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The Monthly TCs Dropped to $74-76/mt after the End of Long-Term Order Negotiations in June
Jul 13, 2022 16:44CST
Source:SMM
The SMM monthly Copper Concentrate Index stood at $75.45/mt in June, a drop of $4.24/mt from May.

SHANGHAI, Jul 13 (SMM) - The SMM monthly Copper Concentrate Index stood at $75.45/mt in June, a drop of $4.24/mt from May. The SMM weekly Copper Concentrate Index stood at $72.5/mt as of July 8. The aggressive restocking of Xiangguang greatly reduced the supply of clean ore in the market, and market transactions with traders were thin, coupled with then on-going negotiation of TCs under long-term orders between Antofagasta as well as domestic and Japanese smelters in the middle of the year. The smelters mainly purchased blended ore or participated in tenders of the mines. The TCs of blended ore dropped from $92-96/mt to $82-86/mt, and the tender prices also dropped to $74-76/mt amid supply tightness of spot goods, and the shipment is mainly scheduled in August and September. Currently speaking, copper concentrate TC under long-term orders for the first half of 2023 between Antofagasta and Jiangxi Copper, Tongling Nonferrous Metals and Jinchuan Group has been set at $76/mt, while that with Japanese smelters is $75/mt. Market players unanimously believed that copper concentrate will be relatively sufficient in the second half of this year and first half of next, and TCs will most probably stand firm between $74/mt and $76/mt.

On the news front, the supply side tightness has temporarily eased. Community residents in the Peruvian Andes have agreed to negotiate the use of highways by the Las Bambas mine, and mining activities and logistics are expected to restart on June 11, 2022 (Peruvian time). After 18 years of steady production, Hudbay Minerals' 777 copper-zinc mine in Manitoba, Canada has been be shut down due to depletion of mineral resources and is scheduled to close safely in September. In addition, Ganqimaodu and Erlianhot inland ports in north China were once again hit by the pandemic . Personnel at Ganqimaodu Port were not allowed to leave the facilities from June 4 to 7. And due to the increase in confirmed COVID cases, the Erenhot port was locked down. Erenhot Port is the main import port of Erdenet copper mine in Mongolia. The annual copper concentrate output of Erdenet copper mine is about 130,000 mt in metal content. But these land ports have basically returned to normal within 1-2 weeks, which has limited impact on domestic copper concentrate imports.

On the whole, the monthly TCs dropped again mainly due to the supply disturbances in South America and short supply of spot clean ore in China due to aggressive restocking by Xiangguang after it resumed the production.  Currently, the TCs have resumed rationality after Xiangguan resumed the production from its shutdown earlier. Although the maintenance period of the smelters for the third quarter is coming to an end, smelters are not expected to experience significant ore supply shortage in the near term. In addition, the 400,000-mt project owned by Dayeyang Xinhongsheng is unlikely to reach full production any time soon. Furthermore, the market has received guidance concerning future TCs after CSPT team finalised the third quarter spot copper concentrate TC at $80/mt. The TCs are likely to move around $74-76/mt if the new mining capacity is put into production as scheduled, should there be no new events. The pricing coefficient of domestic spot Cu 20% copper concentrate remained unchanged at 89-91% on a delivery-to-factory basis.

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