September 16, 2013 / 9:36 AM / 4 years ago

Asia spot copper smelting fees hit 2-year high at $100 a tonne

* Spot TC/RC reach $100 a tonne, 10 cents a pound this week

* China smelters seen placing orders to buy 80,000 tonnes in Q4

* Q4 spot buying lower than previous years, TC/RC set to rise further

By Polly Yam

HONG KONG, Sept 16 (Reuters) - Copper smelting fees in Asia have risen nearly a third since July to the highest level in more than two years as concentrate supplies have increased, trading sources said on Monday.

The hike in the spot treatment and refining charges (TC/RC) for processing imported concentrate into refined copper could mean higher profits for smelters such as China’s top producer Jiangxi Copper Company Ltd.

But the gains might also encourage some smelters to step up expansion projects, which would weigh on global refined copper prices.

Reflecting the rise in concentrate supplies, a smelter in China received TC/RC of $100 per tonne and 10 cents per pound this week for spot clean, standard south American concentrates, traders said.

“Spot TC/RCs should not be lower than $100 and 10 cents in the fourth quarter of the year,” a trading manager at a copper smelter in China said. “There is plentiful supply in the market currently,” the trading manager said.

The treatment and refining charges are price discounts to London Metal Exchange copper prices given by sellers to smelters to convert concentrate into refined metal. As the supply of concentrate rises, there is higher demand for smelting capacity and the charges increase.

The $100 and 10 cents mark was last seen in the middle of 2011. It was up from spot TC/RC of $92 and 9.2 cents last week and from about $72 and 7.2 cents in July.

The TC/RC was higher than $86 and 8.6 cents paid to two Chinese smelters on a total 60,000 tonnes of clean, standard south American copper concentrates for quarterly shipments in October to December 2013, traders said.

Global miner BHP Billiton reported output from its majority owned Escondida mine in Chile, the world’s single-largest lode, rose 28 percent in the 2013 fiscal year. Additionally, Mongolia’s giant new Oyu Tolgoi mine - run by Rio Tinto - started shipments in July.

A trader at an international trading firm said some global trading houses had been keen to sell spot concentrates to Asian smelters, with Chinese smelters being virtually the sole buyers.

The $100/10 cents mark could indicate that copper concentrates was turning into a “buyer’s market”, from a “seller’s market” in the previous two years, the trader said.

“a red line traders see for TC/RC,” the trader said.

But orders for spot concentrates from smelters in China may slow after they increased purchases in the second half and that could push spot TC/RC higher.

Large smelters in China may need to buy only about 80,000 tonnes of spot concentrates in the fourth quarter of the year, down from about 200,000 tonnes in the same quarter in previous years, sources at smelters estimated.

China’s imports of copper ores and concentrates surged 37 percent in the first seven months of the year to 5.4 million tonnes, with the July inflows hitting a record 938,503 tonnes, customs data showed.

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