What is the supply trend of copper concentrate TC "roller coaster" 2022 during the year? [SMM analysis]

SMM12 March 24: since the beginning of this year, the SMM copper concentrate import index has experienced a 'roller coaster' market. Affected by the tight supply of copper concentrate at the beginning of the year, TC continued to decline, reaching a low of US $29.57 / ton in mid-April, but as more new production capacity was put into production, the copper concentrate supply situation improved. The TC index of SMM copper concentrate imports rose all the way, reaching 65.52 US dollars / ton on October 15, and declined slightly recently. As of December 17, the SMM copper concentrate import index was 60.75 US dollars per tonne, up 105 per cent from the low of the year.

Index of imported copper concentrates (week)-index value (US dollars / ton)

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Recently, the long order processing fee Benchmark for copper concentrate in 2022 has been finalized. according to SMM, sources said Jiangxi Copper, Tongling Nonferrous Metal, China Copper and Jinchuan Group and Freeport confirmed that the long single processing fee for copper concentrate in 2022 is US $65 / ton and 6.50 cents / lb. The copper concentrate processing fee Benchmark in 2021 is 59.50 US dollars / ton and 5.95 cents / lb, and the copper concentrate processing fee BM has increased in 2022.

Review of Copper Market in 2021

Affected by the epidemic last year, the decline in copper production caused a shortage of copper concentrates. since the beginning of this year, major mining enterprises have improved from the epidemic, and copper production has increased significantly compared with last year. And since copper prices have continued to rise and hit historical highs this year, major miners have stepped up their pace of active production, the speed of resolving various incidents at the mine end is also faster than in previous years, and copper concentrate production continues to increase.

Copper production rose 14.4 per cent year-on-year in the first half of the year, with Antamina (Antamina) 226800 tons, up 40.2 per cent year-on-year, accounting for 20.9 per cent of total production, according to (INEI), Peru's national statistics bureau. This was followed by Cerro Baird (Cerro Verde), output of 199800 tons, an increase of 10.8% over the same period last year, accounting for 18.4% of the total output. In the first half of the year, Peru produced a total of 1.08 million tons of copper, and with the commissioning of the Justa (Mina Justa) copper mine in July, the country is expected to meet its annual production target of 2.5 million tons.

Ivanhoe Minerals announced on December 22nd that its Kamoa-Kakula joint venture in (DRC), Democratic Republic of the Congo, had exceeded the upper limit of its annual copper production guidance and had produced more than 100000 tons of copper concentrate so far this year. Production data are reported on a 100% project basis. Ivanhoe owns 39.6% of the Kamoa joint venture and is a project operator. Zijin Mining Group (39.6 per cent), Crystal River Global (0.8 per cent) and the Government of the Democratic Republic of the Congo (20 per cent) are its other stakeholders. In May 2021, Kamoa-Kakula began to produce copper concentrate for the first time from a concentrator with a capacity of 38000 tons per year. Subsequently, it reached commercial production on July 1 and is expected to produce 200000 tons of copper per year. According to the latest news from Ivanhoe, the second phase of the concentrator will be a "copy" of the first phase of the plant, with annual output doubling, currently under construction and about 70% completed. Ivanhoe's 2021 production guidelines are set at 92500-100000 tons, compared with an original estimate of 80-95000 tons. Prior to this, the annual production guidance was also increased in November, reflecting the successful completion of the first phase of the concentrator.

SMM believes that the global copper concentrate is still in a tight balance in 2021, and China's electrolytic copper production is expected to increase by 650000 tons to 9.95 million tons in 2021. According to SMM estimates, the growth rate of global copper production in 2021 is about 7.0%, mainly from the incremental production capacity of large copper projects such as the underground part of Grasberg, the second phase of Spence and Kamoa, as well as the resumption of production in mines in South America and other places. The growth rate of global mine copper production is expected to slow to about 5% in 2022. In terms of recycled copper, the high copper price squeezed out the channel inventory in the first half of the year, and the supply elasticity weakened obviously in the second half of the year.

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