Copper smelters eye higher charges

Source:Reuters-Global Times Published: 2017/9/20 17:53:40

Firms to hold quarterly TC/RC meet in Shanghai

China's top copper smelters will seek to set a higher floor for treatment and refining charges (TC/RCs) for the fourth quarter of this year, traders and analysts said, ahead of upcoming talks on 2018 supply contracts with miners.

Representatives of the 10 companies on the China Smelters Purchase Team (CSPT) is set to gather in Shanghai on Thursday for their quarterly TC/RC meeting, two sources close to the group said.

Traders expect the team, which includes Jiangxi Copper Co, Jinchuan Group and Tongling Nonferrous Metals Group, to set its new benchmarks higher than the third-quarter TC floor of $86 per ton and RC of 8.6 cents per pound.

A source close to the team put current spot TCs at $88 per ton, noting that the CSPT determines its prices based on market discussions. The market was not tight at the moment, the source said.

Higher charges by the smelters would reflect increased supplies of copper concentrate. China's copper concentrate imports stood at 1.44 million tons in August, up from 1.4 million tons in July, according to customs data.

The CSPT "will try to push the fourth quarter so that they have some power of negotiation for the 2018 benchmark," said a trader who sells copper concentrate to companies on the team. He forecast a fourth-quarter TC of $88 per ton.

The annual benchmark, which was $92.50 per ton for 2017, according to a second source, is usually settled during Asia Copper Week in Shanghai, when global miners and smelters converge for key contract renegotiations. The event runs from November 28 to December 1 this year.

Miners, smelters and traders often use a combination of the annual benchmark, quarterly benchmarks and spot prices when agreeing TC/RCs.

Chris Wu, a copper consultant at CRU in Beijing, said that copper prices had risen substantially, offering better margins for miners. She expected the CSPT to raise its charges.

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