China Copper, Tongling Nonferrous Metals, Jiangxi Copper, Jinchuan Company and Freeport set 2021 copper concentrate TC at $59.5/mt

SHANGHAI, Dec 14 (SMM)—Chinese copper smelters China Copper, Tongling Nonferrous Metals, Jiangxi Copper, Jinchuan Company and US miner Freeport-McMoRan have agreed on the 2021 copper concentrate treatment charges (TC) in their long-term contracts at $59.5/mt, sources told SMM.

Spot copper concentrate TCs hovered at low levels in 2020, staying below $50/mt in the second half of the year. According to SMM historical data, the benchmark copper concentrate TCs for next year’s long-term contracts were very close to the average spot copper concentrate TC as of the benchmark TCs negotiations. In October, SMM monthly copper concentrate TCs stood at $48.62/mt, the lowest level in recorded history. The average price of SMM Copper Concentrate Index (weekly) came in at $48.11/mt as of December 11. 

Market participants expect demand-supply structure of copper concentrate to improve in 2021 as those production affected by COVID-19 in 2020 will recover and Grasberg’s underground project, Spence Phase II project and Kamoa project which have been brought into production will boost copper concentrate output, and thus TCs in long-term contracts are expected to rise sharply. Global pyro-metallurgy copper concentrate output is likely to expand 1.44 million mt on the year to 18.14 million mt in 2021, as SMM estimated.

Spot copper concentrate TCs were below $65/mt most of this year, a mark considered a break-even for Chinese smelters with full cost taken into consideration, SMM learned. Lower TCs, together with failing prices of sulphuric acid which is a byproduct of copper concentrate smelting, squeezed margins at domestic smelters and has led to suspension of some smelting capacity.