TCs for Imported Copper Concentrate Up $7.45/mt MoM in Aug, But the Weekly Increase Sarply Slowed Down

SHANGHAI, Sep 16 (SMM) - SMM Monthly Imported Copper Concentrate Index stood at $58.55/mt in August, up $7.45/mt from July. But the weekly increase of Imported Copper Concentrate Index slowed sharply. The deadlock between sellers and buyers increased as spot TCs rose above $60/mt.

However, as the expected mitigation in the interference of mine production by salary negotiations and the output at overseas newly expanded mines steadily increased, the supply and demand pattern is still beneficial to buyers. SMM Weekly Import Copper Concentrate Index stood at $61.05/mt as of September 10.

The buyers and sellers focused their attention on the salary negotiations of the three copper mines of Caserones, Andina, and Escondida in August. The strikes of the Caserones and Andina increased market concerns. Escondida and BHPB reached a new labour contract, easing the market sentiment.

Later, the Alashankou port was closed due to the pandemic, roads in Peru were blocked, and global logistics tensions increased. This, coupled with the recent SHFE/LME copper price ratio, high prices of sulphuric acid, and tightening copper scrap supply, is beneficial to sellers of copper concentrate when facing rapid increase in TCs. Copper concentrate traders held a wait-and-see outlook amid losses of long-term orders and spot orders.

Dongying Fangyuan reportedly plans to restart the smelting plant with an annual capacity of 300,000 mt in the fourth quarter, which boosted confidence of copper concentrate sellers. High prices of sulphuric acid has already sent the operating rates of the crude smelting capacity to a high level. And there will be almost no new crude smelting capacity in China by 2022, and only Shandong Dongying Fangyuan Nonferrous Metals resumed production with a capacity of 300,000 mt/year, which is likely to increase the demand for copper concentrate. The other plants are mostly under maintenance and planning for winter restocking, which seems difficult to fully digest the added supply of concentrate. In the absence of unexpected situations in overseas copper mines and logistics, the balance of copper concentrate will continue to benefit buyers.

In addition, a large-scale smelters in central China were reported to have environmental protection issues. In order to cooperate with environmental protection inspections and rectification, the operating rates have been lowed down. Although it will not affect the trend of the spot market in the short term as there is no delay or selling plan for extra concentrate as a result of lowing operating rates, the market still need to further observe the development of the situation. Copper prices fluctuated rangebound. The current pricing coefficient of domestic copper concentrate (Cu 20%) remained unchanged between 89-91% (spot cargoes, delivery to factory) for domestic smelters.