Sluggish copper concentrate spot transactions during holidays, spot TCs to still have room for decline in the fourth quarter

As of September 28, the SMM Imported Copper Concentrate Index (Weekly) stood at $93.23/mt, $0.59/mt lower than a week earlier. During the National Day holidays, there was still a small amount of trades in the copper concentrate market. The price coefficient of Cu 20% domestic ore stood at 88.5-89.5%.

Chinese holidays combined with the LME Week muted the spot trading of copper concentrate in China. During the holidays, a smelter in north China purchased Peruvian clean ore with TCs in the mid-to-low $90s, with the loading scheduled from late November to early December. The current traded TCs of clean ore scheduled for the fourth quarter between mines and smelters are in the high $80s. According to market participants, there were rumours at the LME Week that some Chinese smelters underwent shortages of raw materials and were making inquiries aggressively. Sellers generally expected that Chinese smleters’ raw material inventory would be relatively tight in the fourth quarter. But according to SMM survey, raw material inventory at a smelter in north China that commissioned an capacity expansion project was ample, with concentrated arriving shipments of both domestic and seaborne copper concentrate.

According to SMM analysis, demand for spot copper concentrate from some Chinese smelters, especially smelters in the north-west, will increase in the fourth quarter due to production in winter and new production capacity. But this growth in demand will be within a reasonable range. On the supply side, the "armed protection period" of the Las Bambas copper mine has expired again and other disruptive factors to South American mines occur periodically. Therefore, we expect there is downside room for spot copper concentrate TCs in the fourth quarter. Copper concentrate inventories across seven major ports in China stood at 953,000 mt on September 28, down 19,500 mt from a week earlier.