[SMM Analysis] Private copper refineries will be centrally overhauled mainly due to shortage of raw materials and declining profits

SMM7 March 30: according to SMM data, the copper concentrate index in June was $51.71 / ton, down $1.76 / ton from the previous month, the third consecutive month of decline. After entering July, TC continues to decline. On July 24th, the SMM copper concentrate index (week) reached US $49.8 / ton. at present, the spot TC trading center has broken through the US $50 / ton mark.

SMM Copper concentrate Index (week)

According to SMM, at present, some domestic copper smelters have been affected by the shortage of raw materials and declining profits to reduce production or carry out maintenance and adjustment, mainly private refineries, especially some private roughing plants have centralized maintenance in July and August this year.

In addition to the pressure of TC decline on the supply at the mine end, for mineral refineries, due to the recent increase in domestic scrap copper supply, the domestic circulation of crude copper from scrap copper has increased, and the crude copper imported in July and August has been concentrated in Hong Kong, which makes the domestic crude copper processing fees go up rapidly and squeezes the profits of this part of the refinery. However, according to SMM's understanding, at present, mineral refineries reflect that there is still a certain profit in the production of domestic copper concentrate as raw materials, but the use of imported raw materials has approached the cash cost line, so they concentrated on overhauling in the third quarter to adjust production pressure. According to SMM statistics, the production capacity of single refineries overhauled in July and August is about 400000 tons.

Domestic crude copper processing fee

Although the overhaul of domestic refineries increased in July, part of the overhaul was passively adjusted by the pressure of the raw material port, so it was difficult to change the current tight supply of copper concentrate caused by the overseas epidemic. SMM learned that the current spot TC offer continues to be under pressure, and the spot TC is deadlocked at 40 US dollars / ton. As for crude copper, as the supply end has scrap copper to produce crude copper and imported to Hong Kong to support, this part of the short-term maintenance will not reduce crude copper processing fees, but in the long term, the tension of the mine side will be transmitted to crude copper through domestic rough refining, the trend of RC and TC will tend to be consistent, and the upward space for crude copper processing fees is limited.

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