HONG KONG, May 6 (SMM) – Chinese restrictions on imports of copper scrap will determine treatment charges, after copper TCs fell sharply from the start of 2019, said Ian Roper, general manager of SMM.
There will be a time period for adjustment later this year when import restrictions take effect, and copper scrap supply will be key to TCs later this year, Roper said in a panel discussion at the Asia Metals Seminar on Monday May 6.
Spot copper concentrate TCs fell greater than expected from the start of 2019, down from previous highs of $92/mt, to $68/mt, much lower than the benchmark 2019 annual TC of $90.8/mt.
Roper also discussed how strong, first-quarter smelter output accounted for the quick movement of TCs this year. “But TCs are unlikely to go lower, as new smelters in China ramp up, especially in the second half of the year,” he added.
Imports of Category Seven copper scrap were banned since 2019, and import restrictions on Category Six materials will begin from July 1.
In the same discussion about the 2019 outlook for metals, Norman Ting, general manager of marketing at Metro Mining, said that US-China trade talks will pave the way for aluminium prices after "a good run in 2018 with several cutbacks".
Ting explained: "China is trying to export aluminium products before new tariffs take effect. The capacity surplus of these products will need a market when the tariffs are imposed, and this will pressure prices."
SMM’s senior analyst for lead and zinc, Liu Mengyue, highlighted a potential breakthrough in production of refined zinc in the second half of the year, as new projects come online and capacity is expanded.
"But zinc prices are likely to receive a boost as consumption picks up in the second quarter and lowers inventories," she added. Global inventories of zinc ingots currently exceed 300,000 mt, down about 200,000 mt from a year ago.
NEV producers in China are also set for a year of developments. SMM’s senior analyst of lithium and cobalt, Hong Lu, said that NEV producers have two strategies for this year in light of new policies around electric vehicles.
"The first strategy is to continue the use of high-nickel ternary batteries in order to obtain greater subsidies, and the other is to control costs and turn to lithium iron phosphate (LFP) batteries" she explained.
She noted that, in the fastest growing passenger vehicle market, ternary batteries will continue to account for the largest share, of 70% or more. But LFP batteries will gain popularity among unsubsidised passenger vehicles with lower driving ranges.