January 17, 2014 / 8:43 AM / 4 years ago

Spot copper concentrate TC/RC fall 20 pct as supply down

* Offers at $100-$105/10-10.5 cents spot TC/RC

* Chinese smelters want TC/RC above $110/11 cents

By Polly Yam

HONG KONG, Jan 17 (Reuters) - Sellers of spot copper concentrates have lowered their process fees by about 20 percent from December on expectations of lower supplies after Indonesia imposed an export tax and a Philippine smelter reopened, traders and smelter officials in China said.

Spot treatment and refining charges (TC/RC) this week were offered at $100-$105 per tonne and 10-10.5 cents per pound for standard copper concentrates for delivery to China, they said.

The charges hit $130 and 13 cents in December 2013, the highest since mid-2011, driven by the reselling of concentrates originally destined for the Pasar smelter in the Philippines and an expected supply rise in the global market in 2014.

Last month’s strong spot charges helped Chinese smelters win a 41 percent rise in term TC/RC for shipments in the first half of 2014 from Anglo-Australian miner BHP Billiton at $99 and 9.9 cents, which are 7.6 percent higher than the yearly benchmark of $92 and 9.2 cents for 2014.

Chinese smelters and BHP have failed to agree on the annual term TC/RC for 2014, two officials at smelters said on Friday.

Japan’s biggest smelter Pan Pacific Copper and BHP also have not agreed on annual term TC/RC for 2014. Japan is the second largest copper concentrate importer after China.

Global miners or trading houses pay TC/RC to smelters to convert concentrate into refined metal, with the charges deducted from the sale price, based on London Metal Exchange copper prices . Higher charges are typically seen when concentrate supply rises.

Large Chinese smelters were not likely to accept spot TC/RC below $110 and 11 cents for shipments in the first quarter of 2014 because of high concentrate inventories and expectations of a supply rise in the global concentrate market this year, a trading manager at a Chinese smelter said.

The fall in spot TC/RCs are likely due to worries over the export tax issued in Indonesia, he said.

Indonesia’s top copper producer, Freeport-McMoRan Copper & Gold, faces paying billions of dollars more in taxes if it fails to convince the government to back down from a new export tax. The tax came as a surprise after a reprieve from the country’s controversial mineral ore export ban.

The tax for copper concentrate exports has been raised to 25 percent from 20 percent, and will gradually go up to a maximum 60 percent by the end of 2016.

Freeport and fellow miner Newmont Mining together account for virtually all copper mining in Indonesia.

Traders said the reopening of the Pasar smelter in the Philippines also had taken up some of the extra supplies, while global miners and international trading houses were not keen to offer spot concentrates after signing deals on their 2014 term shipments over the past few weeks.

“There’s not much spot in the market since Pasar already reopened. While the Chinese smelters are not likely to buy large amounts of spot before the Lunar New Year holiday,” a trader at one international trading firm said.

The Lunar New Year falls on Jan. 31 this year.

Sources last week said Glencore Xstrata’s Pasar copper smelter in the Philippines planned to restart as soon as January 15, after being damaged by Typhoon Haiyan in November. (Editing by Tom Hogue)

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