China copper smelters hike Q4 2022 TC/RC floor to a five-year high

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China’s top copper smelters lifted their floor treatment and refining charges (TC/RCs) for the fourth quarter of 2022 to a five-year high as rising concentrate supply is expected to outpace the expansion in smelting capacity.

Demand for copper concentrate in China, the world’s biggest smelter and consumer of the metal, was expected to remain stable, with several processors bringing new capacity online in the third and fourth quarter of this year. Because of China’s clout in the market, its TC/RCs guide the global direction for processing prices.

The floor charges of $93 per tonne and 9.3 cents per pound were set at a meeting of the China Smelters Purchase Team (CSPT) held online on Tuesday, three sources with knowledge of the matter said.

The charges are higher than the $80 per tonne and 8 cents per pound set for the third quarter of 2022, and also up from $70 per tonne and 7 cents per pound set for the fourth quarter of 2021.

Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. The charges fall when supply tightens and rise when more concentrate is available.

The members of the CSPT in top copper consumer China, including Jiangxi Copper, Tongling Nonferrous and China Copper, are meant to adhere to the floor when agreeing spot processing deals for imported concentrate.

“Overseas supply is on the rise following the launch of new mining capacity and production ramp-ups in some key copper origins,” an attendee at the CSPT meeting said, asking to remain unidentified because of the confidential nature of the talks.

As Covid restrictions that had constrained mining operations in 2021 were relaxed this year, the first half of 2022 saw global copper mine production climb 1.3% from a year earlier to 10.63 million tonnes, according to data released by the World Bureau of Metal Statistics. The International Copper Study Group (ICSG) forecasts global copper mine production to total 22.25 million tonnes this year, a yearly increase of 5.1%.

That said, uncertainty over mining activity and logistics still lingered over the supply outlook amid intermittent workers’ protests against mining companies, including Chile’s Escondida, the world’s largest copper mine and Peru’s Las Bambas and Cuajone mines.

China produced 7.12 million tonnes of refined copper in the first eight months of 2022, up 2.6% from the same period last year.

Spot treatment charges in China, as assessed by Asian Metal, are at $86.50 a tonne so far in September, compared with $59.50 at the beginning of 2022.

(By Siyi Liu and Dominique Patton; Editing by Christopher Cushing and Christian Schmollinger)

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