AB: China copper smelters halt spot concentrate imports
Published: 30 Jul 2009 00:06:43 PST
Jul.30 MetalBiz--An official at the China Smelters Purchase Team said on July 29, China's major copper smelters have not concluded spot copper concentrate imports this month as they hold out for higher treatment and refining charges which have fallen to U.S.$20 and 2 cents.
Smelters' reduced orders could cut the country's concentrate imports in Q3 after record imports in June, and that may trim refined copper production in China, the world's top buyer of concentrates and consumer of the metal.
The official at CSPT, which groups China's top copper smelters and controls members' imports of spot concentrate, said, spot TC/RCs were around U.S.$20 and 2 cents now, which was a loss-making level.
He estimated that at the current TC/RCs, Chinese smelters would make a loss of nearly U.S.$670,000 for every 10,000-ton of concentrate imports, using TC/RCs of U.S.$20-U.S.-25 cents per pound.
TC/RCs are the discount from the London Metal Exchange copper price that concentrate sellers charge smelters for concentrates to convert into refined copper. Lower TC/RCs arise when supply of concentrate falls or demand rises, which usually raise the prices of concentrate.
In January, spot TC/RCs to China had settled at about U.S.$90 and 9 cents. Traders said, while Chinese smelters had increased bookings in March-May due to strong Chinese copper prices, driving down spot TC/RCs in Asia
A Chinese smelter official said, Chinese smelters that had built concentrate stocks in the first half were making profits for refined copper production, thanks to a 80% rise in LME and Shanghai copper prices this year.
The cheap concentrate stocks were encouraging Chinese smelters to run at full production, he added. Output reached 335,200 tons in June, the third-highest level in China.
CSPT had relaxed control over member smelters' imports of spot concentrate in June and allowed smelters to set TC/RCs with sellers depending on their situations.
The CSPT official said, while it has tightened controls again and told members not to buy spot shipments below TC/RCs of U.S.$40 and 4 cents, hoping to push up the charges to Chinese smelters.
Low spot charges in Asia pressured mid-year TC/RCs for term contracts. Japanese smelters and global miners such as BHP Billiton set term TC/RCs at around U.S.$50 and 5 cents for shipments between July 2009 and June 2010, a third lower than U.S.$75 and 7.5 cents for shipments in 2009.
