SHANGHAI, Nov 21 (SMM) – Chinese copper smelters Jiangxi Copper, Tongling Nonferrous Metals, China Copper and US miner Freeport-McMoRan have agreed on the 2020 copper concentrate treatment charges (TC) in their long-term contracts at $62/mt, and refining charges (RC) at 6.2 cent/lb, the lowest since 2012, sources told SMM on November 21.

The charges, paid by miners to smelters to process concentrate into refined metal, fell from the 2019 benchmark of $80.8/mt and 8.08 cent/lb, weighed by tight ore supply and expanding smelting capacity in China.

SMM assessments indicated that, as of November 15, the average TC for seaborne spot copper concentrate stood at $65.36/mt. 

In August, SMM monthly copper concentrate TCs slipped to a seven-year low of $54.5/mt. Spot copper concentrate TCs were below $65/mt most of this year, a mark considered a break-even for Chinese smelters with cash cost taking into consideration, SMM learned.

Lower TCs, together with failing prices of sulfuric acid which is a byproduct of copper concentrate smelting, squeezed margins at domestic smelters and has led to suspension of some smelting capacity. 

Javier Targhetta, senior vice president for marketing and sales at Freeport McMoRan, said on November 19 that he thought a “reasonable” benchmark for 2020 would be $60/mt. Capacity additions at Chinese copper smelters and stable production at mines are set to weigh on TCs and RCs, he added.

The SMM Copper Concentrate Index, which was launched in end October, reflected the spot prices of the copper concentrate treatment charge (TC) in China. Our analysts will give their insights on the copper supply outlook and discuss more about the capacity and production of the domestic smelters in the upcoming China Nonferrous Metal Industry Annual Meeting 2019 and 2020 (SMM) Metal Price Forecast Conference on November 22-23.