More Chinese Copper Smelters Resume Toll Trading

SHANGHAI, Nov. 3 -- More copper smelters in China are resuming toll trading for imported concentrates as treatment and refining charges (TC/RCs) fall and domestic demand weakens, sources report.

    "Chinese copper smelters, including Jiangxi Copper, resumed toll trading as early as in the third quarter, so as to tackle falling TC/RCs and difficult sales in the local physical market," said a trader in Shanghai.

    Spot copper premiums have fallen to quotations as low as USD 30/mt, compared to the annual benchmark at $75, while spot copper TC/RCs were quoted at $20 per tonne/2 cents per lb, down from the annual offer of $75/7.5.

    "Given the deteriorated situation, I am forecasting that toll trading will pick up in the next few weeks," said the trader.

    "October exports from China have already hit the highest level this year, indicating a weak market locally," he said.

    China exported 10,705 mt of refined copper in September, up 338% year-on-year, according to Chinese customs.

    "Any TC/RC offer below $70/7 can be read as loss-making," said an official at a local smelter. "Although Chinese smelters agreed to the offer of $47.2/4.72 in 2008, it was offset by record-high sulfuric acid prices that time."

    Acid prices were quoted at over RMB 2,000/mt (USD 292/mt) in early 2008 but have since fallen back to RMB 20-30/mt.

    However, toll trading will not pose much influence over copper prices as the volumes processed remain small, said market participants.

    "We cannot tell how much concentrate has been imported for toll trading, but I am convinced the amount is not big," said the official.

    "It could be only several thousand mt, so it won't affect too much at all," he said.

    (Source: Metal Bulletin)