Copper Concentrate Index may Fall Below $80/mt Despite Glencore Restarting a Copper Mine

SHANGHAI, Feb 9 (SMM) - Copper concentrate TCs continued to fall in light of continuous disturbances and the SMM imported copper concentrate index also fell this week. The SMM Imported Copper Concentrate Index (weekly) stood at $80.73/mt as of February 9.

The protests in Peru have affected the mining and transportation in south Peru, which affected the market sentiment. The news of Glencore restarting the Antapaccay copper mine also attracted the market attention.

According to mining news, Glencore has resumed the production at Antapaccay copper mine in Peru,

which was shut down for 11 days on security concerns following three violent attacks.

According to statistics, Antapaccay is one of Peru’s largest mines, producing nearly 136,000 mt of copper from January to November 2022.

The protests have already affected 30% of its copper output and could choke off access to almost $4 billion worth of the metal. 

“We expect shipments from Peru (includes zinc, tin and silver) will be impacted over the coming months, and congress shows no sign of calling a general election in the immediate future,” commodities analyst for BMO Capital Markets, Colin Hamilton, wrote earlier this month.

Political reasons aside, the current unrest is Peru is exacerbated by longstanding discontent with high poverty levels and discrimination felt by many in Peru’s Andean and Amazonian regions. The south of Peru is rich in copper, but locals say the benefits of mining don’t reach the communities who live close.

The turmoil in Peru disturbed the mine supply and was the leading factor for the continuous decline in the imported copper concentrate index. As of last Friday (February 3), the SMM Imported Copper Concentrate Index (Weekly) stood at $80.73/mt, $2.83/mt lower than a week earlier and down $10.35/mt or 11.36% compared with $91.08/mt on November 25, 2022.

Previously, SMM believed that the relatively high raw material inventory can help smelters avoid this temporary difficulty, but the poor shipment in South America has caused some domestic smelters to worry about the delivery of long-term orders. And this also further increased the demand for the spot overseas clean ore shipped in the first quarter. As SMM surveyed, although a smelters locked the long-term orders for the first half of this year in the second half of last year, a shipment of clean ore from Chile almost caused delays. In order to avoid risks as much as possible, the refinery increased its inquiries for clean mines in the first quarter. The recent deterioration of the raw material supply pattern has led to the spread of market panic. The seller's offer price for the first-quarter shipment of ocean-going clean mines fell from a high of US$70 before the Chinese New Year to a mid-US$70, while buyers expressed their expectations for the shipment of ocean-going clean mines in the first quarter. The asking price is in the low $80s.

For the market outlook, the SMM imported copper concentrate index may decline further. With the maintenance of domestic smelters and the recovery of overseas supply, the SMM TCs of imported copper concentrate may rebound in the first half of the second quarter.