China copper smelters keep Q1 2023 treatment charges same as prior quarter

FOSHAN (China): China’s top copper smelters agreed to make no change to the guidance price for treatment and refining charges (TC/RCs) for copper concentrate in the first quarter of 2023, three sources with knowledge of the matter said, with expectations of higher global supply keeping the price at a multi-year high.

The rates of $93 per tonne and 9.3 cents per pound were unchanged from the current quarter but up from $70 per tonne and 7 cents per lb set for the first quarter of 2022.

The prices were decided at a meeting of the China Smelters Purchase Team (CSPT) held online on Thursday, the sources said.

Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. The charges fall when supply tightens and rise when more concentrate is available.

“The team members think that the fundamentals will not change greatly in the first quarter,” one person who attended the meeting said.

The prices are at a five year high because of expectations of higher supply next year, even as demand for copper concentrate in China, the world’s biggest smelter and consumer of the metal, is expected to remain stable.

Because of China’s clout in the market, its TC/RCs guide the global direction for processing prices.

Normally CSPT members, including Jiangxi Copper, Tongling Nonferrous and China Copper, set a floor price that they are supposed to adhere to when agreeing spot processing deals for imported concentrate.

The new “guidance price” agreed on at Thursday’s meeting suggests that there will be more room for negotiation during 2023, although sources said the floor price had already become less fixed in recent years.

“It’s not a hard requirement, every firm can decide according to their own situation,” another meeting attendee said.

Spot treatment charges in China are currently at $84.50 a tonne compared with $59.50 a year ago, according to Asian Metal.

Global copper production is estimated to rise 3% from this year to 22.66 million tonnes in 2023, according to CITIC Futures, as new copper mines start up.

Refined copper production is forecast to increase 2.5% to 26.45 million tonnes next year, the brokerage added.

China added 1 million tonnes of new smelting capacity this year and will add another 560,000 tonnes of new capacity in 2023, CITIC said.