Default of Copper Concentrate Contract at Qinhuangdao Port Struck the Copper Industry

SHANGHAI, Aug 8 (SMM) - As of Friday August 5, the SMM Imported Copper Concentrate Index (weekly) stood at $73.38/mt, $1.72/mt higher than the previous week. Transactions of copper concentrate spots were sluggish last week. A smelter purchased concentrate spots from traders at the TCs of about $74-75/mt, which were scheduled to be shipped from September to October.

The breach of contract at Qinhuangdao Port had a bad impact on the copper industry. Some sellers sold the copper concentrate at Qinhuangdao Port and quoted the TCs at $74-79/mt. On the news front, copper supply from the South American mines still faced challenges. In the Chuquicamata copper mine owned by Codelco, the conveyor belt from a mine pit to the dressing plant collapsed. Fortunately, no one was injured. Codelco said that its pre-tax income in the first half of 2022 decreased by 35% to $2.4 billion, which was mainly caused by the production cut because of the decline in ore grade of the Ministro Hales copper mine and the lower recovery rate of concentrate in Chuquicamata and El Teniente mines. On August 2, the chairman of Zijin Group reiterated that the copper output of Zijin will reach 860,000 mt in 2022, which is consistent with the expectation.

Generally speaking, the default of the copper concentrate contract at Qinhuangdao Port had a serious impact on the supply of raw materials and commodities trading, but it had a limited influence on the supply of raw materials of smelters. Sellers quoted the TCs of copper concentrate at Qinhuangdao Port at $74-79/mt, which will support the spot TCs in the short term. The pricing coefficient of domestic spot Cu 20% copper concentrate stood at 89-90% on a delivery-to-factory basis last week.