China copper smelters, miners split over finalizing TC/RCs for 2024

An agreement between Chinese copper smelters and Chilean miner Antofagasta that could set the tone for copper concentrate floor price in 2024 is facing roadblocks because of split views and a wide bid-offer spread, industry sources said Nov. 16.

The first annual settlement between a major copper miner and Chinese smelters during the fourth quarter usually becomes the benchmark for contracts in the year ahead. In recent years, miners Freeport or Antofagasta have usually entered into contracts with Chinese smelters.

Market participants observed negotiations between Chinese smelters and Antofagasta on Nov. 15 during the Asia Copper Week in Shanghai, expecting challenges in finalizing an agreement.

The negotiations were led by China Copper and Tongling Nonferrous on the buy side, while Freeport and Antofagasta led the supply side.

Antofagasta offered treatment charges in the $72-$75/mt range for cargoes loading in 2024, while smelters bid at $88/mt, according to industry sources.

Both contractual buyers and sellers, including Antofagasta, did not respond to S&P Global Commodity Insights’ requests for comment on the matter.

“Smelters are looking to rollover benchmark in 2023, which might be difficult,” a trader told S&P Global on the sidelines of the Asia Copper Week.
The floor price for 2023 loading copper concentrate treatment and refining charges concluded respectively at $88/mt and 8.80 cents/lb.

Market view for 2024 was split due to supply uncertainty as smelting production capacity in Asia rises, industry sources said.

China’s ZTS Nonferrous and Baiyin Nonferrous both fired up new smelting facilities in October with a combined 380,000 mt/year in capacity.

India’s Adani is expected to start copper production by using copper concentrates from next September with 500,000 mt capacity. Indonesia’s PT Freeport and PT Amman Mineral Nusa Tenggara are expected to contribute a combined 520,000 mt in smelting capacity by the end of 2024.

Meanwhile, on the supply side, uncertainty over First Quantum’s Cobre Panama mine in Panama due to protests and an export ban on Indonesian-origin copper concentrates from next May have added to supply pressure.

The spot market has been weakening since October due to strong restocking activity from northern Chinese smelters, with spot treatment and refining charges hitting a six-month low.

Platts, part of S&P Global, assessed CIF China clean copper concentrate treatment and refining charges respectively at $79.30/mt and 7.93 cents/lb on Nov. 15. The assessments respectively reached $78.80/mt and 7.88 cents/lb on Nov. 9, the lowest since March.

Although spot offers for December shipments were heard in the high-$70s/mt, Chinese smelters refused to agree below $80/mt.

“Some traders have cargoes on hand but refuse to offer for now,” a procurement source said.

Miners pay treatment and refining charges to smelters to turn ore into refined metal and the agreed rate plays a crucial role in determining profitability on both sides. Treatment and refining charges typically decline when the supply of copper concentrates tightens.

The China Smelters Purchase Team, a group that includes nation’s top copper smelters, on Sept. 22 set the floor price for copper concentrates treatment and refining charges for the fourth quarter of 2023 respectively at $95/mt and 9.5 cents/lb, unchanged from the previous quarter.

Global copper concentrates supply might continue to see a surplus in 2024 but the excess could be limited, according to some industry sources.

Market participants were keeping on a close eye on Freeport’s export permission at its Grasberg mine in Indonesia that could impact overall supply if the mine is not allowed to export after May 2024.
Source: Platts