The copper price on Friday attempted a fresh two-and-half year high, as Chinese smelters scramble to pick up concentrate on the spot market amid a political row between Beijing and Canberra.
On the Comex market, copper for delivery in December made gains for the fifth straight session, jumping more than 2% to $3.1740 a pound ($6,997 a tonne) in brisk trade. More than $5.5 billion worth of metal had traded by early afternoon in New York.
Friday’s trading brings the bellwether metal’s recovery since the height of the covid-19 induced sell-off, which sent the copper price crashing to below $2.00 a pound, to more than 63%.
Reports that China has unofficially banned Australian copper concentrate imports have forced refiners in the country, responsible for more than half the world’s copper consumption, to drastically lower treatment and refining charges (TC/RCs).
Australia only accounts for 5% of Chinese concentrate imports, but comes at the same time as covid-related disruptions and labour action in top producer South America.
In an indication of just how scarce copper for prompt delivery has become in China, spot treatment charges plunged to an eight-year low of just over $50 a tonne this week, a 30% decline from the 2020 high hit in March.
That is also well below the annual benchmark of $62 a tonne, and Reuters quotes a Singapore-based trader as saying spot rates could go lower still:
“If you had a ship full of copper concentrate floating offshore, you’re rapidly trying to find a home,” an Australia-based trader said.
Traders said Australian shipments meant for China could divert to Japan, Korea, India, or to blending facilities in Taiwan or Malaysia.
Australian producers of lead and zinc concentrates and precious metals are also making back-up plans in case the ban broadens, two traders said.