SHANGHAI, Jun 26 (SMM) – The floor price of imported copper concentrate treatment charges (TCs) for the third quarter is likely to stand at $85-87/mt, up from $78/mt in the second quarter, SMM estimated.
The price is set to be determined at the end of this month as the China Smelters Purchase Team (CSPT) convenes in Manzhouli of Inner Mongolia, SMM learned.
We expect the floor price to rise in the third quarter as demand from smelters declines amid sufficient inventory and ample supply. Smelters have stockpiled due to rising spot copper concentrate TCs since mid-May.
TCs of imported clean copper concentrate for the week ended Friday June 22 rose $2/mt from a week ago to stand at $81-87/mt, according to SMM assessment This marked the fifth consecutive week of increase.
While copper mines operated smoothly during the first half of 2018, supply of imported copper concentrate grew due to turmoil at Vedanta Resources' copper smelter in India's state of Tamil Nadu, which buoyed TCs.
Market participants believed that issues at Vedanta are unlikely to be resolved in the short term. This also added to the expectation of higher copper concentrate TCs in the September quarter.
TCs for spot copper concentrate are also likely to remain at high levels in the short term. Key things to watch include salary negotiations at the world's largest copper mine Escondida in Chile, and the development at Vedanta's smelter, SMM believes.
Separately, the growth rate of global copper mine production is expected to rebound to 3.3% this year, SMM forecast, and the supply increment to stand at 650,000 mt in metal content. About 80% of this would come from the international markets, whereas production at Chinese mines is likely to keep growing in the following years as new capacity commissions.
Domestic demand for copper concentrate will also grow this year on fewer scheduled maintenance across large-scale smelters, SMM survey showed. We expect China's refined copper production to reach 8.45 million mt in 2018, up 5.6% from 2017.