SHANGHAI, Dec 10 (SMM) - China's copper consumption has accounted for half of the world's total, but the gap between the demand for copper cathode and its own supply has not effectively narrowed, which means that China needs to import a large volume of copper cathode each year.

In the past ten years, China's self-sufficiency of copper concentrate has continued to decline, and the imbalance between supply and demand has gradually deepened. China's copper concentrate self-sufficiency has fallen from 40% in 2010 to 23.5% in 2021. To meet China's copper consumption, China needs to rely heavily on overseas copper raw materials.

The global copper concentrate showed tight balance in 2021. Considering the factor of disruption, the supply gap will narrow and will turn into surplus in 2022. At present, the balance of supply and demand of spot copper concentrate is increasingly tilted to the smelter end, and the long-term contract TCs are expected to rise in 2022.

The disruptions to copper concentrate shipments have been eased, and the newly expanded production capacity has been gradually released, raising the TCs from lows since mid-April. Sulphuric acid prices in south China rose above 1,000 yuan/mt amid strong demand from downstream buyers.

Sulphuric acid is difficult to continue to support the profits of smelters in the medium and long term, and the proportion of TCs and RCs rebounds in profits.

Global copper concentrate supply will face a major turning point in 2024 or 2025.

The main driving force for the growth of domestic copper cathode output this year is still the increase in the supply of copper concentrates, but the smelting of secondary copper raw materials is the sector with the largest marginal change. In the long run, the structure of raw materials for Chinese copper smelters will change.

Starting from 2024, there will be more smelting projects overseas than in the Chinese market, which may change the continued growth of China’s imports of copper concentrate, which will transform into other forms to flow into the Chinese market.