* Smelters expect TC/RCs to rise to $110/11 cts on Freeport
* Freeport to be allowed to export 756,000 T concentrate in
* Sellers this week offer TC/RCs at $84-$90/8.4-9 cents
By Polly Yam
HONG KONG, July 25 Chinese copper smelters are
holding off on spot purchases of raw material concentrate,
betting they can charge higher processing fees on imports once
Freeport-McMoRan Inc resumes exports from Indonesia,
sources at smelters and traders said.
Indonesia said on Friday it expects to sign a memorandum of
understanding with U.S. miner Freeport on Friday that would
allow it to ship 756,000 tonnes of copper concentrate in the
second half of the year. A resumption of the exports has been
anticipated by the copper market.
Chinese smelters, the world's biggest importers of copper
concentrate, buy up to half of their requirements in the spot
market, and a postponement of purchases will force trading
houses and other sellers to find alternative buyers.
The sellers will also have to fork out more to the smelters
in spot processing fees once Freeport's concentrates from
Indonesia hit the market.
Sellers of concentrate pay treatment and refining charges
(TC/RCs) to the smelters to convert the raw material into
refined metal, with the charges deducted from the smelters' sale
prices. The charges rise or fall in line with concentrate
"Freeport's resuming exports would have a big impact. TC/RCs
could jump to $110/11 cents immediately after the Freeport
restarting," said an executive at a state-backed copper smelter
in China, who declined to be named because he was not authorised
to talk to media.
The executive said his firm was going to put purchase of
spot concentrate on hold while waiting for Freeport's exports
from Indonesia to resume. It was not immediately clear when the
exports would restart.
A trading manager at a large state-owned smelter also
expects spot TC/RCs to rise to about $110 per tonne and 11 cents
per pound shortly after Freeport's restarting. Those levels of
the processing fees were last seen in March.
Chinese smelters had already started reducing purchases of
spot concentrate since late May, betting on Freeport resuming
exports in the third quarter and on a rise in TC/RCs. But TC/RCs
have continued to fall since then because of strong spot buying
by other Asian smelters, traders and the smelter sources said.
Sellers this week offered to pay TC/RCs of $84-$90 per tonne
and 8.4-9 cents per pound for spot standard, clean copper
concentrates to China, compared to around $100 and 10 cents in
The offers were also lower than the $95.5 and 9.55 cents
paid by Anglo-Australian miner BHP Billiton to
at least one large Chinese smelter for term concentrate
shipments in the second half of 2014.
The trading manager at the large state-owned smelter said
the firm was likely to buy two to three shipments of spot
concentrate imports if TC/RCs rose to $100-$110 and 10-11 cents.
China's copper concentrate imports CU-CNCONIMP surged 47
percent on-year to nearly 1 million tonnes in June, the
third-highest monthly number ever.
The jump in June imports was due to increased arrivals of
term shipments, the smelter sources said.
(Editing by Muralikumar Anantharaman)