Spot Copper Concentrate TC/RC Guidance Price Rose Sharply in Q4

SHANGHAI, Sep 29 (SMM) – The CSPT held a general manager office conference in Shanghai this morning, at which the spot TC/RC guidance price was finalised at $70/mt and￠7.0/lb in Q4. Spot TC has fallen to $30/mt at the end of March, the lowest level in ten years. Many smelters suggested that they could not accept prices below $30/mt. In doing so, the CSPT did not determine the rock-bottom price for Q2, the price in Q3 rose slightly from Q1 and increased sharply in Q4, indicating that the tight supply of copper concentrate was eased.

The global copper concentrate output is expected to grow 7% amid the expansion of production in 2021 and the recovery of overseas supply on less impact from the pandemic. Except for Escondida whose output declined due to the falling grade, others basically saw increment. TC stood at $65.29/mt as of September 24. The imported copper concentrate index rose 120% from the low levels.

South America was still affected by the pandemic at the beginning of the year, road blockages in communities, and extreme weather. Both local concentrate output and transportation conditions have been affected in January and February, leading to thin imports in February and March in China. And TC fell below $30/mt at the end of March and early April. Sharp rise of copper prices in H1 stimulated concentrate production and promoted new projects progress. The buyers and sellers focused their attention on the salary negotiations of the three copper mines of Caserones, Andina, and Escondida in August. The strikes of the Caserones and Andina increased market concerns. Escondida and BHPB reached a new labour contract, easing the market sentiment. Then, the Alashankou port was closed due to the pandemic, roads in Peru were blocked, and global logistics tensions increased, coupled with the recent copper price ratio, high prices of sulphuric acid, and tightening copper scrap supply, all of which is beneficial to sellers of copper concentrate when facing rapid increase in TCs. Copper concentrate traders held a wait-and-see outlook amid losses of long-term orders and spot orders. Dongying Fangyuan reportedly plans to restart the smelting plant with an annual capacity of 300,000 mt in the fourth quarter, which boosted confidence of copper concentrate sellers. High prices of sulphuric acid has enabled the smelters to maintain high operating rates of the crude smelting capacity. There will be almost no new crude smelting capacity in China by 2022, and only Shandong Dongying Fangyuan Nonferrous Metals resumed production of 300,000 mt/year, which is likely to increase demand for copper concentrate. The remaining part is mostly for maintenance and winter restocking adjustments, which seems difficult to reverse the loose state. In the absence of unexpected situations in overseas copper mines and logistics, the balance of copper concentrate will continue to benefit buyers. RCs of crude copper continued to decline due to shipment problems in Africa and tight supply of copper scrap. Imported CIF RCs have reached the annual long-term order level, and the improvement may come after China's National Day holidays.