China’s Top Copper Smelters Set Lowest Q3 Processing Charges Since 2015
China's leading copper smelters have agreed on the lowest price guidance for third-quarter processing charges since at least 2015, according to sources familiar with the matter.
Despite the significant drop from previous quarters, the newly set guidance prices are higher than current spot levels, as smelters anticipate a moderate easing of supply shortages in the upcoming months.
The China Smelters Purchase Team (CSPT) convened in Shanghai and decided on guidance prices for copper concentrate processing treatment and refining charges (TC/RCs) at $30 per metric ton and 3.0 cents per pound, sources reported. These figures are less than half of the first-quarter guidance of $80 per ton and 8.0 cents per pound, marking the lowest guidance recorded by Reuters since Q3 2015.
In March, the CSPT refrained from setting guidance prices for the second quarter due to a sharp fall in spot TCs amid tightening supplies. The spot TCs index by Fastmarkets hit a historic low in April, reaching $-4.1 per ton last Friday. However, there are indications that spot TCs are stabilizing, with smelters forecasting increased supply in Q3 due to inventories and production plans.
CSPT, which includes over 10 top copper smelters, holds quarterly meetings to assess market conditions and provide guidance prices for the near-term spot market. TC/RCs are crucial revenue sources for smelters, paid by miners for processing copper concentrate into refined metal. Lower charges indicate reduced supply, a situation exacerbated by the December closure of First Quantum's Cobre mine in Panama.
Meanwhile, China's demand for copper has risen as smelters increase capacity. The country's refined copper output grew by 8.2% in the first five months of 2024, reaching 5.54 million tons, according to the National Bureau of Statistics. Additionally, China imported 11.59 million tons of copper ore and concentrate in the same period, up 2.7% year-on-year, according to customs data.
Last month, Chilean miner Antofagasta settled a mid-year agreement with some Chinese smelters at $23.25 per ton and 2.325 cents per pound, reflecting the ongoing adjustments in the market.
