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SMM, December 29: since 2018, the scrap copper policy has been tightened as scheduled, the pattern of supply and demand of scrap copper has appeared, and the frequent shutdown and overhaul of overseas smelters have led to a sharp drop in inventories on the three major exchanges around the world. But against the backdrop of escalating global trade frictions and falling macroeconomics, copper prices are weak and weak, and SMM collates the 2018 TOP 10 list of the most influential copper circles based on influence for readers' reference.
NO.1 India's largest copper smelter Sterlite permanently shut down
On May 28, the Indian government's ban on the permanent shutdown of Sterlite caused a stir in the market. As India's largest copper smelter, its importance to the entire Indian copper industry chain and the global copper market is self-evident. The cause of the incident is that the Sterlite refinery caused serious pollution in the Tuticorin area. Vedanta's decision to expand its production capacity of 400000 tons is more like a fuse, igniting the anger of the local people, and a large number of people began to hold demonstrations. In an attempt to stop the smelter from operating, Sterlite had to stop production on March 27th. The subsequent situation continued to escalate, and Vedanta chose to step into legal proceedings and file a lawsuit, but because it had a lot of water in environmental protection investment, it did not solve the problem, on the contrary, the situation escalated further. The situation got out of hand when 13 people were killed in clashes with demonstrators. Vedanta has appealed to the High Court for the government to implement the order of the Green Court, which will be heard on January 21 next year.
NO.2 "Seven categories" scrap Copper Import approval significantly reduces supply and demand in the scrap Copper Market by nearly 70 per cent
A total ban on seven categories of waste imports will be formally implemented from January 1, 2019. 2018 is a transitional year for seven categories of waste imports. According to the data we have tested at present, China will produce 924000 tons of scrap copper in 2017 (excluding new materials). Most of the new materials are returned by enterprises, which is difficult to become a variable of raw material supply in the market, and imports 1.298 million metal. In 2018, domestic scrap copper 775000 tons of metal, imported scrap copper 1.272 million tons of metal. Affected by import restrictions on "seven categories", the proportion of "seven" metals in imported waste fell to 16 per cent in 2018 from 52 per cent in 2017, while the proportion of "six categories" rose sharply to 84 per cent. Judging from the current share structure of imported scrap copper, the "seven categories" have been officially banned, and the proportion of the "six categories" has increased significantly. If it is also banned in the future, the import of scrap copper in the future may be wiped out.
NO.3 Escondida wage contract strike in 2017 is a thing of the past
Escondida, the world's largest copper mine, did not repeat the 44-day strike in 2017, and BHP Billiton officials said in mid-August that the risk of a strike at Escondida had been completely eliminated. The workers voted in favour of the latest wage proposal. The two sides later signed a contract. After reaching an agreement with management, union leaders made the proposal to about 2500 members this week, concluding three months of negotiations. Escondida's risk relief also set the tone for the market, with salary negotiations for more than 40 copper mines generally going well in 2018.
NO.4 2019 copper concentrate long single benchmark furnace
November 15 news, Jiangxi Copper and Antofagasta reached a 2019 copper concentrate long order negotiations, signed TC/RC at US $80.8 / ton, 8.08 cents / pound, TC decreased by US $1.45 / ton compared with 2018, the price is in line with market expectations. Supply growth in the copper market is widely expected to decline in 2019, while capacity in copper smelters will increase.
NO.5 copper options officially listed
On September 21, copper options were officially listed. It has become the third commodity option successfully traded in China's futures market after sugar and soybean meal, and it is also the fourth option, and it is also the first industrial option born in China.
SMM said that copper options have a unique function compared with futures, it has its unique advantages in measuring and managing volatility risk, cooperate with futures, promote each other, and provide investors with more diversified asset allocation options.
Compared with the traditional copper futures market, copper futures option is a financial tool with lower cost, easier operation and easier risk control. The introduction of copper futures option not only provides more diversified and refined risk aversion tools for copper related enterprises. At the same time, it will also help to enhance the pricing power of copper in the world financial market. Listed copper options are of great significance to promote the risk management level of China's non-ferrous industry and enhance the function of futures market to serve the development of real economy.
NO.6 the 13th largest smelter in the world closes down and copper Tc/Rc is expected to rise by the end of February next year
In order to meet Chile's stricter emission standards, Codelco plans to begin a smelting upgrade of nearly US $1 billion in October this year, and with the arrival of the planned overhaul of its Chujikamata (Chuquicamata) copper smelter, it will begin on December 13. A spokesman for the mining company said Chukikamata is expected to undergo 60 to 80 days of repairs and the shutdown is expected to last until the end of February. At the same time, the Potrerillos smelter, located in the El Salvador branch of Codelco, will also be closed for maintenance, and work is expected to continue until the end of January next year.
SMM said that the Chukikamata copper mine accounts for about 2 percent of the world's copper production, and the overhaul of the smelter will not affect the output of copper concentrate. On the whole, the overhaul will have a limited impact on future supply. Copper prices have also digested expectations in the past two months, and as with the previous shutdown of Vedanta, more copper concentrate will flow into the Asian market without a decrease in copper supply, which will be good for the future TC/RC trend, and continue to pay attention to the progress of Chukika Mata and Potrerillos maintenance.
NO.7 CSPT finalizes TC floor price for copper concentrate in the first quarter
The CSPT Group met on December 27th to finalize the TC floor price of $92 per tonne for copper concentrate in the first quarter, up $2 per tonne from the previous quarter. Floor prices continue to rise, due to the current smelter for the first quarter procurement desire is not strong, only to Hong Kong in March to hold a strong interest in the source of goods, but the current traders have also tightened the offer, the two sides are more deadlocked, TC has a turning trend.
NO.8 Zambia plans to increase mining taxes and royalties in 2019 to reduce debt
In September, Zambia's finance minister said in a budget speech that Zambia would introduce new mining tariffs and raise royalties to help reduce rising debt. At the same time, people are protesting against corruption in the government.
Zambia, Africa's second-largest copper producer, and Zambia's largest industry lobby group say more than half of Zambia's copper mines, Africa's second-largest metal producer, are likely to be unprofitable next year because of increased taxes on operators. The effective tax rate will be between 86 and 105 per cent and about 27900 jobs will be at risk, the Zambia Mining Association said in a statement to reporters in the capital, Lusaka, in December.
Including Glencore Plc and First Quantum Minerals Ltd.. Mining operators, including, have warned the Zambian government through industry lobbies, reducing more than 21000 jobs and $500m in capital spending cuts.
Sokwani Chilembo, chief executive of mining companies, said by telephone that copper production would be flat next year and would fall from 2020 because of tax increases. He said the industry group expects to produce 820000 tons this year. Copper accounts for more than 70 per cent of Zambia's foreign exchange earnings.
Adjustment of NO.9 "six types" scrap copper from unrestricted import solid waste to restricted import solid waste
On December 27, the Ministry of Ecological Environment and the General Administration of Customs issued a joint announcement to adjust the "six categories" of copper scrap from unrestricted import solid waste to restricted import solid waste. As the policy announced at the end of the year limited its impact on 2018, the abolition of six categories of restrictions on imports was expected as early as the market. Judging from the future trend, the "seven categories" ban on scrap copper is expected to cause a contraction in the supply of imported copper scrap. In 2018, the proportion of "six categories" is as high as 84 percent. In July next year, the "six categories" of copper scrap will also be converted to restricted imports of solid waste. The total supply of imported scrap copper will be reduced even more. With reference to the process of the prohibition of the "seven categories", the state has laid the groundwork for a total ban in 18 years and has deliberately reduced the number of import approvals. If the policy is also intended to pave the way for a total ban on "six types" of scrap copper in 2020, the policy is expected to have an even greater impact. The total amount of approval is also difficult to be optimistic, in the import qualification application will be challenged first, if follow the license route, the import qualification of profit and waste enterprises will be strictly examined, the number of approved will be suppressed.
NO.10 Trade dispute between China and the United States drags down the trend of Copper Price
Sino-US trade frictions not only drag down the trend of copper prices, but also affect the entire commodity and even the Sino-US trading system and economy. It is of far-reaching significance, but because it is not an independent event of the copper circle, it ranks 10th in terms of influence.
