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China’s group of top copper smelters — China Smelters Purchase Team — in a bid to stabilize the free-falling copper concentrate TC/RC market called for a joint production cut Jan. 26, triggering mixed market reactions.
The meeting also called for CSPT members to set procurement floor price level at $50/mt and 5 cents/lb for TC and RC, respectively, and not accept side terms such as quotation period and gold payable changes.
Spot TC/RCs fell 67% since the 2024 benchmark was set at $80/mt in November 2023 between producers and Chinese smelters, while spot market has still not stabilized amid strong demand, according to a trader.
Most market participants were supportive about the meeting, citing that it is an effective way to ease falling TC/RCs.
Traders were observed offering cautiously ahead of the meeting as spot TCs kept trading lower, but spot availability increased significantly after the meeting.
“Many offers bundled March and April loading shipments together, selling 20,000-30,000 mt as a package,” a procurement source said. It is a sign that sellers were happy with current TC/RC level, and willing to sell as many as possible, the source added.
Offers still stood in the mid-$20s/mt from trader to smelter but sellers showed no intention to increase offers by much. “We don’t believe that top smelters are really going to cut production much after the meeting,” another trader said.
However, some CSPT smelters who have urgent demand decided to stay away from the spot market after the meeting.
CSPT members may not be able to get import license from the Chamber of Commerce if they buy below the $50/mt TC level, a smelter source explained about bids that pulled back.
“We have to carry on and rely on existing stocks now,” a second smelter source said.
“It means smelters may have to cut production on administrative level,” another smelter source said, who believed TCs tension will be relieved.
Due to the wide gap between spot TCs and floor price level, more market participants were waiting to see how market will develop in the short-term, especially with the Lunar New Year coming soon.
March loading clean copper concentrates traded at $27/mt Jan. 25 between trader and smelter, M+2 or M+4 pricing at seller’s option.
Platts, part of S&P Global Commodity Insights, assessed CIF China Clean Copper Concentrates treatment and refining charges at $26.20/mt and 2.62 cents/lb, respectively, Jan. 25, after normalization for quotation period from M+4 to M+3.
Source: Platts