate TCs were assessed at $82-90/mt by SMM.

Higher Q4 floor price sets tone for 2018

In September, China Smelters Purchase Team (CSPT) set the TC/RCs floor price for the fourth quarter at $95/9.5, compared with $86/8.6 for the third quarter.

While market participants believed the TC/RC floor price for the March 2018 quarter would be lower than that for the current quarter due to market fundamentals, it is unlikely to be much lower given its impact on the 2018 benchmark price.

The CSPT is scheduled to set the floor price for the first quarter of next year on December 29. SMM expects the negotiations for 2018 benchmark copper TC/RCs to be concluded only in the second half of January.

SMM forecast global copper concentrate supply to grow by 650,000 mt in 2018. In China, additional  refined copper production capacity is planned at 1.2 million mt but we see actual implementation at 900,000 mt next year. Demand for copper concentrate is estimated to add 600,000 mt as these new capacities would be commissioned throughout the year.

Considering the restrictions on copper scrap imports, we see the copper market in a tight balance in 2018.

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